Group opposes TVA rate hike

Group opposes TVA rate hike
By Joseph D. Bryant
Staff Writer

An environmental advocacy organization added its voice to criticism of a proposed rate increase for TVA's residential customers.

Officials with the Southern Alliance for Clean Energy recently accused TVA of misleading the public about its reasons for the 7.4 percent increase that's expected to generate $365 million annually for about 10 years.

While the Tennessee Valley Authority has earmarked the funds for mandated clean-air initiatives, the Southern Alliance said the funds will also be used for the restart of a reactor at Browns Ferry Power Plant near Athens.

"TVA ought to be honest about what's really driving the rate increase," said Stephen Smith, executive director of the Knoxville-based organization. "They're also spending a million-plus a day on the Browns Ferry restart. The reality is the dollars are coming out of the same pot."

Smith said TVA is disingenuous when it cites air control as the reason for the rate hike when it spends that same amount on the Browns Ferry project.

The Browns Ferry restart is expected to cost $1.8 billion by its completion in 2007. Smith said that cost, along with an additional $300 million in financing costs, calculates to $1 million a day being spent. That is the same amount TVA said it would cost to implement the air-quality controls.

Smith said an honest assessment would show that the rate increase is an effort to finance TVA's entire capital projects that include both the air controls and work at Browns Ferry.

"While we support and understand the cost of cleaning up TVA's old, dirty coal-fired power plants, the cost of the Browns Ferry plant restart is as much or more of a factor in the rate increase than clean-air controls," Smith said. "The rate debate should honestly reflect the fact that TVA needs money between now and 2007 for the capital cost of rebuilding the troubled Browns Ferry nuclear plant."

Smith said it is more popular for TVA officials to cite environmental improvements as the reason for the increase rather than financing a reactivation at a nuclear plant.

"But it is horribly misleading and basically dishonest to say we are blaming all the cost on clean air," Smith said. "Let's be honest about what you're

doing."

TVA spokesman John Moulton dismissed Smith's claims, saying financing for the Browns Ferry project is being pursued in other ways, not through the rate hike.

"The clean-air costs are basically a federal mandate, and these costs have been escalating," he explained. "We've been able to absorb these, but we just can't do it any longer."

As evidence of where the money will be spent, Moulton said statements sent to local distributors will show an "environmental adjustment" reflecting extra money from the rate increase.

"We're actually going to show a line item," Moulton said.

TVA will also provide an annual rate review process with detailed information about the pollution reduction and money spent.

As for financing the Browns Ferry project, Moulton said TVA is pursuing options not related to the rate increase.

The agency hired a Boston-based firm to investigate options for financing the project. The current phase of construction has been self-financed.

During his tour of the facility in February, TVA Director Bill Baxter said the agency had several options in paying for the project, including self-financing and partnering with private sources for funding.

"We have not had to borrow to do this," he said during his visit. "Browns Ferry is a great business decision even under that conservative analysis of self-financing."

Criticism from the Southern Alliance for Clean Energy came on the same day members of the Tennessee Valley Public Power Association launched their campaign against the TVA rate increase proposal.

Members of the trade organization, representing the 157 electric cooperatives within TVA's service area, restated their objection to the plan during a press conference in Huntsville.

Power executives agreed a rate increase was necessary. They objected, however, to TVA's proposal to raise residential and commercial rates while reducing the rates of the largest manufacturing customers by 2 percent.

TVA officials said lowering the rate for industries is an effort to bring costs to the national average and help spur economic development. TVPPA members call it an unfair burden shifted to everyone except a few industries. They call for an increase for all customers.

TVA board members will vote on the rate increase Aug. 27.

Joseph D. Bryant can be reached at 740-5745 or joseph.bryant@timesdaily.com.