Small businesses blast TVA's proposed grid access fee

Small businesses blast TVA's proposed grid access fee

Board to vote on rate realignment Thursday

May 9th, 2018 by Dave Flessner in Business Around the Region
Chris Calhoun, owner of The Tap House and The Brew Market, talks against a proposed grid access fee in front of TVA's power headquarters in Chattanooga along with Jon Nessle, left, the arborist and landscape coach, and Lenda Sherrell, right, the state director for the Tennessee Small Business Alliance

Chris Calhoun, owner of The Tap House and...

Photo by Contributed Photo /Times Free Press.

The Tennessee Valley Authority is proposing to add a grid access fee on its wholesale power rates for the first time in a move TVA says will make power bills more stable and better reflect actual expenses without raising overall rates.

But a coalition of small businesses Tuesday objected to the proposed rate restructuring, claiming it unfairly rewards big industrial users at the expense of small businesses and low-energy individual power users.

"This proposal from TVA is a bad deal across the board, continuing preferential treatment for a handful of large industrial customers, while passing the cost along to Tennessee families and small businesses," Lenda Sherrell, state director of the Tennessee Small Business Alliance, said during a news conference Tuesday in front of TVA's power headquarters in Chattanooga.

Over the past five years, TVA rates have declined by an average 2 percent and electric rates in TVA's seven-state region are below those in 70 percent of the country. But the biggest cuts in power rates since Bill Johnson become TVA's CEO in 2013 have been provided to large, direct-served industrial customers which have benefited from incentive plans, off-peak purchases and changes in how fuel costs and interruptible power contracts are priced.

A study by Synapse Energy Economics Inc. found TVA's average rates for industrial and direct-served customers dropped 20 percent from 2011 to 2016 while residential rates rose an average 5 percent.

Consumer and environmental groups claim a proposal the TVA board will vote on Thursday could continue that trend by imposing additional fixed, or grid access charges, to wholesale power rates charged to the 154 municipalities and coops that distribute TVA-generated power.

But in a new web video outlining the proposal, TVA contends that the proposed rate change will not generate any net increase in revenue for TVA since the grid access fee will be offset by lower energy charges per kilowatthour sold. The changes will help reduce the variability of bills by raising the fixed costs for the typical user by about a half cent per kilowatthour, while cutting the energy use charge by a comparable amount.

Johnson said TVA developed the rate change over the past year working with its local power companies and he said the change should help reduce some of the winter and summertime spikes in power bills during severe weather months and help to better reflect a portion of the fixed costs TVA incurs to maintain its generation and transmission assets to serve its customers.

"Our rates remain very competitive and this change will not increase our overall charges," Johnson said.

But Jon Nessle, the owner of a landscaping business in Chattanooga, said he opposes any change that will tend to benefit major industry at the expense of small businesses and homeowners like him.

"I hope that TVA recognizes the importance of providing a level playing field to the hundreds of thousands of small businesses throughout their territory," he said.

Nessle said he wasn't sure that the changes would end up costing him, but he objected to any continuation of the rate advantages afforded to major energy users and industry over small businesses and individuals with a grid access fee. Once established, Nessle said such a fee could be raised in the future to shift even more costs from big users to those who use less energy.

Chris Calhoun, owner of The Tap House and The Brew Market, said TVA's proposed rate realignment "is completely off the mark and unfair, missing the fact that small businesses are the ones truly making an economic difference in Tennessee."

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