TVA considers no electric rate hike in 2003

TVA considers no electric rate hike in 2003
By DUNCAN MANSFIELD
Associated Press Writer

KNOXVILLE (AP)—The Tennessee Valley Authority is considering extending a freeze in electric rates to a fifth consecutive year while still paying down debt, reviving an old nuclear reactor and adding more pollution controls to its coal plants.

"TVA is committed to delivering power through our distributors at the lowest feasible cost, and stable rates through '03 is a desirable thing," TVA Chairman Glenn McCullough said Thursday.

McCullough said the budget for fiscal 2003, which the TVA board will vote on Tuesday, is still being written.

Bill Baxter, who serves on the three-member board with McCullough, told The Knoxville News-Sentinel on Wednesday that no rate hike was planned.

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

McCullough said TVA was still calculating how it will end fiscal 2002 on Sept. 30. TVA's 2002 budget was $7.1 billion.

Revenues from electric sales have improved with rising late-summer temperatures, he said. That could make it possible for TVA to exceed its $50 million pledge to debt reduction in 2002.

Reducing long-term debt would continue in fiscal 2003, though at a less aggressive pace, Baxter said. McCullough said the agency is committed to "the trend" of debt reduction.

There also would be money for the $1.8 billion restart of the 29-year-old Browns Ferry Unit 1 nuclear reactor in Alabama and the latest schedule of pollution control equipment at TVA's coal-fired plants.

While TVA is reviewing private financing options for Browns Ferry, McCullough said there will be "ample provision in the '03 budget to ensure a successful recovery for Unit 1" by 2007.

The country's largest public utility has raised electric rates only once in 15 years—in 1997—with the aim of reducing TVA's long-term debt. The debt was then approaching $28 billion. Today it is about $25 billion.

The General Accounting Office reported in May that residential electric rates charged by TVA distributors are lower than the rates of 12 large utilities just outside the agency's jurisdiction.

"It's good news for our customers when rates are stable," said Larry Fleming, president and CEO of Knoxville Utilities Board.

"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 watchdog group, expressed concern that extending the rate freeze could "delay the commitments to clean air."

"We are committed to clean air, clear skies and having an ample supply of affordable reliable power in a strong economy," McCullough said. "We are going to do those things."

TVA provides electricity to 158 distributors serving 8.3 million people in Tennessee and parts of Kentucky, Virginia, North Carolina, Georgia, Alabama and Mississippi.