Spring has arrived with warmer temperatures, but consumers are still paying the price for the cold winter storms in February that boosted both energy use and fuel prices.
The Tennessee Valley Authority will raise its monthly fuel cost adjustment in April by nearly a third - the biggest monthly percentage change since the federal utility began adjusting part of its rates each month to reflect the price of its fuel. TVA spokesman Scott Brooks said TVA is catching up for higher fuel costs incurred during the extreme temperatures in February and the rising price of natural gas over the past year since the price of natural gas fell to the lowest price in decades last April after the pandemic shut down much of the global economy.
TVA's fuel cost adjustment will jump 32.6% next month for residential and commercial customers, boosting the average price of electricity for EPB customers by 4.9%. TVA has not raised its base rates for power in the past two years and has granted credits to its local power companies during the pandemic that have offset the rise in fuel costs, although not all TVA distributors have passed along the credits to their consumers.
Despite the April fuel-cost increase, TVA's overall wholesale power rates charged to the municipalities and power coops that distribute its power will still be lower next month than they were a year earlier, Brooks said. While some distributors have used the credits to lower electricity prices, EPB has used TVA's credits to offset its own higher operating expenses, including some of the $35 million EPB spent to repair broken power lines from the April 2020 tornadoes.
The typical Chattanooga household that uses 1,296 kilowatthours of electricity will pay EPB $6.83 more for electricity in April than in the current month due to the higher fuel cost adjustments, EPB spokeswoman Scottie Summerlin said.
Weather, economy hike prices
Brooks said natural gas prices are up 24% from the three-year average gas rate after winter storms limited some production this winter and the cold weather and improving economy continues to boost demand for fuels.
Gasoline prices in Chattanooga are up 68.9 cents per gallon from a year ago to the highest mid-March level in seven years, according to GasBuddy.com surveys of 170 local service stations. Patrick De Haan, a petroleum analyst for GasBuddy.com, predicts the U.S. average price of gas will reach $3 a gallon in April, primarily due to higher demand for fuel as more motorists hit the road again as the pandemic eases and the economy improves.
Energy prices sunk a year ago when the pandemic limited travel and business and demand for fuel and electricity declined. But prices are rebounding as fuel demand returns.
"The overall system average fuel rate for April is approximately 17% higher than the three-year average April fuel cost," Brooks said. "Natural gas pricing expectations in April are 24% higher than the three-year average gas rate."
The U.S. Energy Information Administration predicts natural gas spot prices will rise by more than 32% this year over 2020 levels.
Even with next month's increase, however, TVA's fuel costs are still 27% below the all-time peak reached during the 2014 polar vortex.
BY THE NUMBERS
• $145.18 — Average electric bill in April, 2021 for typical EPB residential customer• $136.90 - Average electric bill a year ago for typical EPB residential customer using 1,296 kilowatthours• $154.49 - Average electric bill for April, 2014 for typical Chattanooga household• $138.35 - Average electric bill for the current month for typical Chattanooga householdSource: EPB. Bills reflect average consumption of electricity of 1,296 kilowatthours for residential customer.
Price of reliability
Although more expensive, TVA avoided the power outages suffered in Texas during the February winter storms.
"The actions taken by TVA employees across the valley maintained the reliability of the TVA electric system and saved customers across the valley tens of millions of dollars relative to what they would have otherwise paid in fuel costs," Brooks said. "While customers in Texas and the Midwest are facing residential bills of thousands of dollars from the February weather, residential bills in the TVA service area are expected to increase by an average amount equal to a couple cups of coffee over the next several months."
The federal government is also providing more assistance for rental and utility payments to those hurt by the pandemic. Last year, Congress agreed to provide an extra $50 million to boost the Low Income Home Energy Assistance Program funding to a total of $3.74 billion.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.