Thursday, August 12, 2010
TVA focuses on working together for economic growth
By SUE WATSON
New general manager of customer services, Tim Weston, on board at TVA in Tupelo, and customer service representative Dawn Best met with city elected officials to strengthen communication links in advance of any new economic developments.
Weston said the Tennessee Valley Authority is ready to work on any economic development projects and to work with distributors like Holly Springs Utility Department to attract investors to the city.
TVA faces the same challenges any other power industry faces in the nation - rates and capacity overall, he said. There is a general push in the industry nationwide to increase capacity.
He said he hopes citizens will also use electric power wisely to reduce their bills.
Power costs TVA more in high demand seasons of summer and winter and less in spring and fall, he said. When TVA has to buy extra capacity to meet peak seasonal demands, that causes a fuel cost adjustment (FCA) increase to its distributors that is passed through directly to its customers when fuel prices go up.
“Fuel such as natural gas and diesel may also cost more during high-demand seasons,” Weston said. “TVA uses a fuel cost adjustment to meet those costs and that is passed directly to customers through its distributors.”
As economic activity picks up, TVA will continue its long history of working with the City of Holly Springs and the State of Mississippi, he said.
Alderman Garrie Calhoun asked if the FCA will ever stop showing up monthly on the customer’s bill.
Weston explained that the FCA was instituted in 2006 in response to the increase in fuel costs; and the adjustment, which can increase in any month or decrease, is passed directly to the customer to avoid an increase in utility rates per se.
The monthly adjustment tends to follow the cost of fuel in general and affects customers like going to the gas pump does. Sometimes it’s up and sometimes it’s down, he said.
“The message I would drive home to you is to try to reduce your energy use,” Weston said. “Whether and how people use electricity is what raises their bill.”
A separate interview with TVA spokeperson Scott Brooks brought out some facts and figures that may help consumers understand what is going on with electricity bills.
The typical fuel cost adjustment comes in tenths of a cent per kilowatt hour that is added to the consumer’s bill, he said. In July the FCA was reset to 0.403 cents per kilowatt - less than half a penny per kilowatt.
A residential customer who uses 500 kilowatts in July would pay about $2 more in FCA for the month.
The FCA was instituted in October 2006, not so much to keep up with the cost of gasoline, but to keep up with rising costs of natural gas or other fuels and power TVA has to buy on the market, Brooks said.
During extra heavy demand such as in summer and winter, it is sometimes cheaper for TVA to buy electricity on the market than to gear up a gas-powered turbine, he said.
TVA generates its power from nuclear power plants year round. It operates some coal-fired generators year-round as well and others when needed, and generates power from hydroelectric turbines when water is available and produces power from natural gas-fired generators. Hydroelectric generation provides the cheapest source of electricity and is clean. Some wind and solar power is available but not on the scale as the other sources.
The FCA was once calculated quarterly but TVA moved to a monthly adjustment in order to minimize the swing in FCA rates. FCA rates went down from October 2009 through February 2010 and converted to a positive increase in June.
It is normal for people not to notice fluctuations in their electricity bill when their bill is going down, he said.
Customers got a credit in their FCA from October through February because the FCA was overestimated in months prior to the decrease, Brooks said.
TVA is a public power provider and essentially operates as a non-profit and no tax dollars are spent to subsidize TVA. TVA has no stockholders but has a board of directors appointed by the U.S. president and approved by Congress to oversee the company.
A large cost of generating power comes from spending money to meet government regulations and those of the Environmental Protection Agency, Brooks said.
“It’s a delicate balance between cheaper energy sources and more environmentally friendly sources of energy,” he said.
TVA spent $5.3 billion beginning in 1977 to install emission controls on its coal plants and will be spending about $4 billion more over the next several years.
Brooks said those emission control expenses are passed on to the customer.
TVA does expect economic growth in the Tennessee Valley and helps areas to attract business and people to the area. Large corporate users of electricity buy electricity directly from TVA and therefore avoid the higher rates they would pay if buying power from a distributor like HSUD, for example.
That in itself is an incentive for business and industry to move into the Valley, he said.
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