EPB will boost what it charges for electricity in Chattanooga this fall for the first time in eight years.
EPB directors unanimously adopted a $650 million power budget for the next fiscal year that will increase electric rates by an average of 4% starting Oct. 1. The increase in EPB's share of consumers' power charges will add about $5 a month to the average residential EPB customer who uses 1,136 kilowatt-hours of electricity.
"When we adopted our last rate increase in 2015, we thought it would only last for three or four years, but we were able to extend those rates for years longer than expected," EPB President David Wade told the EPB board Friday. "But inflationary pressures and other factors make it necessary to make this decision at this time."
EPB and the other 152 local power companies that distribute Tennessee Valley Authority power have benefited over the past three years from a 2.5% wholesale credit provided under a pandemic relief program adopted three years ago by the TVA board.
TVA is not expected to extend that relief into its next fiscal year, which begins Oct. 1.
TVA, the wholesale power supplier to EPB, has not raised its base power rates since 2019, but the utility has increased its fuel cost charges consistently through the pandemic to raise electricity prices for most Chattanooga power users. In 2022, a jump in the prices of coal and natural gas boosted Chattanooga electricity prices by more than 20% even though TVA and EPB base rates were not changed.
Fuel prices have since moderated, to some extent, and Wade said the delivered cost of power this fall, even with the EPB rate hike, may be comparable with a year ago for many consumers.
But Wade said equipment and labor costs continue to rise. The price of a typical 32-kilovolt transformer purchased by EPB jumped from $1,478 in 2019 to $5,220 this year, Wade said. Price increases and delivery delays have also created challenges for everything from repair vehicles to conduit wiring.
Even with the electric rate increase, Wade said EPB power rates will remain lower than most other electric utilities in the South.
Along with the rate increase, EPB is also petitioning TVA to start a new rate schedule to offer lower electricity prices at night and higher prices during the day to reflect what it pays for power from TVA at different times of the day.
EPB has a limited residential time-of-day pricing option that has about 100 customers, and the new rate schedule would expand that option.
"For residential customers who can shift a substantial portion of their energy consumption to the overnight hours, customers would have the choice to opt in to be charged 3 cents less than the regular base rate per kWh for energy use between 11 p.m. and 5 a.m. and 1 cent more per kWh during all other hours," EPB spokesperson Sophie Moore said in an emailed statement.
The lower rate at night should help electric vehicle owners and encourage them to recharge their vehicles during periods of lower power demand, Moore said.
TVA spokesperson Scott Brooks said about half of TVA's distributors now offer some type of retail seasonal time-of-use rates to their residential customers. About 95% of TVA's largest, direct-served industrial customers take service under a seasonal time-of-use rate structure, he said.
Despite the increase in EPB's electric rates, the utility is not planning an increase in its fiber-optic rates for internet connections in the new fiscal year.
EPB is likely to raise rates for television content provided through its video plans, however, to recover higher content costs from broadcast television stations and other content providers. Those rate increases typically occur in January.