After a year of falling electricity prices, power rates in the Tennessee Valley are headed up again this spring.
The typical Chattanooga household will pay $4.90 more a month for electricity in April under the latest fuel cost adjustment to TVA's electric rates.
The April 1 increase to TVA, which translates into a 4.5 percent increase at the retail level, follows a similar increase this month.
The combined increases in March and April will offset all five of the monthly rate cuts the Tennessee Valley Authority has made since the start of the current fiscal year in October. TVA rates are expected to move still higher this spring, although energy experts don't expect the increases to continue through most of 2010.
"The fuel cost credit that customers have received since October is slowly being used up," TVA spokesman Scott Brooks said. "That credit was created when fuel costs in 2009 were lower than TVA had forecast. As the credit is reduced over the next three months, fuel cost adjustments will continue to increase slightly."
TVA rates jumped by more than 30 percent in 2008 when the price of gas, coal and other energy rose. But TVA didn't foresee the dramatic drop in fuel prices due to the recession last year, which pushed down fuel costs enough to offset most of the prior year increases over the past 15 months.
The excess credit from the below-forecast fuel prices pushed down TVA's fuel cost adjustment eight times during 2009 and early 2010 before beginning to rise again this month.
"I think we're likely to see more normal pricing this year (with less volatility)," said Jack Simmons, president of the Tennessee Valley Public Power Association, the Chattanooga-based trade group for the 156 distributors of TVA power.
But after a colder-than-normal winter, many Chattanoogans are wary about any electricity rate increase this spring.
BY THE NUMBERS* 4.5 percent -- Retail rate increase for electricity prices in Chattanooga from the April fuel cost adjustment* $4.90 -- Average increase for residential customers of EPB in April using 1,300 kilowatt-hours of electricity a month* $114 -- Average monthly electric bill in Chattanooga under new rateSource: Tennessee Valley Authority, EPB
Nicholas Jones, a 22-year-old University of Tennessee at Chattanooga student who lives in Red Bank, said his $113 electric bill in January was much higher than most months, due in part to colder weather this year.
"It's tough enough already as a working college student to pay these kind of bills," he said.
The U.S. Department of Energy's short-term energy forecast predicts that the spot market price of natural gas will rise this year to $5.17 per million Btu, a $1.22 per million Btu increase over the 2009 average. The energy department's Energy Information Administration projects price increases to continue in 2011, averaging $5.65 per million Btu for the year.
But overall, electricity prices nationwide are projected to be relatively stable this year and rise only 1.4 percent next year due to higher natural gas prices, according to the Energy Information Administration.
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