TVA plans another 2 percent rate boost for rising fuel costs

TVA plans another 2 percent rate boost for rising fuel costs

By: AP

CHATTANOOGA (AP) — The Tennessee Valley Authority plans to boost electricity rates July 1 to offset rising costs of coal and the lingering effects of the drought.
Rates for most consumers will go up about 2 percent under the automatic fuel-cost adjustment made every three months by the federal utility, which supplies wholesale to most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.
TVA executive Ken Breeden says the typical household will pay $1 to $3 more a month for electricity this summer under the increased rate.
The boost comes three months after TVA raised both its base rates and its fuel-adjusted rates on April 1 by more than 12 percent — TVA’s biggest single increase in more than two decades.
“Fuel costs continue to be a hard spot for us,” TVA President and CEO Tom Kilgore told the agency’s directors during a meeting Monday in Florence, Ala.
And drought conditions reduce the amount of power that can be produced by dams.
“We got some good rain in April, but our hydro production is still below average and every one of those kilowatt-hours we don’t get from hydro we have to replace with expensive gas generation,” Kilgore said.
TVA officials said fuel costs were up 24.7 percent over the previous quarter because of higher coal and natural gas prices.
Eston Glover, president of Pennyrile Electric Cooperative Corp. in Hopkinsville, Ky., and chairman of the Chattanooga-based Tennessee Valley Public Power Association, said distributors don’t like the increase but understand why it is needed.
“The cost of fuel is changing daily and it’s certainly not going down,” he said. “That’s why we put this fuel cost adjustment in, so we could distinguish between fuel costs and other capital and operating expenses.”
TVA is not alone. Glover noted that Georgia Power Co. plans to raise rates 2.8 percent in June to offset higher coal and other fuel expenses.
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Information from: Chattanooga Times Free Press, www.timesfreepress.com
Published in The Messenger 5.21.08

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