Electric bills to decrease
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Effective today, TVA has approved a 4.5 percent reduction in its wholesale power rates, which means retail customers of McMinnville Electric System and Caney Fork Electric will also pay less.
?We?re going to pass the rate reduction on to our retail customers,? said Caney Fork general manager Hubert King.
MES general manager and CEO Rodney Boyd said local residents are fortunate both Warren County electric utilities have decided to pass the rate decrease along to their customers.
?While MES is lowering our customer?s bills, several TVA distributors are not passing the full decrease along to their customers,? said Boyd. ?Many of our fellow distributors cite the increased cost of doing business, of transformers, and of power line equipment as reasons they are not passing the rate reduction along to their customers. MES is able to pass this rate reduction along because of the increased efficiency of our cost-savings measures.?
According to Caney Fork and MES officials, the average retail customer will see an approximate reduction of $3.50 in their monthly bill.
MES said its small commercial customers will see around a $6 reduction. MES?s largest commercial customers will see a decrease of approximately $100.
TVA?s rate reduction comes after a 7.5 percent rate increase in October, 2005 and another 9.95 percent rate increase in April, 2006. Those two rate increases added approximately $15 to a typical residential customer?s bill.
Along with the rate decrease, TVA also said it will begin calculating a fuel cost adjustment charge every quarter. It has yet to be seen how that fuel cost charge will impact electric bills.
?We won?t know what that first fuel surcharge is until the end of the year,? said King.
Because the fuel surcharge will be calculated every quarter, it means TVA power rates could change several times a year. It?s been said the adjustment will help TVA deal with unpredictable changes in the cost of fuel and purchased power.
The fuel surcharge will fluctuate based on how much TVA pays for coal, natural gas, and other power plant fuels.
?The fuel cost adjustment mechanism will adjust rates quarterly up or down to reflect the forecasted difference in fuel and purchased power cost from the baseline amount,? said TVA chief financial officer Mike Rescoe. ?Many utilities across the nation and most of TVA?s neighboring power companies use similar mechanisms to adjust their rates.?
The fuel cost adjustment for October-December will be zero. The next fuel cost adjustment for January-March will be based on the cost of the prior quarter?s forecast fuel cost and the actual fuel cost and could result in a rate increase or decrease on bills. As TVA?s fuel cost rises and falls each quarter, so will the fuel cost adjustment.
What does all of this mean for customers of McMinnville Electric System? Beginning Jan. 1, 2007, MES customers will see a separate line on the power bill listed as Code 4. Code 4 will stand for TVA Fuel Adjustment and will show the actual adjustment for that billing period. This line will be adjusted each quarter.
Caney Fork is expected to have a similar billing procedure.