BRISTOL, Va. – A March 1 increase in the cost of electricity could foretell additional rate increases this year, the Tennessee Valley Authority’s top executive said here Thursday.
TVA announced it will reduce the fuel cost adjustment credit consumers receive by .209 cents per kilowatt-hour. That will effectively raise the average monthly residential electric bill between $2.50 and $5.50, depending on usage.
“The rate increase was all about fuel,” Chief Executive Officer Tom Kilgore said after a meeting of the TVA board of directors at the Holiday Inn Hotel & Suites at Exit 7. “We had six months of [FCA] decreases. We’re giving credit back to the customer for decreases, but the decline has stopped and is trending upward.”
Last October, TVA increased the base rate it charges for electricity by 8 percent, but that hike was offset with a series of reductions in the FCA – a mechanism to address fluctuating costs of fuels TVA uses to produce electricity.
Speaking after the TVA board’s meeting in the Twin City, Kilgore said costs of coal and natural gas could push electricity prices up again.
“My prognostication is, we’ll probably continue to see some increases because the prices are going up. We don’t follow exactly in sync with gas and oil, but when you see the price of crude oil going up, that affects the BTU value of all other fuel.”
BTU is British thermal unit and is related to the amount of heat needed to raise temperatures.
TVA relies on a combination of coal, natural gas, nuclear and hydroelectric to generate power to its seven-state service area, including both Bristols.
“Coal is trending upward a little bit, and gas has gone up more than that,” Kilgore told the board.
The CEO attributed the previous series of reductions to TVA’s ability to use all of its hydroelectric-generating capabilities.
“I know people are tired of the rain, but it’s free fuel. It helps keep the electric rates low,” Kilgore said.
TVA’s hydro generation has increased almost 400 percent this fall and winter – compared to a five-year period dominated by drought conditions. That means the agency has relied less on coal and natural gas during that period.
In other matters, Kilgore told the board the cleanup of coal ash spilled into the Emory River near Kingston, Tenn., “probably” will be finished by mid-May.
About 2.2 million cubic yards of coal ash have been removed from the river, or about 70 percent of the ash that spilled into the water in December 2008.
The board also overhauled the compensation plan for its 11,600 employees.
“As you know, I had some reservations about this, but I feel this is a much better arrangement,” board Chairman Mike Duncan said.
Kilgore said the total impact of the plan means virtually no change to each customer’s bill.
“We’ve realigned the corporation recently, and we’re working to have less reporting levels, so some people will have more [employees] reporting to them. As we do that, we have to re-evaluate everybody’s jobs,” Kilgore said. “A couple employees will get a raise out of this. Our compensation is in the fractions of a percent of the electric bill anyway, so the ratepayer is not going to see any difference in their bill, and our total payroll is not going up.”
dmcgee@bristolnews.com | (276) 645-2532
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