KNOXVILLE - The Tennessee Valley Authority will boost its base electric rates this fall for the first time in two years, but most consumers may not notice the difference.
TVA directors today approved a $10.5 billion budget for fiscal 2014 that will raise base rates by 1.5 percent on Oct. 1. The increase will boost the monthly electric bill for a typical residential customer about $1.50.
But most of that increase is being offset with lower monthly fuel cost adjustments by TVA, which are projected to lower the average electric bill next month by about 6 percent. Abundant rains this summer have helped reduce TVA's average fuel costs, which are adjusted each month.
"We're being more efficient to find ways to live within our means," TVA President Bill Johnson said in outlining the utility's spending plan for 2014. "But we have to address the hard question of declining revenues."
TVA doesn't expect to get back to the power peaks it reached before the recession for at least another decade, TVA Chairman Bill Sansom said today.
With the sluggish economic recovery and more efficient appliances and machines, TVA's power demand is falling and the utility doesn't expect to get back to its 2006 peak levels until 2024.
"This is is a significant change," Sansom said a board meeting today. "Anybody in business knows that when your sales go down you've got to really work with your costs."
TVA lost its biggest industrial customer in May when the U.S. Enrichment Corp. plant in Padacuh, Ky. shut down.
As a result, TVA expects to sell 4.6 percent less electricity in fiscal 2014 than it did in the past year. The mild weather this year is already cutting electricity sales in 2013 compared with the previous year.
TVA asked for voluntary retirements and resignations earlier this year at some of its coal plants where TVA is cutting operations.
"Our power rates are generally competitive now, but they have trended up in recent years," Johnson said.
TVA will offer some new incentives for industrial customers next year and Johnson said TVA is working to hold down future rate increases.
TVA will continue in the next year to finish a second reactor at its Watts Bar Nuclear Plant and to maintain the option of finishing the Bellefonte Nuclear Plant in Alabama and building new small modular reactors in Oak Ridge. Those investments, along with pollution controls on TVA coal plants, will require TVA to spend about $2 billion in its capital budget next year. That will boost TVA's debt by about $1 billion.
Read more in tomorrow's Times Free Press.