The Tennessee Valley Authority is proposing to revamp the way it prices its electricity by adding a grid access charge to monthly power bills each month and cutting the variable price of power.
TVA says the change won't generate any more money overall. But it will increase the fixed portion of what power users pay each month while reducing the per-kilowatt-hour rate.
"We are very focused on keeping rates low for everyone and providing more bill stability over the course of the year," said Cass Larson, TVA's vice president of pricing and contracts "In fact, we cut more than $1.5 billion annually in costs over the past few years to protect consumers and keep power bills as low as feasible for years to come."
In an environmental assessment released Friday, TVA said its preferred choice among three alternatives for the new grid access fee would be to cut the variable charge for power between 0.25 cent and 1 cent per kilowatt-hour and make up for that loss with a fixed charge, probably around 12 percent of most residential power bills.
Local power companies have already increased fixed charges on retail electric bills in the Tennessee Valley by an average of 50 percent in the past seven years, even as overall TVA power costs have dropped by an average of 2 percent over the past five years.
TVA said Friday it is soliciting comments about the proposed rate realignment for the next 30 days. TVA directors are expected to vote on the rate changes at their next board meeting on May 10 in Muscle Shoals, Ala., although the changes won't be fully effective until the fiscal year starting Oct. 1, 2019.
In an 82-page report on the proposed changes, TVA said the revisions "better align wholesale rates with the underlying costs to serve wholesale customers" and will limit what the utility said were overly generous payments for purchases of solar, wind and other self-generated power by customers, known as distributed energy resources.
"TVA's current energy prices over-incentivize consumer installation of distributed energy resources, leading to uneconomic results for the people of the Valley as a whole," TVA said in its environmental assessment published Friday. "Over the next decade, forecasted load is expected to be flat or declining, resulting in little need for new energy sources."
While energy consumption is declining, generation of electricity by consumers put on the power grid continues to rise as more businesses and home owners install solar panels, windmills or battery systems for power generation.
"The imbalance created by uneconomic distributed energy resources [like wind and solar] investment means that costs are shifted to consumers throughout the Valley who do not invest in distributed energy resources," TVA said.
TVA estimates 70 percent of its costs are fixed because the utility has to maintain generation capacity and transmission networks to deliver power on demand at any time, even if users aren't using any power at that time.
But environmental critics complain that shifting more of the fixed costs of TVA's power costs on to customers could discourage energy conservation and the development of solar, wind and other renewable, clean energy sources in the Tennessee Valley.
"Increasing mandatory fees means that customers are forced to pay a higher fixed amount every month, even before they flip on a light switch, and they lose the freedom to control their monthly bills through the use of energy efficiency and solar power," said Stephen Smith, executive director for the Southern Alliance for Clean Energy. "TVA has never had a grid access charge for wholesale power in its history and it makes no sense to add one now."
Smith said TVA, once a leader in promoting solar power, is now lagging neighboring utilities in North Carolina, Georgia and Florida in solar power generation.
TVA will accept comments on the changes via email or mail to Matthew Higdon at mshigdon@tva.gov or 400 West Summit Hill Drive, WT 11D, Knoxville, TN, 37902.