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TVA rate increase equals lower charges for MTEMC customers

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By BEN DUDLEYThe Wilson Post

Tennessee Valley Authority approved a base rate increase and a fuel cost adjustment decrease this past week, but the overall result will be lower per kilowatt-hour charges for Middle Tennessee Electric Membership Corporation customers in October.

It comes out to about a 3-percent reduction. TVA raised its base rate about 8 percent but lowered its fuel cost adjustment by 11 percent overall, bringing MTEMC members’ rates back to where they were last October, when TVA enacted a 20 percent increase.

“It’s very hard to explain, but the bottom line is that it means lower rates for our customers,” said Todd Palmer, MTEMC’s communications coordinator

TVA does, however, face many acknowledged challenges. For example, on the same day as the rate change, TVA’s Board of Directors took action to ease ratepayer impact in the face of a major budget shortfall.

Their actions included $1.9 billion in budget cuts and $2.8 billion in additional borrowing primarily to fund capital projects. The shortfall, projected at $7.2 billion for the period 2010 through 2012, is the result of a sales revenue decline, increased contributions to TVA’s employee pension fund, investments to maintain power plants and system assets, the Kingston ash spill recovery effort, the North Carolina Clean Air lawsuit, and TVA’s storage and disposal of coal combustion by-products.

As a result of the economic downturn, TVA sales declined about 8 percent, which is the largest drop in sales in TVA’s history.

The TVA Board also approved a change to the Fuel Cost Adjustment mechanism from quarterly to monthly calculation. TVA officials say this should result in more accurate forecasting of fuel and purchased power costs and less dramatic swings in the FCA charge.

Staff Writer Ben Dudley may be contacted at

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