Rainy weather, mild economy help cut TVA rates for Chattanooga region

Rainy weather, mild economy help cut TVA rates for Chattanooga region

July 16th, 2013 by Dave Flessner in Business Around the Region

Tennessee Valley Authority headquarters and TVA logo

Photo by Miranda Harple

With summertime temperatures heating up after a mild and wet spring, Tennessee Valley consumers won't have to sweat quite so much when they pay their monthly air conditioning bills in August.

That's because TVA is cutting what it charges for electricity again next month because of another drop in its fuel costs. The decline in TVA's August fuel cost adjustment will trim the typical residential power bill by only about 28 cents compared with what consumers would pay for the same amount of power this month. But compared to a year ago, August power bills will be 3 percent lower, saving a typical EPB customer that uses 1,461 kilowatt-hours an extra dollar next month, EPB spokesman John Pless said.

EPB estimates the typical homeowner using the average power level will pay a monthly power bill of $145.16 in August.

With above-average rain swelling TVA reservoirs and mild temperatures and economic growth limiting power demand, fuel costs for the Tennessee Valley Authority are cheaper this summer than they have been in at least four years.

"The good news is that fuel costs are down and that should save on consumer bills," said Donald Hoffman, executive director of the Chattanooga-based Associated Valley Industries, a trade group for industrial and major commercial power users served by TVA distributors. "The bad news is that part of the reason fuel costs are down is because TVA is selling less power and that isn't necessarily good for TVA."

In the first half of fiscal 2013, TVA sales to directly served industrial clients was down by more than 8 percent compared with a year ago.

But TVA is picking up some help from Mother Nature this year. In Chattanooga, rainfall so far this year is more than 17 inches above normal, according to the National Weather Service office in Morristown, Tenn.

As a result, hydroelectricity generation from TVA's 29 power-generating dams on the Tennessee River and its tributaries -- the cheapest source of power for the federal utility -- is 43 percent above normal so far this year.

Natural gas prices also remain relatively low, making gas-generated power and most of TVA's purchased power much cheaper.

The decline won't necessarily help TVA's competitive posture among electricity providers in the Southeast, however.

The decline in TVA's fuel costs is shared by most of its neighbors, Hoffman said, "so TVA's relative rates remain slightly above most of its neighboring utilities."

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