published Monday, August 15th, 2011

TVA cuts fuel surcharge next month but plans rate hike in October

The TVA headquarters building is located in downtown Chattanooga.
The TVA headquarters building is located in downtown Chattanooga.
Photo by Angela Lewis /Chattanooga Times Free Press.
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With the dog days of August losing their bite, electricity users in the Tennessee Valley will get a break on their power bills next month.

But the 1 percent drop in power rates in September will likely be reversed in October when TVA plans to raise its base rates even more with the start of its next fiscal year.

TVA announced today that because of milder temperatures and less power demand expected in September, the utility’s fuel cost adjustment will be lowered next month, cutting wholesale power rates by 1 percent. For most residential electricity users in the Tennessee Valley, the rate change will cut the monthly power bill from 50 cents to $1.50 in September.

“Because September's power demand is historically lower than August demand, TVA expects to generate less electricity to meet the region's needs,” TVA spokesman Scott Brooks said in a statement today. “This means lower overall fuel expenses and less purchased power.”

TVA adjusts its rates each month to reflect the changing costs of coal, natural gas and purchased power used to meet its power demands.

TVA also is preparing for a bigger base rate increase to become effective in October.

TVA directors on Thursday will also consider a proposal to raise the utility’s base rates for fiscal 2012. Under the budget plan being developed this week, TVA managers have told distributors and major industrial customers to expect a rate increase of under 5 percent in the next fiscal year.

TVA communications manager Barbara Martocci said today that the board will decide on a rate change Thursday, but details of the rate hike and the budget are still being reviewed by the board.

TVA’s 9-member board will vote Thursday morning in Knoxville on the higher base rate as part of the utility’s budget plan for 2012.

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about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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esaletnik said...

The average inflation rate per year for 2009-2010 was .65%. They expect to keep next years rate under 5%. So 4.9% is not out of the question. That's 7.5 times the inflation rate.

August 15, 2011 at 2:37 p.m.
mrredskin said...

you're comparing the AVERAGE inflation rate to a specific rate hike?

did you eat an apple for lunch? I had an orange. Why don't we compare the two?

August 15, 2011 at 2:47 p.m.
mhbraganza said...

How much power is TVA purchasing and how much do they (we) pay for it?The EPB already marks up the power they get from TVA. Does TVA do the same for the power it buys from others?

August 15, 2011 at 3:34 p.m.
OldTimer1933 said...

We must keep in mind that several of TVA's sites use fuel iol. I don't know if that fuel has a tax that is expiring in September, but Congress is now speaking of the need to increase the tax on diesel fuel and gasoline because there has been no rise in the tax rate in 18 years PLUS there is a need to take care of several more 'shovel ready' infrastructure boondoggles...oops, I mean 'projects'.

August 15, 2011 at 7:12 p.m.
NoMyth said...

@OldTimer1933: You're off the mark. Outside of Hawaii and Alaska, there is very little power generated from fuel oil. TVA has to raise rates to pay for the Kingston ash spill, benefits for tens of thousands of retirees (TVA used to be egregiously over-staffed), and for past and present nuclear plants, not to mention coal, natural gas, etc.

August 15, 2011 at 8:44 p.m.
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