TVA plans rate increase under $9.7 billion budget
By Bill Poovey
Associated Press Writer
HUNTSVILLE — The Tennessee Valley Authority plans to increase rates, likely between 6 and 9 percent, under a $9.7 billion budget approved unanimously by its board of directors on Thursday.
The increase will be used mostly to offset increases in costs for coal and power purchased from other sources during peak demand periods.
TVA President Tom Kilgore told the nine directors that the exact amount of a rate increase would be announced after he consults with various customers and is presented to the board. He said a 6 percent increase means about a $5 monthly increase for the average residential customer.
That increase, likely to start in April, will be in addition to a quarterly fuel surcharge from the unusually hot, dry summer across much of TVA's coverage area. That surcharge ranges from $3 to $6 per month for average residential customers.
The budget includes $2 billion in capital spending. It includes $800 million toward further reducing TVA's $25 billion debt but also adds $800 million in new debt on new assets.
Kilgore said that in addition to cost cutting, a rate increase is needed to avoid a $300 million revenue shortfall.
The capital budget includes $1 billion in spending on new power plants, including $317 million to begin construction of a second reactor at Watts Bar, $423 million for investment in additional gas-fired generation, $190 million for transmission system upgrades and $383 million for clean-air initiatives.
The budget includes $22 million for the first phase of a new energy efficiency and peak power demand reduction program.
The board also voted to hire Ernst & Young LLP as external auditors, replacing PricewaterhouseCoopers LLP.
TVA supplies electricity to about 8.7 million consumers across an 80,000-square-mile territory that includes most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.
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