no avatar

TVA cuts rates 4 percent

Jeff Keeling • Nov 14, 2008 at 12:00 AM

Plunging prices for natural gas and lower demand for electricity should mean a break for area electricity customers come January, when the Tennessee Valley Authority will reduce its charge to local power distributors, the agency announced Thursday, adding that “residential customers can expect a decrease ranging from about $4 to $8 in their monthly power bills.”

The reduction likely will amount to about 4 percent, and help offset an increase from TVA for the quarter that began Oct. 1, which resulted in a nearly 17 percent hike in energy costs for Johnson City Power Board customers.

Distributors, including the JCPB, typically pass TVA’s charge to them, called a “fuel cost adjustment,” directly to customers. The adjustment announced Thursday in TVA’s charge per kilowatt hour will affect bills mailed to customers between January and March, and JCPB commissioners likely will approve a related rate change later this month.

TVA debuted its FCA in January 2007 — adjustments were made annually before that — and in eight quarters since, rates have risen six times, decreased once (January 2008) and been left unchanged once. The agency said it is having to purchase less power on the open market — its most expensive option and one that drives up costs to consumers — due to lower demand across the Tennessee Valley. The coming price cut might have been larger, but coal costs have stayed relatively high and a severe drought has lessened the amount of hydroelectric power TVA can generate.

After increasing a grand total of 14.3 percent from 1999 through 2006, rates have gone up more than 46 percent since January 2007, including a 16.8 percent increase for the current quarter. While TVA’s FCA was nearly 20 percent for this quarter, the JCPB (and most distributors) didn’t pass on that entire increase.

If the JCPB holds true to form, an exact 4 percent reduction would mean customers currently paying 9.82 cents per kilowatt hour could see their rate drop back to 9.42 cents.

TVA briefed distributors on the pending FCA Wednesday, and that news was a welcome relief to officials at the JCPB, which also is working on a plan to contribute to a safety net for customers struggling to pay their bills. JCPB commissioners directed staff members at their October meeting to seek ways the Power Board can bolster the resources available for customers who are struggling to pay their bills.

While some distributors already have programs that support local charities helping people pay their bills, the JCPB doesn’t. Commissioners may get a chance at their Nov. 25 meeting to approve such a plan, which likely would need to pass muster with the Power Board’s auditor and attorney.

Were rates to drop to 9.42 cents per kilowatt hour, a JCPB customer using 2,000 kwh a month (not uncommon during the winter heating season) would see a savings of nearly $8 a month and an “energy charge” of about $188.40 instead of $196.40 at the current rate.

For the January-March period of 2008, that same 2,000 kilowatt hours would have cost a JCPB customer about $147.

Recommended for You

    Kingsport Times News Videos