Houston (Platts)--14Feb2014/333 pm EST/2033 GMT

The Tennessee Valley Authority will increase its wholesale fuel cost by 23.25% in March, a TVA spokesman said Friday.

For the billing period beginning March 1, the total monthly fuel cost will be 2.688 cents/kWh, up from 2.181 cents/kWh in February, spokesman Scott Brooks said.

"The increase from February is due mainly to higher demand from a record cold January," Brooks said.

TVA reached a new winter demand record of 33,345 MW on the morning of January 24 with temperatures averaging about 7 degrees across the region, according to a TVA news release. The previous record was 32,572 MW on January 16, 2009 when temperatures averaged 9 degrees.

This March's rate will be more than 31.25% higher than the March 2013 monthly fuel cost of 2.047 cents/kWh.

The total monthly fuel cost is what TVA uses to recover the costs of the fuel it utilizes to generate electricity -- such as coal and natural gas. It is variable and calculated monthly as generation fuel costs and purchased power costs from other suppliers rise and fall. The fuel cost makes up one-third of the overall wholesale rate.

TVA charges wholesale prices to the 155 local power companies that, in turn, provide power to 9 million people in parts of seven southeastern US states.

--Kassia Micek, kassia.micek@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com

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