Wilkie says Co-op customers will see rates drop

By Scott Wright

CENTRE — Cherokee Electric Cooperative Chief Executive Officer Randal Wilkie told The Post the Tennessee Valley Authority's decision to reduce its monthly fuel cost charge will be reflected in customers' bills next year.

“We will be passing it on in its entirety,” Wilkie said Friday.

Cherokee Electric purchases the electricity is supplies to Cherokee and surrounding counties from TVA.

The federal agency announced Thursday it will cut electricity rates by about 6 percent to account for lower fuel costs, offering some relief for customers after a major rate increase earlier this year.

“The fuel cost adjustment will go into effect Jan. 1,” Wilkie said. He said the savings should equal about $4 to $8 a month.

The change reflects a 25 percent reduction in the federal utility's fuel cost charge, which is adjusted every three months. This will be the first decrease after three successive quarterly increases.

The reduction should help offset an across-the-board 20 percent rate hike TVA enacted Oct. 1. That was the federal utility's highest increase in three decades. It was blamed largely on rising costs for fuel to supply its power plants and electricity purchased from others.

"We are glad for the relief this decrease will bring to ratepayers across the valley," TVA Chief Financial Officer Kim Greene said in a statement Thursday.

She attributed the move to reductions in purchased power and lower natural gas prices, as well as economic conditions that lowered TVA's power sales from July through September.

"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," Greene said.

TVA adopted a fuel cost adjustment mechanism in October 2006 after experiencing a sharp spike in fuel costs caused by hurricanes Katrina and Rita the year before.

The 6 percent rate drop on Jan. 1 will be the largest quarterly decline since the mechanism was adopted.

The rate cut announcement comes just weeks after TVA directors approved a pay raise for President and CEO Tom Kilgore from a potential $2.7 million to $3.27 million. Board members defended the raise as a necessary move to compete with private utilities.