TVA raises rates due to August demand

TVA fuel cost adjustment drives August electric rates amid record electricity demand, kilowatt-hour pricing shifts, and peak megawatt loads; residential bills may rise as utilities balance purchased power, hydro power output, and heat wave conditions.

TVA faced its highest demand for electrical power since 2007 this month and customers will be seeing an increase in their monthly bills because the agency had to buy extra electricity to meet this demand.

TVA met a demand for electricity of more than 31,700 megawatts on the afternoon of August 4 compared to an all-time high of 33,482 megawatts on August 16, 2007. TVA spokesman Jim Allen said demand is expected to remain high.

Rates for September are not yet available, but an increase in TVA's fuel cost adjustment for August is expected to raise residential electricity bills by $1 to $2 for the billing period starting August 1, according to TVA, as pressure for higher rates grows.

This is based on an increase in the rate from 0.403 cents per kilowatt-hour to 0.508 cents per kilowatt hour. TVA's fuel cost adjustment is a measure the agency uses to help recover fluctuating fuel and purchased power costs.

"In the summer, we sometimes do have to buy supplemental power off the market to meet demand," Allen said.

TVA has done that lately, although not to the extent it had to in 2007, when there was a drought, Allen said.

"We had very little hydro-generated power that year. We like to use hydro during peak demand times because it is our cheapest source of power," he said.

While it has slacked some since Aug. 4, power demand remains high as temperatures in East Tennessee hover in the 90s. TVA projects that demand will reach 31,399 megawatts, with an average highest temperature in the TVA coverage area of 98 degrees, and demand will top out at 31,327 megawatts on average, when the highest average temperature is expected to be 97 degrees, Allen said.

The TVA fuel cost adjustment increases are typically passed along by the Knoxville Utilities Board and other local utilities to their customers, aligning with TVA's plans to increase rates and borrowing while cutting costs.

If TVA's fuel costs decrease, the federal utility may also lower power rates.

Allen said consumers can help reduce demand and higher power bills by using measures such as raising thermostats to 78 degrees, turning off lights and appliances, putting computers on "sleep" mode, closing blinds and curtains on the south, east and west sides of homes during the day, using a microwave or grill instead of stove or oven and using dishwashers and clothes washers only with full loads and after 8 p.m.

TVA provides electrical power to more than 9 million customers in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia, and has faced criticism over high rates from industrial groups.

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