TVA approves largest rate hike in 30 years

Citing cost surges for fuels like coal and natural gas, the Tennessee Valley Authority’s Board approved a rate increase that will push electric bills about 20 percent higher come Oct. 1.

“We recognize that the increased costs TVA is experiencing are also driving up costs for families and businesses,” said TVA President Tom Kilgore. “The last thing we want to do is tell customers that our product is going up in price, but we have no alternative for paying for fuel.”

The increases are passed directly through to members of Middle Tennessee Electric.

“When TVA approves a rate increase, it raises the rates of each member of our cooperative,” said Chris Jones, MTEMC’s vice president of marketing and communications. “We exist solely to serve the members; they are our only revenue source. For each dollar we take in, about 84 cents goes straight back to TVA.”

Most of the increase will go toward the escalating costs of fuels TVA uses to generate electricity, which are covered through TVA’s Fuel Cost Adjustment.

“Across the globe we’re seeing unprecedented increases in the fuels used to generate electricity,” Jones said. “About 50 percent of TVA’s power production is through the burning of coal, and coal is up more than 120 percent over the last two years.

“We understand our members will be frustrated with this. We are frustrated with this, and I’m sure TVA is also. So much of what’s happening – whether its natural gas market price surges or the drought in East Tennessee – is beyond our control.”

Jones said despite the increases, rates for MTEMC members remain about 20 percent lower than other areas of the country.

“And other areas of the country are seeing these same types of rates increases as well,” he said. “No one is immune.”

Posted on August 20, 2008.

 

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