Abundant rains and cheaper natural gas this summer will cut the fuel cost portion of consumer electric bills next month to their lowest level in more than two years.
The typical Chattanooga homeowner should save $4.42 on his or her September power bill compared to this month, thanks to Mother Nature and a favorable gas market.
"The overall system average fuel rate for September is approximately 15 percent lower than the three-year average September fuel cost," TVA spokesman Scott Fiedler said. "This is primarily due to expectations for higher hydro generation and lower gas rates in September."
Rainfall in July was 12 percent above normal, boosting runoff into TVA reservoirs by 16 percent more than normal.
"We're also benefiting from historic low natural gas prices and and hope they continue," said Doug Peters, president of the Tennessee Valley Public Power Association, the Chattanooga-based trade group that represents the 155 municipalities and power coops that sell TVA power.
TVA board to vote on rate hike
The power savings from the latest fuel cost adjustment will likely be short lived. On Wednesday, the Tennessee Valley Authority board is expected to approve another 1.5 percent annual increase in its wholesale base power rates for the fiscal year that begins Oct. 1, offsetting the fuel cost savings for most consumers by this fall.
Overall, TVA has kept the price of its electricity relatively flat over the past five years with cheaper fuel offsetting the 1.5 percent base rate increases adopted by TVA in each of the past six years.
The yearly base rate increases were part of TVA' long-range plan to shore up its balance sheet while the utility was finishing the last of its nuclear reactors, building new gas generation and repairing old coal plants. As part of its plan, TVA has cut its workforce to the lowest level in a half century and reduced its annual operating and maintenance expenses by more than $600 million from where they were five years ago.
With most its capital projects now complete — and with favorable weather this year — TVA is on pace this year to earn more than the record $1.2 billion it earned in 2016 to achieve its biggest profits in the utility's 85-year history.
As a result, the local power companies that distribute TVA power across the 7-state region are eager for TVA to call a halt to its yearly increases in base rates.
"We hope at this point that TVA is at the end of its projected need for these annual rate increases," Peters said. "We think with the rate increases TVA has had, plus this new one, we think that should be enough to get TVA where it wants to be, barring some unexpected catastrophic event."
According to EPB, the average Chattanooga household that uses 1,295 kilowatt hours of electricity will pay $137.24 for power in September, compared with a bill of $140.31 for that much power this month.
Power costs in Chattanooga were still cheaper a year ago when the typical household paid $135.89 for 1,295 kilowatt hours of electricity in September 2017.
Chattanooga Gas seeks rate hike
Although natural gas prices have gotten cheaper, the supplier of natural gas for Chattanooga homes and businesses — Chattanooga Gas Co. — was in Nashville Monday before the Tennessee Public Utilities Commission asking for a rate increase.
Chattanooga Gas, a subsidiary of Southern Co., is seeking its first base rate increase in natural gas rates in eight years and has requested state regulators to approve a $6.2 million rate increase the company says will boost the typical residential gas rate by about 16 percent.
The gas utility says the increase is needed to keep pace with rising capital costs and inflation since the last base rate increase eight years ago. Even with the proposed based rate increase, the delivered price of natural gas for most consumers will still be less than at the last rate increase due to the drop in the commodity cost of natural gas, which flows through to customers on the fuel adjustments to their bills.
On Monday, the Tennessee Public Utility Commission heard arguments from the company for the rate increase and challenges to the proposal by Tennessee's Office of Consumer Advocate. The Nashville rate hearing is scheduled to continue today.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340