TVA Executes the Largest Electric Rate Increase in More Than a Decade, While Providing the Least Amount of Information of Any Major Utility

Citizens Pay the Price for a Broken Oversight Process

On Thursday, August 22, the Tennessee Valley Authority’s (TVA) Board of Directors will meet in Florence, Alabama to authorize a 5.25% electric power rate increase without any public documentation showing why the increase is needed or how those additional revenues will be spent. This rate increase amounts to approximately a staggering half-a-billion-dollar rate increase for Tennessee Valley ratepayers. Only in the Tennessee Valley could a major utility raise rates without public scrutiny of financial documents.

The 5.25% rate increase coupled with last year’s 4.5% electric rate increase is strategically set just below a 10% threshold that would trigger renegotiation of hundreds of power supply agreements with local utilities. But even with this rate increase, TVA is still racking up debt at a rate not seen in decades.

Based on documents over a year old at this point, we can only guess what is driving TVA’s current financial woes: the largest buildout of fossil gas in the country this decade. These new fossil gas pipelines and power plants aren’t cheap, and TVA’s plan to increase reliance on gas is risky. Families and businesses across the Valley will see increased bills when gas prices rise again and as these new gas power plants become obsolete in just a few short years. 

This rate increase also comes as TVA continues to plow forward under a resource plan that is over five years old. TVA delayed the public release of their Integrated Resource Plan (IRP), which had been expected to be released in March. Now, five months later, we still do not have an update for when the draft IRP will be available for public review.

The request for approximately $500 million is expected to be quickly approved by the TVA Board of Directors on Thursday at a tightly orchestrated Board meeting with limited information and with no questions taken from the public or independent experts. This is just another way that TVA is less transparent than other utilities, despite claiming to be a public power utility.

It is important to understand that no other utility the size of the TVA is allowed to execute such a massive electric power rate increase with such limited public information. Large utilities are normally subject to independent regulatory rate reviews by state Public Service Commissions with independent regulatory staff that review utility filings that attempt to justify the rate increases. The independent state commissions then hold public hearings allowing public intervenors and the professional staff to question utility executives under oath on the details of the material presented before rendering judgment on whether the utility’s request for an increase is justified and in the best interest of the public.

Dr. Stephen A. Smith, Executive Director of the Southern Alliance for Clean Energy, said, “Only in an Orwellian world of misinformation do we see our nation’s largest “public” power utility pass a massive rate increase while providing the public the least amount of information compared to “private” utilities. It’s highly unusual for a utility the size of TVA to issue a rate increase with zero independent review. This is a broken process, and every ratepayer in the Tennessee Valley is literally paying the price.” 

Maggie Shober, Research Director with the Southern Alliance for Clean Energy, said, “People across the Tennessee Valley will see electric bills increase because their public power utility has spent their hard-earned money on plans that it refuses to release to the public. But what is perhaps most disappointing is the fact that the people of the Tennessee Valley have never known anything different. They do not know that most utilities must present a detailed case for public scrutiny before raising rates. TVA has a visage of public power as a federally-owned utility but operates as an unregulated private monopoly.”

The Congressional delegation from the Tennessee Valley is failing the regional citizens by not requiring independent oversight of TVA’s ratemaking process. We support bipartisan efforts by Tennessee members of Congress to increase transparency in TVA resource planning.

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About the Southern Alliance for Clean Energy
Since 1985, the Southern Alliance for Clean Energy has worked to promote responsible and equitable energy choices to ensure clean, safe, and healthy communities throughout the Southeast. Learn more at cleanenergy.org.