TUPELO, Mississippi — The Tennessee Valley Authority, which raised its wholesale rates last month for the first time in four years, may have more frequent rate hikes in coming years as the federal utility absorbs higher costs and rising power demand from growth in the region and electrification of cars, the TVA board was told Thursday.
“To meet the growing demand we are expecting, we have the highest capital spending plan to build more resources than we have ever had,” TVA Chief Financial Office John Thomas said.
With higher interest rates to borrow money for such expansion and higher wage and supply costs, Thomas said “pressure on power rates continues” and future rate hikes are likely by TVA.
TVA raised its wholesale rates Oct. 1 by 4.5% in its first base rate increase since 2019. A drop in the price of natural gas, which had doubled after the outbreak of the war in Ukraine last year, has offset that increase for most consumers from the fuel cost adjustments added to customer bills to reflect the changing price of fuel used by TVA.
TVA rates remain well below the U.S. average, and TVA President Jeff Lyash said TVA rate increases are likely to be no more, and likely less, than most other electric utilities in coming years.