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Daily Archives: August 7, 2008

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 2008


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