TVA RAISES WHOLESALE RATES AND ELIMINATES PANDEMIC CREDIT
Changes are coming this October due to actions taken by the TVA Board of Directors. These changes will directly affect the rates AUB customers pay for their electricity.
First, TVA is enacting a wholesale rate increase, TVA’s first wholesale rate increase since October of 2018. The move will result in an overall 4.5 percent increase in wholesale power rates charged to AUB and will be effective October 1, 2023. AUB will be passing this increase directly through to our customers.
Second, TVA is discontinuing the COVID Pandemic Credit. In October of 2020, in an effort to assist communities and businesses in the valley recover from the pandemic, TVA passed a 2.5% Wholesale Pandemic Relief Credit. Local Power Companies were given the flexibility to reduce their wholesale cost of power and increase their net revenue, or they could pass the credit directly through to their customer in the form of a lower retail bill. AUB’s directors elected to pass those wholesale reductions directly to our ratepayers and lower their monthly bills.
The TVA wholesale increase will raise power costs for AUB by some $1,271,054 annually. The discontinuance of the Pandemic Credit will result in an additional $524,728 being added to our wholesale bill.
About 82 cents out 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 13,900 power customers.
“The combined effect of these actions by TVA will result in a higher retail bill for all of our customers,” AUB’s Amy McDonald said.
Both TVA rate actions, will be effective October 1, 2023.
The wholesale power rate increase will add about $3.62 to the average residential bill. The elimination of the pandemic credit will add an additional $1.93. We know that all customer accounts are different, but on an average consumption of 1179 kilowatt hours a month, we expect our customers to see roughly a $5.50 increase.
“This is not a local rate increase,” said AUB’s Eric Newberry.
“When we speak of a ‘local’ rate increase versus a TVA rate increase, we are talking about the resulting additional revenue staying at AUB for operating the division,” Newberry said.
“When TVA raises AUB’s wholesale rate for power the resulting additional revenue doesn’t stay at AUB for operations, it passes through to TVA to pay for that electric power,” Newberry said.
AUB General Manager Eric Newberry said that TVA has raised AUB’s wholesale rate eight times since 2008, increasing the local utility’s wholesale rate by some 50 percent.
“In that same time frame, AUB has raised our local rates by roughly 3%,” Newberry added.
