For the second year in a row, the Tennessee Valley Authority is reducing the price of its power through rebates or credits to its customers after cutting its own debt and expenses.
The federal utility announced Thursday that it will provide a special $200 million coronavirus pandemic relief credit in the next year equal to a 2.5% discount on its base electric rates. A year ago, TVA announced plans to try to keep its electric rates stable for the next decade and offered a 3.1% rebate to local power companies that signed long-term contracts with the utility.
TVA President Jeff Lyash said Thursday the credit is intended to help communities and businesses recover more quickly from the ongoing COVID-19 pandemic and reflects the improved performance of TVA.
"The continued impact of this pandemic on our communities is unprecedented and creates continued economic uncertainty," Lyash said. "TVA's team has just been doing an excellent job at constantly looking at ways to lower costs and improve reliability, and they are poised to deliver a tremendous performance year in fiscal 2020 despite the challenges presented by COVID-19."
The virus forced costly changes in how TVA refueled its nuclear reactors and recovered from storm damages and is expected to reduce the agency's power sales this year by $300 million or more and limit sales again in the coming year.
But Lyash said TVA decided to offer the $200 million credit for distributors, plus provide ongoing support for its community matching assistance program and a special back-to-business credit, because of its better-than-expected results this year and its long-term partnerships with most of the municipalities and power co-ops that distribute power in TVA's seven-state region.
With lower borrowing costs and debt reducing interest costs and more rainfall this year boosting cheaper hydroelectric generation, TVA has been able to deliver electricity at prices lower than a decade ago and still maintain adequate reserves to offer the additional credit, Lyash said. Over the past six years, TVA has reduced its annual operating expenses by more than $800 million through cuts in staff, programs and technology, he said.
TVA reported net income of $652 million in the first nine months of the fiscal year while paying down its debt to the lowest level in 30 years, TVA Chief Financial Officer John Thomas said.
The credit for the coming year was welcomed by local power companies, which will determine how the rebates will be spent to either lower prices, offset higher expenses or extend utility cutoff moratoriums adopted by most utilities this spring during the worst of the pandemic-driven economic downturn.
Doug Peters, president of the Tennessee Valley Public Power Association - which represents TVA's 154 distributors - praised TVA's credit and flexible regulations on how the money will be spent.
"We applaud TVA's leadership for easing the financial strain this pandemic has put on TVPPA members by supporting them with the pandemic relief credit," he said. "We further commend TVA for putting decision-making regarding the use of these funds in the hands of local power companies so they can make decisions based on their unique knowledge of their business and community needs."
In Chattanooga, EPB used its rebate last year to begin to pursue building a battery storage or solar farm on the north edge of its service territory. EPB President David Wade said the new TVA credit underscores the value of America's biggest public utility.
"Actions like these set TVA and the public power model apart by demonstrating a clear and responsive commitment to joining local power distributors in putting people and communities first," Wade said.
EPB has suspended power disconnections for non-payment and waived its late fees since March due to the financial hardships caused by the pandemic. EPB matched TVA's donations to also support local efforts to aid those hurt or threatened with being evicted from their homes due to the economic slowdown.
"Throughout this time, we have been working with nonprofit and public partners to identify sources of assistance including special programs that have been put in place to support people in coping with the COVID crisis," EPB Vice President J. Ed. Marston said. "We also partnered with United Way and engaged TVA in a campaign of support for the United Way Restore Hope fund to provide financial assistance for people impacted by the COVID crisis, including many who had never sought help before."
While EPB has suspended power cutoffs, other TVA distributors have or are soon planning to restore power cutoffs for those not paying their power bills.
A coalition of environmental groups wants TVA to act as the regulator of local distributors to suspend any cutoffs of customers. In a petition delivered to TVA this month, dozens of climate-justice organizations asked the agency to impose a moratorium on electricity shutoffs in the region and fund debt relief for its customers.
"In the face of a public health, environmental and economic crisis not seen since the Great Depression, we are calling on TVA to return to its original mission to improve quality of life here in the Tennessee Valley," said Brianna Knisley, Tennessee campaign coordinator with Appalachian Voices. "TVA can and should protect vulnerable communities from power shut-offs."
The petition urges TVA to reallocate its resources to help customers pay their bills and fund equitable economic recovery through clean energy and efficiency programs.
"In the midst of the pandemic, when people are unemployed and without basic needs like power, food, water, and broadband services, TVA has a responsibility to support its customers by instituting a moratorium on utility shut-offs, thus upholding its original mission to serve the people of the Tennessee Valley," said Isabella Killius with Sunrise Tennessee.
Lyash said local power companies, which are governed by locally elected or appointed directors who are closest to each community and its needs, should have the flexibility to best determine how to spend the $200 million credit.
In addition to the pandemic relief credit, TVA is making another $2 million contribution to the Community Care Fund established in April. Similar to the initial contribution, these funds will be matched by local power companies and other community groups to benefit local organizations that assist families and businesses most in need. Earlier this year, similar matched funds ultimately provided more than $4.5 million to nearly 300 groups across the area, TVA Vice President Buddy Eller said.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.