Higher fuel costs push up TVA electric rates in April

Higher fuel costs push up TVA electric rates in April

March 26th, 2014 by Dave Flessner in Business Around the Region

Spillways at Chickamauga Dam create a spray on the supports as gulls circle looking for food.

Photo by Tim Barber /Times Free Press.


• $155.56 -- Average electric bill in April for typical residential customer in Chattanooga

• $142.28 - Average electric bill a year ago for typical Chattanooga household

• $154.49 - Average electric bill for April for typical Chattanooga household

• $155.45 - Average electric bill this month for typical Chattanooga household

Spring has arrived with warmer temperatures, but consumers are still paying the price for the cold winter.

The Tennessee Valley Authority will boost its monthly fuel cost adjustment in April as the federal utility catches up for higher fuel costs incurred during the extreme temperatures in January and continued colder than expected weather in February.

TVA fuel costs will boost the average electricity rate in Chattanooga by 0.6 percent next month from the current rate, according to EPB. April electricity rates in Chattanooga will be 9.3 percent higher than a year ago.

The increases are due to fuel costs that are up 23.5 percent from a year ago, TVA said. Although TVA fuel rates were similar to a year ago during the coldest weather in January, TVA is making up higher-priced fuel and purchase power expenses during the subfreezing temperatures at the start of the year with higher fuel cost adjustments this spring.

"The increased sales during that period caused TVA to rely on higher-cost generating sources like fuel oil, natural gas and purchased power," TVA spokesman Scott Brooks said.

Consumers who heat with electric furnaces have already paid electric bills averaging 15 to 30 percent more than last winter in the Tennessee Valley due to colder weather even though fuel cost adjustments hadn't yet pushed up rates in January.

Three of TVA's all-time top five days for electricity use were in January 2014 (Jan. 7, Jan. 6, and Jan 28) -- the coldest January in TVA's 7-state region in nearly three decades.

Larry Watson, who rents a one-bedroom apartment in Red Bank, had to pay an electric bill more than $100 last month following an even bigger bill in January.

"That's a lot higher than normal, but you've got to keep warm in the winter," he said. "Nobody wants to pay a higher light bill and is sure hate to see rates go any higher, but there's not much I can do about it."

The monthly fuel cost adjustment, which comprises about a third of the typical residential electricity bill, has skyrocketed since January with the biggest increases since TVA began imposing the monthly fuel cost adjustments eight years ago.

Despite a boom in U.S. energy production, the U.S. Energy Information Administration estimates that average costs for heating a home with propane will likely be 54 percent higher for this winter (October 2013 through March 2014) than a year ago.

The average U.S. tab for heating homes with natural gas is projected to jump 10 percent this year to $663 while the cost for using oil will rise 7 percent o $2,243. Electricity costs during the winter, on average, are up 5 percent this year to $934.

"Persistently cold weather east of the Rocky Mountains drove up demand for all heating fuels, depleted inventories and put upward pressure on prices," EIA said in a recent winter assessment of winter heating bills.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340