Jan 5 - McClatchy-Tribune Regional News - Dave Flessner Chattanooga Times/Free Press, Tenn.

The Tennessee Valley Authority was created to help bring cheap electric power and faster economic growth to an impoverished portion of Appalachia during the Great Depression.

But nearly 75 years after its founding, TVA now is eager to slow its growth, particularly in the amount of electricity it has to generate during times of peak demand. By April, utility officials expect to adopt a new conservation plan to help limit the growth of electricity consumption in the region and to reshape the valley's energy load away from peak periods.

"We all need to start thinking more about how we use electricity and how we can use it more efficiently," said Joe Hoagland, TVA's new vice president of energy efficiency and demand response.

The federal utility is spending $22 million in this fiscal year and recently hired the PA Consulting Group to help develop new pricing schedules, consumer education and energy audits to encourage electric users to limit power usage during hot summertime afternoons or cold winter mornings.

TVA's distributor in Chattanooga, EPB, already provides free energy audits to several hundred homes and businesses a year, according to Judy Burnett, EPB's manager of economic development.

"The greenest kilowatt is the kilowatt that is never used," she said.

Environmental leaders who long have complained about the lack of conservation incentives by TVA say they are encouraged by the change. But they want to see more done quickly.

"At long last, we are starting to see the ship of TVA begin to turn," said Stephen Smith, executive director of the Southern Alliance for Clean Energy. "While we are frustrated it has taken so long to come to this point, I think TVA is finally getting the message."

Murray Hills resident Rachael Summers recently got her home reviewed by EPB engineering technician Roy Sapp, who recommended a variety of ways to seal windows and doors, connect and clean air ducts and insulate walls and attics.

Ms. Summers said she requested the energy audit after one of her monthly heating bills jumped to $380 last winter.

"My bills were outrageous, but the audit was very helpful," she said.

In the 1970s and '80s, TVA helped pay for more than 1 million such home energy audits across its seven-state service region. But most such audits, along with low-interest loans for conservation investments, were abandoned by TVA and its distributors in the 1990s.

But as the cost of new power is rising, Dr. Hoagland said, TVA wants again to encourage customers to limit the growth of electricity consumption. Although TVA's conservation plan still is taking shape, Dr. Hoagland believes it could end up being the most ambitious attempt ever by TVA to encourage energy efficiency.

Mr. Smith said utilities with the best conservation practices typically spend 1 percent of their annual revenues on such programs, which would require TVA to boost its current conservation budget more than four-fold. Mr. Smith also objected to the lack of any specific commitment by TVA to generate more of its power from renewable sources.

"On efficiency, TVA is about at their own 20-yard line beginning to move down the field," he said. "But with regard to renewable fuels, TVA seems stuck on its own 5-yard line."

VALLEY OF CONSUMPTION

With residential electricity priced 25 percent below the national average in the Tennessee Valley, the average Tennessee household uses 40 percent more electric power than the rest of the nation, according to the most recent data from the U.S. Energy Information Administration.

Last year, the typical household in the Tennessee Valley used more than twice as much electricity as the average home owner in California, where the state has adopted more conservation incentives.

But Dr. Hoagland said Californians also have been encouraged to use less power by higher rates and more frequent power interruptions.

"In California, prices are high and the lights go out," he said. "I don't think we want that for the valley."

Dr. Hoagland said the Tennessee Valley doesn't have as much wind and solar power as many areas of the nation, and the utility is turning to what it says is clean nuclear power for more generation without contributing to global warming.

In its strategic plan adopted in May, TVA set a goal of cutting the growth of its electricity peak demand by 1,200 megawatts -- the equivalent of a reactor at the Sequoyah Nuclear Plant -- within the next five years through its new conservation efforts.

TVA's peak loads have been growing nearly 2 percent a year. During last summer's August heat wave, TVA reached its 13 highest all-time records for electricity consumption in the valley.

Dr. Hoagland said the conservation efforts may limit some TVA power sales, but they also should reduce the amount of expensive energy TVA must buy or generate during peak periods. At the peak, TVA often pays four or five times its normal costs for additional power.

Pricing power

Unlike most other power generators, TVA does not price its electricity to reflect such cost differences, however.

Since 1993, TVA has used an "end-use" pricing plan that charges distributors strictly based upon the total amount of kilowatthours of electricity they consume in a month.

"As consumers, we have to change our behavior, and we've got to have a reason to change our behavior," Dr. Hoagland said. "We need to begin to send the right signals to our customers, because the way we bill folks over the years they have had no way to see that electricity costs more at the peak."

TVA is negotiating with its distributors to alter its end-use pricing schedule, but officials for the utility and the distributors trade group, the Tennessee Valley Public Power Association, said such a change isn't likely before 2009.

Ultimately, consumer rates are likely to be priced based upon the time of day power is consumed. Such a pricing mechanism would encourage electric users to employ more programmable thermostats and water heaters to shift more of their power load away from peak times of the day. But to fully implement time-of-day pricing, consumers will need smarter electricity meters than those now at most homes.

Back to the future

In the 1970s under former TVA Chairman S. David Freeman, TVA required its distributors to offer low-interest loans for energy-efficient appliances and encouraged many to install radio-controlled devices on electric furnaces and water heaters to be remotely controlled to shut off during peak demand periods.

Some distributors objected to having to bear the expense of a program that cut their profit margins, but Dr. Hoagland said TVA is approaching its distributors about its newest conservation effort in a different manner.

"We're not trying to shove this down anyone's throats," he said. "It's a much more collaborative process than it was back then, and we're working much more hand-in-hand with our distributors."

Ron Hutchins, president of the North Georgia Electric Membership Corp. and a member of the public power association's rates and contracts committee, said distributors recognize the need to encourage more energy efficiency.

"We still have some negotiation to do with TVA," he said. "We all want a fair system, and some changes are probably going to be made."

In the meantime, TVA is offering self online audits on its Internet site (www.tva.com) and many distributors conduct in-person audits for businesses and new homes.

"By 2009, we hope to offer residential audits again across the valley, and in the current year we are planning to have some these audits with some selected distributors to test out the programs," Dr. Hoagland said.

E-mail Dave Flessner at dflessner@timesfreepress.com