Local Power Rates Move Lower In April
Media Contact:
Wayne Scarbrough
(423) 745-4501 ext. 6002
wscarbrough@aub.org
March 19, 2019
ATHENS, Tenn. – Local electric power rates will fall a bit in April as the spring rate season takes effect.
The AUB residential power rate for April will be $0.08685 per kilowatt hour compared to March’s rate of $0.09008.
April and May—along with October and November—are deemed “transition” rate months in TVA’s rate scheme, said AUB’s Wayne Scarbrough.
TVA’s April fuel charge also is lower than the current March fuel charge, at $0.01768 in April versus $0.01885 in March.
Each month, TVA adds a per-kilowatt-hour fuel charge to the base rate that AUB pays the federal agency for wholesale power. AUB’s power bill from TVA runs around $4 million a month, Scarbrough said.
“Considering the number of wholesale rate increases that TVA has levied on local distributors such as AUB in recent years, the retail rate that AUB’s customers pay is still low by comparison.
“Every October for many years running at the beginning of its fiscal year, TVA has hit us with a wholesale rate increase. They probably will do it again this October. We distributors are giving the incoming TVA CEO the benefit of time to review the agency’s financial plan, its needs in meeting the mandate to set rates as low as feasible by law, and to report his sense of things back to us, as his customers,” AUB’s General Manager Eric Newberry said.
Despite annual wholesale rate hikes from TVA, AUB has been able to keep its retail rate to local customers—called the effective rate—steady over time, he said.
“Take just the past five years,” Newberry said.
“Since fall 2014, TVA has raised AUB’s wholesale base power rate five times. TVA often cites effective rates in the Valley, but those are not TVA’s rates. The effective rates are the retail rates our local customers pay AUB.
“While our wholesale base rate has increased by double digits since 2014 via TVA rate hikes, the effective retail rate our customers pay will be, by comparison, about 2.7 percent lower next month than in April 2014,” he said.
Newberry said that falling market prices for natural gas, which TVA increasingly uses to generate power as they shutter coal plants, have helped to stabilize the fuel portion of the effective rate.
“No doubt, we have seen fuel costs driven down by a declining market price for natural gas, and we’ll take it. We do worry about the effect of all of these TVA base increases, though, when gas prices and resulting fuel costs start to rise, which they will eventually,” Newberry said.
Scarbrough maintains that what keeps local effective rates low are the efforts of local power companies that serve the nine million retail customers of the Valley.
“It’s the daily focus on efficiencies across the company. It’s finding ways to reduce short- and long-term costs in the face of annually rising wholesale rates,” he said.
About 83 cents of every dollar that AUB’s power division collects goes to TVA for wholesale power that is then distributed by AUB to the local utility’s 13,250 power customers.
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