Wednesday, October 21, 2009

TVA Fuel Costs Drop--Electricity Bills Slated to Decline

The CA covered this, too, but the Tennessean went into more depth.

Electricity bills will decline, thanks to drop in TVA fuel costs
By Nicole Young

The Tennessee Valley Authority announced Tuesday that its electric rates will drop 1.5 percent on Nov. 1 because of lower costs for fuel, saving customers 50 cents to $2 on their monthly residential bills.

The base rate charged for electricity in Nashville went up about 11 percent this month but because of reductions in what TVA calls fuel adjustment charges, customers are still paying less than last year, TVA officials say.

For the time being, the fuel adjustment is dropping by the same amount as the rate hikes and the two are canceling each other out.

The adjustment reflects a decline in the price of natural gas, coal and other related expenses that TVA must pay. Recent rains have allowed the authority to use more, cheaper water-generated power, officials said.

The fuel adjustment, which had gone up as much as 16.9 percent, is set to make its largest drop — about 11 percent — this month. On average, customers in Nashville could see a savings of $7 to $10 on their October bills, said NES spokeswoman Laurie Parker.

"The weather plays a huge factor in what people's bills are from month to month," Parker said. "There are a lot of things that can affect what bill is each month, but the kilowatt charge is lower.

"Last year, TVA raised the fuel adjustment significantly, so it had room to come down."

TVA will adjust monthly

Next month TVA will change from adjusting the fee quarterly to doing so monthly, but Parker said TVA estimates its fuel costs will continue to drop over the next several months.

The base rate for electricity, which changes only occasionally and has not been increased by NES since April 2006, went up this month. TVA increased wholesale rates 8 percent while NES rates went up 3 percent, Parker said.

The NES rate hike will cover capital projects, such as new transmission lines needed for growth, she said. Most of the local power distributors' revenues — about 82 percent — go to TVA, which produces the electricity sold. All of the fuel-cost fees go to TVA.

Nearly 9 million people receive TVA power in Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

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