Tennessee Valley Authority headquarters and TVA logoThe drop in fuel costs provided a reprieve for electricity users in the Tennessee Valley this year, but it will result in a slight decline in tax-equivalent payments to state and local governments in TVA’s 7-state region in the next year.
TVA said today it expects to make $535 million of in-lieu-of-tax payments to state and local governments in the current fiscal year, down from the $542 million TVA paid to such governments in the past year. Although TVA generated record profits of more than $1 billion for the first time in TVA history during fiscal 2016, revenues were down slightly due to lower fuel costs, which TVA adjusts for in its monthly bills.
TVA raised its base rate by 1.5 percent last year, but cheaper fuel and more energy efficiency measures helped cut the average power bills for consumers.
TVA makes tax equivalent payments to the eight states where it sells electricity or owns generating plants, transmission lines, substations or other power-related assets. In addition, tax equivalent payments are made to 146 municipalities where TVA owns property.
The payments compensate state and local governments that cannot levy property or sales taxes on TVA as a federal entity.