TVA rate increase hits Oct. 1


Thursday, September 4, 2008
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TVA rate increase hits Oct. 1

By SUE WATSON
Staff Writer

The Tennessee Valley Authority has announced a rate increase that will affect Holly Springs Utility Department customers effective October 1, according to HSUD manager John Collins.

The increase is solely from TVA, and HSUD is not adding a rate increase of its own to the one TVA is imposing, he said. The TVA increase includes a rate increase and a fuel cost adjustment, that combined will mean most HSUD customers will see $11.20 more added to their bill a month for every 1,000 kilowatt hours (KWH) used.

The rate increase depends on the customer category, he said, and can range from a $12 to $15 increase per 1,000 KWH metered.

An average residential bill for 1,000 KWH consumed in July 2008 that cost $98.98 will go up by $14.62 to $110.60 in October. Residential customers who use 1,250 KWH a month will see their bill increase by $18.28 and those who use 1,500 KWH monthly will pay $21.93 more, Collins said.

General power customers who used 1,000 KWH and paid $103.98 in July will pay $128.48 for the same amount of power beginning October - or an increase in the power bill of $24.50 a month.

TVA, in a press release last week, said cost pressures are stretching its resources and TVA’s 2009 budget includes $12.613 billion to cover operating expenses and $2.088 billion in capital investments. The price of TVA electricity will increase in order to cover increased fuel costs and related expenses.

These factors are forcing a total average increase of 20 percent in the wholesale power rates effective October 1.

Most of the increase, $11.20 per 1,000 KWH, will go toward the escalating costs of fuels used to generate electricity, and reflects the quarterly fuel cost adjustment, TVA said. The quarterly fuel cost adjustment is necessary to cover dramatic increases in the costs of fuels used to generate power, particularly the cost of coal and natural gas.

TVA also must purchase power at times to assure a reliable power supply. Price increases for fuel, including coal and natural gas, and purchased power, are driving TVA’s cost up by more than $2 billion in FY 2009, compared to FY 2008.

In addition, continuing drought conditions mean that TVA has been able to generate only about half as much hydropower - which is cheaper to produce - this year as it would generate in an average year. When TVA cannot generate that hydropower, it must buy replacement power at market prices. Those power prices are much greater than hydropower costs and were even higher this summer, averaging 63 percent higher than last summer.

The remainder of the increase, about $2.05 per 1,000 KWH, is an increase in firm wholesale electric power rates to cover the higher costs in several related areas.

However, an area that is not going up is TVA’s non-fuel operating and maintenance costs, which include labor and administrative costs. TVA is holding these costs essentially flat from 2008 to 2009.

Customers can go to TVA's web site at www.tva.com for tips on how to use energy more efficiently and make energy dollars stretch further.

TVA is the nation’s largest public power provider and is completely self-financing. TVA provides power to large industries and to 159 power distributors - including HSUD - that serve approximately 8.8 million customers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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