published Tuesday, August 16th, 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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BY THE NUMBERS
  • $1.19 -- Average savings on a typical residential electricity bill in Chattanooga next month due to latest 1 percent cut in TVA's fuel cost adjustment for September.
  • $8.91 -- Average increase in the typical residential electricity bill in Chattanooga compared with a year ago due to the 6.3 percent cumulative increase in monthly fuel cost and EPB rate changes in the past year
  • $149.37 -- Average residential electricity bill for a homeowner using 1,460 kilowatt-hours in September.
  • Under 5 percent -- TVA's tentative plans for an increase in base rates for fiscal 2012.

Sources: Tennessee Valley Authority, EPB

Chattanoogans who sweated paying their electricity bills through the summer heat wave will get a reprieve next month when TVA reverses three months of increases and cuts the fuel portion of its bills.

But that rate relief could be short-lived. TVA directors are considering a rate increase that could boost electricity charges again in fiscal 2012.

After losing money over the past year because of the costs of tornado damage and plant shutdowns, TVA's board is scheduled to vote Thursday on a new budget that could boost TVA rates again in October.

"My power bills are way up from last year, but my income isn't," said Curtis Barnes, an East Chattanooga resident who paid his EPB bill on Monday. "I'm struggling like a big dog now and I sure can't afford to pay much more."

EPB estimated the typical residential electricity user will save $1.14 on his or her September power bill due to a 1 percent cut in the utility's fuel cost adjustment announced Monday by TVA.

Despite the cut, however, EPB estimates electric rates for most customers over the past year are still up by 6.3 percent, or an average $8.91 more a month, due to previous TVA fuel cost increases and a rate increase adopted by EPB in July.

Those rate increases and the 100-degree temperatures reached twice already this month combined to offset what Taletha Goodlaw thought would be a reduction in her electricity bill this summer.

"I thought when my children moved out my bill would go down, but I still had to pay $159 and that's just too high," she said Monday after paying her monthly light bill for her four-bedroom house.

TVA said the drop in its fuel surcharge in September is due to an expected decline in consumption as the weather moderates and the costs of purchased power and fuel fall below summertime peaks.

"We are expecting demand to go down in September so we won't be spending as much for coal, gas and purchased power," TVA spokesman Scott Brooks said.

TVA adjusts its fuel surcharge on its rates each month to reflect the changing cost of buying coal, natural gas and purchased power.

TVA hasn't raised its base rates since October 2009, but TVA distributors and major industrial customers said they are bracing for a modest rate increase in the fiscal year that begins Oct. 1.

TVA managers have said any increase will likely be below 5 percent, although TVA officials declined Monday to discuss any recommendations to be made to the TVA board on next year's budget.

  • photo
    Damaged transmission lines at TVA's Widows Creek Fossil Fuel Plant block Jackson County Highway 96 in Bridgeport. Staff Photo by Dan Henry - The Chattanooga Times Free Press

TVA reported last week that it lost $240 million in the spring quarter in part due to tornado damage and lost power generation. To pay for planned nuclear plant expansions and additional pollution control equipment on coal plants, TVA officials have told distributors the agency will need more money.

TVA's biggest industrial customers are already concerned that TVA no longer maintains the best power rates for major electricity users.

"We have felt for some time that TVA is not as competitive as it should be and any increase in rates will obviously make TVA less competitive," said John Van Mol, a staff director for the Tennessee Valley Industrial Committee, which represents the major manufacturers served directly by TVA.

Manufacturers served through TVA distributors also worry that TVA industrial rates have risen faster than many neighboring utilities.

"TVA on the industrial side is only in the mid-range of rates among utilities and they should be better than that as a public utility," said Donald Huffman, executive director for the Associated Valley Industries, a Chattanooga-based group that advocates for industrial and commercial businesses served through TVA distributors. "TVA rates have gone up faster in the valley than most other utilities have outside the valley."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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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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