MTEMC Board adds nothing to TVA rate hike, final impact around 15% to members

There will be no rate increase beyond TVA's rate hike for members of Middle Tennessee Electric.

MTEMC's Board of Directors voted yesterday to simply pass through TVA’s rate increase to its members, but chose to add nothing for itself. TVA recently announced a 20-percent increase to wholesale rates. When that filters down to MTEMC members to a retail rate the impact should be just more than 15 percent.

“Since we are a not-for-profit cooperative, when TVA raises rates, it raises rates for all the members of the cooperative,” MTEMC President Frank Jennings said. “The difference between wholesale and retail can be confusing, but the final impact to our members will be just more than a 15 percent, not a full 20 percent."

Citing cost surges for fuels like coal and natural gas, TVA's Board recently approved its 20-percent rate increase to take effect 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.”

Most of the increase will go toward the escalating costs of fuels TVA uses to generate electricity.

"Across the globe we’re seeing unprecedented increases in the fuels used to generate electricity,” said Chris Jones, MTEMC spokesperson. “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 it's 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 28, 2008.

 

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