The drop in fuel costs provided a reprieve for electricity users in the Tennessee Valley this year, but it will result in a $7 million decline in tax-equivalent payments to state and local governments in TVA’s 7-state region during the next year.
TVA directors Firday approved the final in-lieu-of-tax payments to states and localities totaling $542 million in the fiscal year ended Sept. 30. The payments are based upon 5 percent of TVA’s total electricity sales and are divided equally in each political jurisdiction based equally upon the level of TVA investments and the amount of TVA power sold in each area.
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 most TVA consumers.
TVA logo tileThe decline in power sales from just over $10.8 billion to under $10.7 billion means the tax-equivalent payments will dip again this year.
TVA tax payments peaked at $579 million in fiscal 2012 but have declined in most years since due to sluggish sales and lower fuel cost adjustments.