No rate increases for 2003, TVA says

Electrifying BUSINESS C1
TVA expects rates to remain stable for fiscal 2003

No rate increases for 2003, TVA says

Board will convene to adopt budget next week

By Rebecca Ferrar
News-Sentinel business staff

Tennessee Valley ratepayers can rest easy for another year. TVA is planning no rate increase as part of its fiscal 2003 budget.

"We've looked at this thing of how much money you need to do all the things we need to do, and we don't believe we need a rate increase this year," TVA Director Bill Baxter said Wednesday. "We want to pay our bills and accelerate clean air and accelerate nuclear power, but we don't want to become uncompetitive."

The board will meet at 9 a.m. Tuesday at its Knoxville headquarters to adopt the 2003 budget, which will include no rate increase, Baxter said.

It will include a plan to help pay down the agency's $25 billion debt, a $1.7 billion plan to restart the Browns Ferry Unit 1 nuclear reactor in Alabama, and the latest schedule for installing expensive pollution-control equipment at TVA's coal-fired plants.

"It's good news for our customers when rates are stable," said Larry Fleming, KUB president and CEO. "TVA already has very competitive rates and should be applauded for their efforts to continue to manage costs."

Stephen Smith, executive director of the Southern Alliance for Clean Energy, expressed some concern, however.

"It's great to have another year of stable rates, but our fear is they're (TVA) going to delay the commitments to clean air," Smith said. "There are various ways you can reduce expenditures. You can cut programs to the bone, but you also need to pay down the debt so you don't have to make the same high interest payments."

While Baxter said TVA will consider a plan to pay down its $25 billion debt at next week's meeting, debt retirement won't be as aggressive as the previous board hoped.

Former TVA Chairman Craven Crowell made a commitment in 1997 to cut the debt in half in 10 years.

"That's not going to happen," Baxter said. "We can't do that and comply with clean air (requirements) and the restart of Browns Ferry and do the other things we need to do with our transmission system."

"Reducing the debt is very important because it's a business expense. In business, circumstances change from year to year."

Baxter said the investment in Browns Ferry will eventually help pay down the debt as the reactor goes into operation and becomes a revenue-producing entity.

Critics such as Smith call the Browns Ferry plan a "risky" proposition because the plant is almost 30 years old, never performed well and has outdated technology.

The federal Office of Management and Budget have questioned whether the Browns Ferry restart would cost more than $1.7 billion.

TVA is seeking private sector support for the restart.

TVA is the nation's largest public power company, serving 8.3 million people in seven states.