published Friday, May 14th, 2010

TVA customers to feel heat with hike

As the mercury climbed Thursday to just two degrees below the year's record, Chattanooga consumers had extra reason to sweat about this summer.

Electric power rates are going up again in the Tennessee Valley in June -- the fourth consecutive month of such increases by the Tennessee Valley Authority.

  • photo
    Staff photo by Dan Henry/Chattanooga Times Free Press - Tennessee Valley Authority senior balancing authority Mike Bottomley monitors power fluctuations at the system operations center in downtown Chattanooga on Thursday.

For the typical Chattanooga household, the increase in electric rates on June 1 will raise the monthly light bill by about $4.50, or about 3.9 percent, EPB Chief Financial Officer Greg Eaves said Thursday.

TVA blames the latest increase in its fuel-cost adjustment on the end of the fuel credits from last year's rate changes and higher fuel costs expected during the high-demand summer months ahead.

"We're expecting our fuel costs to go up next month as we have to buy more on the market to meet our summertime peaks," TVA spokesman Scott Brooks said. "Up until this month, we have also been enjoying a credit from some of the over-collection last year."

TVA adjusts the fuel portion of its wholesale electric rates every month to reflect the changing costs of coal, natural gas, oil and purchased power.

The June increase in power rates, combined with similar hikes this spring, will combine to leave TVA customers paying higher rates than they did at the start of the current fiscal year despite the dramatic cuts in monthly fuel cost adjustments last fall and winter.

TVA's higher bills are sure to pinch many recession-wary consumers. Tony Jennings, a 50-year-old Chattanoogan who hasn't been able to work at his job at Pilgrim's Pride since last December due to a leg injury, said any increase in power bills causes him a financial hardship.

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"I'm struggling to pay my bills and so are a lot of other people," he said Thursday after paying his $54 electric bill to EPB. "I think these increases are ridiculous, especially considering what TVA makes."

In the first three months of 2010, TVA's net income more than tripled its year-ago level to $430 million.

Although TVA residential electric rates average about 20 percent below the U.S. average, electricity charges in the Tennessee Valley appear to be going up faster this year than in most of the rest of the nation.

Nationwide, the U.S. Electric Information Administration projects the price of electricity will grow by 0.3 percent this year -- the lowest increase since 2002 -- and will rise 2.8 percent in 2011.

In Georgia regions south of TVA's service territory, power rates are also set to go up this year if regulators approve increases sought by gas and electric utilities. AGL, the parent of Atlanta Gas, filed a $54 million increase bid with the state Public Service Commission last week.

Georgia Power Co. has said it plans an even bigger rate request in July, although the amount of the increase has not been released.

BY THE NUMBERS

* 5 -- Percentage of wholesale rate increase announced Thursday by TVA for June

* 3.9 -- Percentage increase at the retail level in Chattanooga

* $4.50 -- Monthly increase in electricity costs for typical Chattanooga household

* 87 -- High temperature Thursday

Source: Tennessee Valley Authority and EPB

Last October, TVA revamped its fuel cost adjustment from a quarterly to a monthly change and agreed to stretch out the credits that resulted from a dramatic drop in natural gas, oil and purchased power prices, as well as some moderation in spot coal costs.

As the economy has begun to improve, fuel prices have drifted higher this year, Mr. Brooks said.

TVA traditionally sells the most power during the summer months when electric air conditioners are operating the most to cool the homes and businesses in the utility's seven-state region.

Chattanoogans got an early taste of the summer ahead on Thursday when temperatures in Chattanooga rose to 87 degrees. The previous high so far this year was 89 degrees on April 5, according to National Weather Service forecaster Derek Eisentrut.

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