AUB Board Acts on TVA Rate Increase

Media Contact:

Wayne Scarbrough

(423) 745-4501 ext. 6002

wscarbrough@aub.org

September 26, 2017

ATHENS, Tenn.--Directors of the Athens Utilities Board (AUB) today executed a final reading of a resolution in response to a TVA wholesale power rate increase passed by TVA directors at their August board meeting.

The resolution reflects a staff recommendation that AUB directors recognize and pass through the TVA increase, which will take effect as of October 1.

"We have to pass these TVA increases through to stay financially whole. But it has been since 2007 since we had a local rate increase that would add to AUB's bottom line," said AUB spokesman Wayne Scarbrough.

That's a challenge in light of repeated and ongoing TVA wholesale rate hikes imposed on the local utility, he said.

"The amount of money we pay TVA for the power we distribute across our system to local communities will increase by some $640,000 annually as a result of this wholesale rate increase," he said.

With the upcoming rate hike, TVA has raised rates on AUB more than 40 percent in the past eight years, according to AUB.

AUB and other Valley distributors of TVA power continue to press the federal agency regarding its plans for annual rate hikes.

"We've listened to pitch after pitch from TVA at all levels, from the CEO to our local contacts, and we don't believe they have made a case for these repeated rate hikes that underpin their current financial plan, especially in reflection of the TVA act itself," Eric Newberry, AUB's general manager, said.

The TVA Act of 1933 created the federal agency. It states as a primary objective that electric power "shall be sold at rates as low as are feasible...particularly to the rural and domestic consumer."

Newberry said that according to TVA's own reporting, their net revenues are strong, they do not have any major capital spending needs on new generation assets, and they spend well in excess of $100 million annually on year-end bonuses.

"If the last several years are an indicator, I suspect that within 60 days of implementing this October rate hike we will see headlines announcing annual bonuses exceeding $100 million," Newberry said.

"We just don't believe that their Congressional mandate for 'rates as low as are feasible' squares with that spending trend," he said.

About 81 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 utility's 13,200 area power customers, according to AUB.

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