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

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

August 15th, 2011 by Dave Flessner in Local - Breaking News

The TVA headquarters building is located in downtown Chattanooga.

Photo by Angela Lewis/Times Free Press.

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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