TVA electric rate hike predicted

By Evan Belanger, The Decatur Daily, Ala.

Local utility providers are bracing for another rate increase from the Tennessee Valley Authority, a move likely to increase electric bills for residential and commercial customers across the region.

Athens Utilities General Manager Gary Scroggins and Decatur Utilities spokesman
Joe Holmes both said Tuesday that TVA has advised they should expect an increase in the wholesale electric rate TVA charges utility providers.

The new rate would take effect Oct. 1 with the start of TVA's 2017 fiscal year. The exact amount of the increase was unclear.

"They have indicated it will be in line with the adjustments of the past couple of years," Scroggins said.

TVA's last rate increase, which impacted fiscal 2016, was 1.5 percent, leading to an average wholesale rate of about 6.5 cents per kilowatt hour, according TVA.

The last time TVA's board of directors did not increase the wholesale rate was in fiscal 2013, which started Oct. 1, 2012.

TVA spokesman
Jim Hopson said the board will set the rate for the upcoming fiscal year during its meeting in August and that no decisions have been finalized.

"We are always talking to our local power companies," he said. "I can't speculate on what the board will do."

In Athens, Scroggins said any rate increase would be passed along to customers.

The Athens City Council on Monday adopted a utility department budget that projected spending on TVA electricity would climb from $85.9 million to $86.7 million in the coming fiscal year -- an increase attributed to the anticipated TVA rate hike and increased usage due to a growing customer base.

In Decatur, Holmes said it was too soon to tell whether the increase would be passed along to customers.

While a wholesale rate increase would likely increase power bills for retail customers across the region, other factors play a role.

That's because TVA adjusts its rates monthly based on its cost for producing electricity.

For example, in May rainfall was 22 percent below normal, causing a decline in hydroelectric power production, TVA's cheapest source of energy.

As a result, TVA increased its wholesale rate in June -- the adjustment lags two months behind -- by 1.837 cents per kilowatt hour as it was forced to make up the difference with more expensive coal and natural gas power.

In another example, Hopson said TVA projects its nuclear capacity will climb to about 38 percent of demand when a second nuclear reactor at the Watts Bar Nuclear Generating Station in Tennessee comes online later this year.

That could reduce fuel costs, he said, noting that the rate structure is designed to give consumers the lowest possible rate when fuel costs are low.

In both Athens and Decatur, the utility providers automatically pass the fuel cost fluctuations along to customers in their retail rates.

TVA also charges different rates depending on the season, charging a greater rate in the summer and winter months, when demand peaks. TVA serves 154 utility providers across Tennessee and portions of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

evan.belanger@decaturdaily.com or 256-340-2439. Twitter @evanbelanger.

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