Electric bills may take dip
Warren County residents could pay less for their electricity come October.
Tennessee Valley Authority, which provides electricity for all of Tennessee, announced Wednesday plans for its first rate decrease since 1988.
The suggested rate reduction is 3.5 to 5 percent ? amounting to $350 million to $500 million from a nearly $9 billion budget. An exact rate will be approved at the TVA board meeting in July and go into effect Oct. 1.
TVA has 158 power distributors in seven states, including local distributors McMinnville Electric System and Caney Fork Electric.
?We will pass through any reduction to our customers,? said Caney Fork assistant general manager Bill Rogers. ?Anything TVA does, whether it?s raising or lowering on the wholesale side, gets transferred to the retail side.?
MES general manager Rodney Boyd said MES would also pass along any rate decrease to its customers. But like Rogers, he also mentioned a fuel cost surcharge which could be billed to distributors. This new charge could negate much of the rate decrease.
?It?s a double-edged sword,? said Boyd. ?I?m neutral on this news. Right now these are all just proposals. I?m anxious to see what the board does in July.?
Talks of a rate decrease are somewhat surprising since TVA raised rates 7.5 percent in October of 2005, and another 9.9 percent in April, 2006.
TVA president and acting CEO Tom Kilgore said TVA would pay for the rate cut through tighter management of capital spending and operations, aided in large part by the expected opening of a 1,200-megawatt reactor at the Browns Ferry nuclear station in Alabama next May.
?We are not making any major reductions in the work force,? he said of TVA?s 12,600 employees, although he added, ?We will constrain our refilling of retirements.?
TVA?s eight-member, part-time board, installed less than three months ago under a restructuring initiative pushed by Senate Majority Leader Bill Frist, R-Tenn., has decided it?s time for a new strategic plan for the country?s largest public utility.
Since 1997, TVA has made a priority of trying to erase a $25.5 billion debt from what was an overly ambitious nuclear power program in the 1970s.
But new TVA chairman Bill Sansom said Wednesday that shouldn’t be the agency’s focus.
?We are not going to start out with the mission of debt reduction,? the Knoxville businessman said. ?The mission is … reliable rates, rates, rates, rates.?
Board member Dennis Bottorff, a Nashville venture capitalist and chairman of the board?s finance committee, said TVA will stick to a commitment to cut debt by $529 million in fiscal 2007, but a goal of a $7.8 billion reduction by 2016 may be rethought.
The agency?s current strategic plan, adopted three years ago, emphasizes debt reduction to prepare TVA to deal with open competition from deregulation.
Bottorff, former chairman of AmSouth Bancorp., questioned whether electric utility deregulation would happen after the problems it caused in California.
In the meantime, accelerating debt payments will only force TVA to charge higher rates and ?the higher you drive rates, the more pressure you put on your customers to say I want out of this model,? he said.
Several Kentucky distributors already are threatening to leave the TVA system because they can get power cheaper from other suppliers.
TVA provides electricity to about 8.6 million consumers in Tennessee and parts of Kentucky, Alabama, Mississippi, Georgia, North Carolina and Virginia.
Associated Press reporter Duncan Mansfield contributed to this report.
Changing rates
TVA electric rate changes since 1985 affecting 8.5 million residents in Tennessee, Kentucky, Mississippi, Alabama, Georgia, North Carolina and Virginia.
October 1985 ? 7.5% increase
October 1986 ? 7.8% increase
October 1987 ? 6% increase
January 1988 ? 6% decrease
October 1997 ? 5.99% increase
October 2003 ? 6.1% increase
October 2005 ? 7.52% increase
April 2006 ? 9.95% increase