Feb. 16, 2009

TVA to reduce fuel surcharge beginning April 1

By Scott Wright

CENTRE — Cherokee Electric Cooperative customers received some good financial news last week when the Tennessee valley Authority (TVA) – which supplies power to Cherokee Electric – announced a decrease in its quarterly fuel cost adjustment.

The change is the second consecutive drop in the quarterly fuel charge and will go into effect for billing periods beginning April 1.

Because the fuel cost adjustment is a per kilowatt-hour charge, amounts that consumers save will depend on the amount of energy they use. While savings will vary across the Tennessee Valley, residential consumers can expect a decrease that ranges from about $4 to $9 in their monthly power bills, according to a TVA press release provided to The Post last week by Cherokee Electric Chief Executive Officer Randal Wilkie.

Retail billing periods for TVA power distributors also vary, so some April bills will include March usage at the lower rate, the document stated.

Overall, the decrease for the quarter will be about a 7 percent reduction on total average wholesale rates, and is a reduction of almost 40 percent from the current quarter's fuel cost adjustment amount. For the quarter beginning April 1, the fuel cost adjustment will decrease from more than 1.47 cents to 0.8 cents per kilowatt-hour.

“In these economically challenging times, we are especially glad lower fuel costs will provide some relief in power costs to the consumers in the Tennessee Valley,” said TVA President Tom Kilgore. “Unusually cold weather this winter has meant higher consumption of electricity and higher power bills even for people who keep their thermostats low.”

Under the fuel cost adjustment, when the price of fuels used to make electricity decreases, the cost of electricity also decreases. Current economic conditions and increased rainfall also contributed to lower fuel and purchased power costs, Kilgore said.

Wilkie said he is glad TVA has been able to pass along some savings to its customers during difficult economic times.

“This charge is something we have no control over, so we were glad to hear that TVA has decided to provide some relief to our customers and others across their coverage area,” Wilkie said.

Unfortunately, coal prices have not decreased as rapidly as other fuel prices, preventing TVA's costs from dropping further. About 60 percent of TVA's power supply comes from fossil fuels – primarily coal, along with oil and natural gas.

Like utilities around the country, TVA uses a fuel cost adjustment to recover costs of the fuel to generate electricity and the cost of electricity bought from other suppliers. The adjustment is part of consumers' power bills and goes up or down, depending on those costs.

In fiscal year 2008, approximately 40 percent of TVA's total revenue – $4.2 billion – was spent on fuel and purchased power. During the first quarter of the current fiscal year, TVA spent $1.4 billion on fuel and purchased power costs.

TVA is working with local power distributors to develop energy efficiency products to help residents, businesses and large industries in the Valley save energy and money on power costs. In cooperation with participating power distributors, TVA will begin offering new initiatives later this year.

TVA is the nation's largest public power provider and is completely self-financing. TVA provides power to large industries and 158 power distributors that serve approximately 9 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.