Electric prices under pressure

Beginning April 1, Tennessee Valley Authority will change its 19-year old rate structure to more accurately reflect TVA’s higher cost to generate power by passing that growing cost along to its 155 power distributors in seven states. Gone will be the flat rate per kilowatt-hour TVA has billed power distributors for years.

TVA says the cost to produce power fluctuates from hour to hour, day to day and month to month. During peak demand times consumers have at times taxed the electric system exceeding TVA’s capacity to meet the need. TVA has had to find others ways to provide the much needed energy, often turning to more expensive fuels like natural gas, or resorting to the costly option of purchasing power on the open market.  All the while, customers have paid the same rate per kilowatt-hour regardless of the time of day or year.

That is about to change. The rate structure change mandated by TVA will more accurately reflect the cost of power during peak times, and is designed to help reduce peak power usage in the region with the hope it will reduce the need for new power plants.  TVA will now charge their distributors different rates depending on months of the year consumers use the most electricity. Rates will be higher during winter and summer months: December through March and June through September.

It is also conceivable in the future TVA will begin billing distributors higher rates based on the time of day electricity is consumed at peak demand. Tennessee’s electric cooperatives are working hard to mitigate the impact of demand billing on a monthly basis, by offering energy efficiency tips and encouraging consumers to be ever-mindful to shift their energy-consuming chores to off-peak hours.

Aside from the growing energy demand, other pressures at work are added regulations mandated by the U.S. Environmental Protection Agency (EPA) adding another expensive hurdle. The EPA will soon begin regulating greenhouse gases such as carbon dioxide. To comply with these regulations, new power plants may have to be built to meet the growing demand, while a number of currently operating plants are retired because they do not meet new standards. For electric co-operatives, tighter emissions controls and the rising cost of building materials could have a multi-billion-dollar impact on the cost of doing business.

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