Lower Fuel Costs Lead To TVA Rate Cut

Reductions in fuel costs will mean lower electricity rates for Tennessee Valley Authority customers, including those in both Bristol cities.

Last week, TVA announced it will lower its surcharge for fuel costs effective Jan. 1. The change is expected to mean residential customers will see their bills drop between $4 to $8 per month, a TVA news release states.

In August, the TVA board approved an average 20 percent electric rate increase – mostly attributed to higher power production costs. The fuel cost adjustment is changed quarterly to reflect what TVA pays for coal, natural gas and other sources to produce electricity. About 50,000 customers of Bristol Virginia Utilities and Bristol Tennessee Essential Services can expect to pay the lower rates.

“We’re pleased to be able to provide this savings to our customers during the colder winter months,” BVU President Wes Rosenbalm said in a news release. “The fuel cost adjustment reflects a decrease in fuel prices for the production of electricity and, when that is on a downward trend, it reduces the cost for the consumer.”

BVU estimates the change will mean residential bills will drop between $6 and $10 monthly.

Because the fuel cost adjustment is based on usage, savings depend on the amount of energy used, Rosenbalm said.

“Recent reductions in purchased power and natural gas prices have reduced our actual costs and forecast for the second quarter of 2009,” TVA Chief Financial Officer Kim Greene said in the news release. “Unfortunately, coal prices remain significantly higher than they were a year ago and sustained drought conditions across the Tennessee Valley have cut TVA’s hydro generation by more than 50 percent, preventing TVA’s fuel costs from dropping further.”