TVA raising electricity rates nearly 3%

TVA raising electricity rates nearly 3%

November 15th, 2011 by Dave Flessner in Business Around the Region

The TVA headquarters building is located in downtown Chattanooga.

Photo by Angela Lewis/Times Free Press.

POLL: Are you worried about being able to pay your heating bill?

DeWayne Smith, who lives near the foot of Signal Mountain, kept his furnace off last month to hold down his monthly electricity bill to $89.56.

With winter on the way, Smith isn't sure how he can cope with colder temperatures and higher power rates coming from the Tennessee Valley Authority.

"I can't hardly pay my bill as it is now, and I don't know what I'll do if rates get any higher," the 45-year-old disabled worker said Monday while paying his monthly EPB bill. "I'm going to be hurtin' real bad next month. Last year, my winter bills went up to over $200 a month, and I just don't have that kind of money."

Just in time for the arrival of winter in December, TVA announced Monday that wholesale power rates will rise 2.8 percent in December because of higher fuel and purchased power costs brought about by a projected 16 percent increase in electricity usage next month over the current month.

After three months of declining fuel cost adjustments, TVA said the monthly fuel cost adjustment will boost bills across its seven-state region next month anywhere from $1.50 to $3.50 for most residential power users.

For the typical Chattanooga household, the rate change will add $3.08 to the average residential customer who uses 1,446 kilowatt-hours a month, EPB Chief Financial Officer Greg Eaves said.

TVA adjusts its rates each month according to the projected cost of fuel and purchased power. During periods of higher power demand, TVA must spend more to either buy power from other suppliers on the grid or crank up more of its own, less-efficient gas turbines or older coal-fired units.

"We're expecting power sales to be up 16 percent in December over November [because of cooler weather] and at least half of that increase is likely to come from purchased power which is usually more expensive than our own power generation," TVA spokesman Scott Brooks said.

TVA power rates are still below the U.S. average, ranking below 58 percent of other U.S. utilities, according to the latest TVA rate comparison. But the federal utility is no longer among the lowest 25 percent of utilities for the price of its power, which TVA President Tom Kilgore said last month "is unacceptable."

The TVA board will meet in Starkville, Miss., Thursday and is expected to discuss ways to help TVA regain its historic price advantage over other utilities, Brooks said.

In the meantime, home-owners with fixed incomes worry about how they will cope with higher power costs.

Katherine Schropshire, an Alton Park homeowner who lives on disability income, paid her $170 power bill Monday but worries about how she will absorb higher bills this winter.

"When you are on a fixed income and you've got medical bills and other expenses, it's really hard when your power bill gets more expensive," she said.

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