TVA rate changes unfair, group says

By Laura Simmons · The Knoxville News-Sentinel

In this mention

The Tennessee Valley Energy Coalition criticized TVA's proposed rate structure changes, arguing that residential customers would unfairly bear the cost of canceled nuclear reactors built to meet industrial demand that never materialized. TVEC spokesman Mark Thompson contended that large industrial users operating continuously would benefit from rate decreases while residential ratepayers would face increased demand charges during peak heating and cooling seasons.

We don't think it's fair that they take two days out of the year to arrive at the demand charge
Joanne Thompson

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TVA rate changes
unfair, group says
by LAURA SIMMONS
News-Sentinel staff writer

Changes proposed in TVA's rate structure in October are unfair to residential customers, a ratepayers group said Thursday.
The changes would result in residential ratepayers paying too large a share of the cost of building TVA's canceled nuclear reactors, which were built primarily to meet the power demand from industrial growth that never happened, said Mark Thompson, spokesman for the Tennessee Valley Energy Coalition.
Under the proposed new rate structure, some residential bills will go up as little as 1 percent, TVA officials said.
Some small businesses will see rates decrease as much as 3 percent or increase as much as 2.5 percent.
"Most of these changes are quite small," said Robert Steffy, TVA manager of power. "TVA will not collect any additional revenue as a result of these changes."
The rate changes "have nothing to do with our annual revenue requirements, shutdown of our nuclear plants or the current lack of hydro generation," Steffy said.
Instead, they are the result of a long-range study of how to charge various customer groups fairly and are required by the Public Utilities Regulation Policy Act, he said.
"Overall, typical customers with relatively constant usage will see significant bill decreases, while others might see an increase of 2 to 3 percent," Steffy said.
Thompson, however, said the users who will have a decrease in rates because of "relatively constant usage" are large industries that operate 24 hours a day, seven days a week.
TVA residential ratepayers will feel the brunt of the demand charges caused by the peak electricity demand during the winter heating season and the summer cooling season, he said.
"We don't think it's fair that they take two days out of the year" to arrive at the demand charge, Thompson said.
"We feel there should be more averaging — some utilities average every month. As a class, we're getting (nuclear) units that we didn't create the demand for."
TVA doesn't fire up a nuclear unit to meet the extra demand from a cold snap or heat wave because it takes too long get a nuclear reactor started, he said. Instead the federal utility uses gas turbines or other non-nuclear generators.
In addition to the proposed change in the rate structure, TVA also will announce this summer its annual rate increase for the next fiscal year, which begins Oct. 1. A congressional source said a rate increase is almost certain because of the drought and the shutdown nuclear reactors.