Power prices and consumption rose this spring across the Tennessee Valley as warmer temperatures and increased economic activity boosted electricity use despite higher prices for that power.
The Tennessee Valley Authority said Tuesday its average delivered price of power increased nearly 11% in the past year due to the jump in natural gas and coal prices.
Combined with a 7% rise in electricity usage due largely to warmer weather this spring, consumers were hit with double-digit increases in their electric bills during the second quarter and continue to pay even higher bills this summer.
For the typical residential EPB customer in Chattanooga that uses 1,295 kilowatt-hours of electricity a month, the higher fuel cost adjustment next month will boost his or her August power bill to $159.36, or $9.39 more than what he or she paid in July and $32.80 more than what was paid for the same amount of electricity a year ago.
"We understand the impact that rising fuel costs and high energy demand can have on our customers," TVA President Jeff Lyash said in a statement Tuesday. "However, our customers are seeing far less cost impact than the rest of the nation."
TVA's average 10.9% increase in prices for electricity is still below the 13.7% nationwide increase in electricity prices in the past year, according to the U.S. Bureau of Labor Statistics report for June. The BLS said the increase in electricity prices in the past year was the highest 12-month rise since April 2006.
Natural gas (piped utility gas) prices increased 38.4 percent over the 12 months ended June 2022, the largest increase since October 2005, according to BLS.
TVA is better positioned than most utilities because over 60% of its generation comes from nuclear, hydro, solar and wind with low or even no fuel cost compared with natural gas or coal-fired generation or purchased power. Lyash said TVA overall power rates remain among the lowest quartile among the 100 biggest U.S. electric utilities.
Although TVA's base rates have remained flat, the price of delivered power by TVA has jumped by the biggest amount in more than a decade over the past year. TVA adjusts its power prices each month with its fuel cost allowance to reflect the expenses for fuel TVA uses to generate electricity.
In 2019, TVA pledged to hold its base rates constant through at least 2029 with rate fluctuations only based upon the cost of fuel needed to generate its electricity. Although fuel prices have jumped and inflation has pushed up other costs for TVA, Lyash said in an earnings call Tuesday that he expects TVA can hold its base rates constant in the coming fiscal year and he is working to maintain the long-term price freeze.
"Three years ago, TVA communicated to our customers that our objective was to hold base rates flat for a decade," Lyash said during an earnings call on Tuesday. "Three years in, we have done that and we're optimistic about our ability to continue even as we invest in maintaining and building our generation portfolio."
In June, TVA experienced a record six days with power peak demands above 30,000 megawatts, including the highest peak usage ever for June. TVA said most of the increase was due to warmer temperatures this spring, which boosted air conditioning usage with the number of cooling degree days up by 37%.
But TVA also said industrial and commercial demand for power was up due to the stronger economy. In the first nine months of the current fiscal year, TVA attracted $9.6 billion of new capital investment and 57,200 new jobs in its 7-state region.
"This is shaping up to be one of our best years for economic development," Lyash said.
Over the past nine months, power sales were up 3%, TVA said.
Despite the growth in sales, net income for TVA in the three months ended June 30 was down nearly 5% from a year ago and net income in the first nine months of TVA's fiscal year was cut nearly in half.
TVA reported net income of $256 million on sales of $2.97 billion in the most recent quarter, compared to the $269 million earned on $2.53 billion in sales the previous year. For the nine months ended June 30, TVA had net income of $476 million on sales of $8.44 billion, compared to the $909 million earned on sales of $7.4 billion in the previous year.
Contact Dave Flessner at email@example.com or at 423-757-6340. Follow on Twitter at @dflesssner1.