Tennessee Valley Authority headquarters and TVA logoKNOXVILLE – Electricity rates in the Tennessee Valley will rise 1.5 percent in October under a budget plan adopted today by the Tennessee Valley Authority.
TVA directors voted to boost TVA’s base wholesale rates to generate an extra $200 million in fiscal 2016. The increase, which is the same percentage amount as the utility has implemented in the past two years, will raise the average residential power bill about $1.50 per month for the 9 million people who live in TVA’s 7-state region.
TVA CEO Bill Johnson, who has worked to hold down the rate increases by cutting $500 million of operating and maintenance costs from the utility’s budget, said the new budget “reflects our continuing efforts to reduce our O&M spending while investing in our power system to modernize and diversify our generating fleet with cleaner and more efficient technology.”
The rate increase is part of an $10.7 billion spending plan adopted by the board today. The new budget anticipates the addition of the Watts Bar Unit 2 near Spring City, Tenn., which Johnson said is now 99 percent complete and should come on line by the end of 2015.
Since he became TVA CEO in 2013, Johnson said TVA has moved toward “smaller and more predictable rate increases” rather than less frequent but bigger rate increases TVA often had in the past.
Due to lower fuel costs in the past year, the 1.5 percent base rate increase adopted by TVA a year ago has been more than offset by lower fuel cost adjustments.
“Lower O&M costs, lower fuel costs and higher revenues have enabled us to fund some capital improvements (for major maintenance and equipment upgrades at exisitng power plants) without adding to long-term debt,” Johnson said.
Read more in tomorrow’s Times Free Press.