As lower temperatures begin to boost heating bills, consumers should get a price break this winter, whether they heat with electricity or natural gas.
The Tennessee Valley Authority announced Monday it will cut its electricity rates in December for the second consecutive month due to falling prices for fuel and purchased power.
Chattanooga Gas Co., which cut its rates by 18 percent in October, estimates most gas users will pay the lowest rates this winter in at least four years.
The typical Chattanooga household that relies upon electric heat will save nearly $4 next month under the latest 3.5 percent cut in TVA's monthly fuel cost adjustment, EPB officials said Monday. The December rate cut follows an even bigger 5 percent wholesale rate reduction this month by TVA, although the autumn cuts still don't offset eight months of previous fuel cost increases.
Chattanooga Gas estimates its average household saved $2.35 last month thanks to the October rate cut and should save even more through the winter months. The commodity price of natural gas, not including the delivery expenses for the fuel, is down 16 percent from a year ago and is priced 46 percent below the peaks reached in the fall of 2008.
Such rate cuts are welcome news for recession-wary consumers who paid higher bills when gas and electric rates increased in previous years.
Jonathan Mash, who lives near downtown Chattanooga, said he paid nearly $300 a month last winter for electricity and is hoping for lower bills this year.
"That's too much money," he said after paying his monthly bill at EPB on Monday.
Evelyn Chubb, who lives in a two-bedroom apartment in Avondale, said her winter heating bills reached nearly $200 last year "and that's a real struggle for a working person like me."
Steve Lindsey, vice president and general manager for Chattanooga Gas Co., said natural gas prices are continuing to decline because of less demand and greater supply.
"Unfortunately, a big contributor is the weak economy, which has lowered industrial use and residential growth," he said. "On the supply side, we're continuing to see new gas introduced into the market from the different methods of exploration, including of the new shale gas."
Lower gas prices also are cutting fuel prices for TVA, which uses its own gas-fired electricity generators and purchases power from other independent power producers that rely upon gas to fuel power generation. TVA sales also were 5 percent below budget in October, which reduced the utility's reliance upon more expensive coal-fired plants.
"The drop we're seeing in natural gas prices is helping to lower our overall costs at TVA and, in many instances, we're being able to shift from our higher-priced coal units to less expensive gas-fired generation," said Cass Larson, general manager for structuring and portfolio management at TVA.
The drop in rates came despite a continued decline in generation from TVA's cheapest power -- hydroelectricity generated at TVA's 29 power-generating dams. Hydro generation last month was 28 percent below what was budgeted for the month, Larson said.
EPB in Chattanooga estimates the latest TVA fuel cost adjustment will cut the December bill for the average residential customer using 1,461 kilowatt-hours of electricity from $141.62 to $137.63, EPB spokeswoman Lacie Newton said.
But Newton stressed that what consumers ultimately pay is still determined by how they use power and what the weather actually turns out to be for the month.
"The colder it is outside, the more you use your heating system -- and your heating system uses more energy than anything else in your home," she said. "That's why we encourage our customers to go online and check out our energy savings tips, use our free online home energy calculator, or call us for a free home energy audit."
Contact staff writer Dave Flessner at 757-6340 or dfless ner@timesfreepress.com.