Heads Up, Tennessee
It’s only to be expected with the rising cost of other fuels but the timing couldn’t be worse. Amid other high energy costs and inflation outpacing stagnant wages, TVA will be raising the rates for electricity by a staggering 10 - 20%.
Nashvillians’ monthly electricity bills could jump 10 percent to 20 percent to cover the rising costs of coal and other fuels used to generate electricity, the Tennessee Valley Authority has announced.
The increase applies to customers of Nashville Electric Service, Middle Tennessee Membership Cooperative and virtually every other electricity distributor in the state and parts of six others.
The hike, the amount of which will be determined later this month, would take effect Oct. 1. It’s a temporary adjustment that could go up or down in January.
The agency blames mainly “skyrocketing” costs of fuels in a world of increasing demand for electricity.
“I don’t personally like to go out in times of rising gasoline prices and rising food prices and say, ‘Your electric bill is going up, too,’ ” TVA Chief Executive Officer and President Tom Kilgore said during a media teleconference Wednesday. “But that is what is happening.”
TVA began making quarterly adjustments – usually upward – last year on top of its base rate to make up for shifting fuel costs.
The amounts generally have been incremental, but Kilgore said this one is “expected to be large.”
He put the range from 10 percent to 20 percent on the average household bill, saying it’s in line with what other utilities have been adding.
Since January, coal prices have leaped by 128 percent, eclipsing oil prices, though oil has drawn the most attention, he said. Natural gas prices are up by 66 percent.
About 60 percent of TVA’s electricity comes from coal, and much of the power it purchases to sell – when it’s not generating enough at its plants to cover demand – comes from natural gas. Hydroelectric power has been down as a result of continuing below-normal rainfall in the eastern part of the Tennessee Valley. [...]
I have a problem with some of the explanation. Although I’m sure I’m not one of a great crowd but we did all the energy saving things here and our usage is way down… way down. However, the bill isn’t way down. To date, the TVA has done a Fuel Cost Adjustment which has padded my monthly bill anywhere from $10-$20 every month since they started it last year. Couple that with a cooler than last year summer, you’d think it would add up to some savings. The more I scrimp the more they pad until there is virtually no difference in my bill this year than last year although the usage is way way way down.
Granted fuel they use to power the plants have gone up.
TVA rates among lowest
While some utilities are required to go back to state public service commissions to push up rates, TVA is a self-financing, independent federal agency that sets its own rates and fuel cost adjustments. No permission is needed from an outside agency.
It has worked out in some ways. Ratepayers in the TVA system traditionally have had some of the lowest rates in the country. This has not encouraged conservation, however, and residential electricity consumption in Tennessee ranks among the highest in the nation.
TVA announced a commitment this year to programs to encourage customers to use less energy. It also touts its nuclear building plans as a way out of the fuel situation.
The last major increase in rates came in the late 1970s as a result of a massive nuclear plant building program that was later scaled back.
Though fuel cost pressures have been “staggering even to us on the inside,” Kilgore said, “relatively speaking, we are still in pretty good position.
“In the valley and at TVA, we think we are still going to be below most everybody else.”
Rates, perhaps, but they fail to mention that fuel cost adjustment. Considering Tennessee is a coal producer bordered by other coal producing states, coupled with the other factors of a cooler than last year summer, more rain because rainfall is slightly above average even for East Tennessee, the explanation doesn’t hold very well. As one commenter on the article put it:
I’m about conserved out and my bill keeps getting higher due to the “Fuel cost adjustment” they add to my bill every month, and now they’re going to add more? Coserve? Might as well go back to cooking and heating by fires. Either tht or finish the Hartsville nuclear plant we paid for years ago. But they may need that money for their CEO and a few others who are down to their last few lobster tails. Maybe they could limo over to Al Gore’s house and talk to him about conserving as well.
August 7th, 2008 at 7:05 am
Up this way we have a similar arrangement: the Bonneville Power Administration. This DOE group runs 25 hydro dams, some windfarms and a nuclear plant. And we have cheap electricity. In fact, many homes have electric furnaces. While their rates are low and have remained constant, they do not sell direct, but through utilities. These latter not only have costs, but shareholders, hence rate inflation. IMO, when gasoline goes up from under $1/gal to $4/gal in eight short years, the effect on the economic structure
has to be profound. I suspect gas prices will remain high, so nuclear, coal, renewables etc are the only
pragmatic area in which to look. We can drill the daylights out of the earth’s crust, but petro is a diminishing commodity and its consumption has
increased significantly worldwide. Fixed and low income folk will feel it first. When they stop purchasing, business will feel it. Its 103 today and here I am running the AC…big help, huh?
August 7th, 2008 at 7:25 am
BB, environmentalists have essentially killed the coal industry and killing that killed some others, like the steel industry and so forth. It’s not just the gas prices, it’s the environmentalist all out war on everything that makes this country and others run.
On top of that, it’s tax and spend in all levels of government with no respite for anyone. Every time they say, they’re going to tax the rich, everybody else gets squeezed in the bargain, so it’s a false statement from the start. They’ve said that so many times in the past that have turned out exactly the same way that you’d think they’d give it up. Americans are smarter than that… except for the ones who’ve never experienced it before.
In all the hulla-BULL-oo over Exxon’s profits, hardly any news outlet pointed out that the government raked in 3 times that amount on the same revenue nor did they point out that it translated into an 8.6% profit margin which is pretty pathetic. If the dollar doesn’t go very far for us, paycheck to paycheck, 11 billion isn’t going to go very far for a corporation.
And wind power? Don’t make me laugh. What are they going to do? Conscript us to pedal so lever and gears that make the propellers move and have us pay for the privilege of doing so? It costs 2 million to build just one of those wind turbines.
Can’t go back to the days of woodburning cookstoves, either. It creates too big a carbon footprint. I have a carbon footprint for the environmentalists and I know just where to put it… up their *****.
No other country in the world is cowtowing to environmentalists the way this country is doing.
August 7th, 2008 at 7:30 am
Forgot something.
Yes, it’s hot. It’s always hot in the summertime but is it as hot as last year? Or the year before? In comparison, this summer is on the mild side which means usage should be down, right? If usage is down, bills should be lower, right? Couple that with all the stupid bulbs they say use electricity and other things you can do to make your home more energy efficient, bills should be lower, right? They’re not.
August 7th, 2008 at 9:22 am
HB,
Coal production has not been ‘killed’, it continues to rise. see http://indexmundi.com/energy.aspx?country=us&product=coal&graph=production+consumption and actually coal-fired electric plants have become cleaner. (the problem is the increase in fuel costs getting the stuff from the powder basin to the utility (for example BNSF rail has increased coal trains to 6000 100 ton loads per day on a triple track mainline through the Wyoming desert..its competitor
Union Pacific does about the same) IMO, coal will continue to grow until and unless nuclear comes on line.
I agree the environmental movement can be a detrimental factor for industries, but things like steel mfg decline have a number causes: high labor, foreign subsidized plants, failure to invest in new technology – (a factor always overlooked) a shareholder greed which resulted in wonderful diviidends but no investment in research or plant
infrastructure. The mixture of free markets
and globalization has been profound. Whatever the cause, the decline of heavy manufacture in this country will cause us grief in the future. (A factor which gives me hope is that those countries that ban environmentalism, eg. China, can make stuff cheaper, but they will get tired of wearing masks to go shopping every day and when they start dying off from
carcinogins at an early age they will clean up their act too….then the playing field will become more equal.)
August 7th, 2008 at 9:31 am
And for those of us who don’t have time to wait decades for the playing field to become more level? Welfare?
August 7th, 2008 at 11:50 am
Welfare? Good question. Likely the one that the
8,787,000 unemployed are asking. I’d like to see
some work done on our highways and bridges: they are in poor shape, the construction companies could use the business and more employment would also result. Presently “Without a fix soon, we could face having to cut all federal highway funds by a third simply to keep the trust fund solvent. That is the last thing we should be doing when infrastructure needs are up, construction jobs are down and Americans are struggling through tough economic times.”
http://www.latimes.com/news/nationworld/washingtondc/la-na-highway21-2008jul21,0,1343115.story
Seems to me if we can spend $48 Billion on Iraq
infrastructure, we could pay more attention here…
August 7th, 2008 at 12:30 pm
BB, they raised the gas tax here to do just that, yet, nothing is being fixed. They raised the sales tax here to pay for education. They raised cigarette tax here to pay for “I don’t remember what”. They raised property tax to pay for something else that I don’t remember now for what. Our water bill doubled last year. Our electric bill also has seen 3 other rate increases not including this new one they’re talking about.
They all talk about how much money they need to “fix” things, but then they don’t “fix” those things. They do something else instead.
I agree that we should start scaling back what we are spending on Iraq’s reconstruction as they seem to be building up their own economy nicely but if you expect our government to use those funds to do anything for the average American you’re mistaken and that’s across the board, nonpartisan. They’ll use it for anything else that strikes their fancy while we keep apathetically doling out more and more.
They keep tossing out bones like the housing bailout, the rebate checks, and offering more and more but when you read the fine print, they’ll take back twice or better what they disperse and are busy creating a domino effect with their policies that will eventually encompass everyone but the very rich and I mean the very rich, not the average rich. The average rich are going to fall right along with the rest of us.
The tax system is really nothing more than an elaborate loan sharking operation that’s being forcefully shoved down our throats. Everything they dole out to us from our own money, they’ll take back double or better.
I’m ready to throw the bums out and tell them to “kiss my grits.”
August 7th, 2008 at 1:54 pm
Gee, I wish I was ‘average rich’! Speaking of loan sharking, we were notified our property taxes will be getting a $6.75 monthly surcharge to meet ’storm water run off EPA requirements. We get about 11″ rain a year. Huh ? Are we having a nice day yet?
August 7th, 2008 at 4:35 pm
Fancy that. $6.75 huh? You really gotta wonder sometimes if they just pull those numbers out of a hat, don’t you?