The Tennessee Valley Authority lost ratepayers $645 million over three years while seeking to shield their power bills and the federal utility’s balance sheets from natural gas price spikes, according to a TVA Office of Inspector General audit report released Wednesday.
The nation’s largest public utility buys the fuel to run its natural gas-fired power plants, which supply around a quarter of the electricity it sells to 10 million customers in Tennessee and parts of six other states.
The TVA board of directors in 2021 reinstated a program that allows the company to enter into contracts with a fixed price for natural gas to avoid volatility.
The hedging practice can yield gains if gas prices rise above the contracted rate or losses if they fall below it, leaving TVA customers to pay the difference. The federal utility passes fuel costs directly onto power bills paid by customers of local power companies that buy electricity wholesale from TVA. That group includes EPB in Chattanooga.
(READ MORE: TVA can give employees millions in payouts without full board)