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TVA Reduces Budget Requirements and Continues Investing in Cleaner Power

August 29, 2016 By Cheryl Kaften

The Tennessee Valley Authority (TVA) announced at a board meeting on August 25 that it would implement a 1.5 percent retail rate increase – which the agency claims is slightly below the rate of inflation.

The rate increase will take effect with the TVA’s 2017 budget year, which begins on October 1– amounting to about $1.50 more a month for the average residential ratepayer who uses 1,000 kilowatt-hours (kWh) per month.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity

The newly approved $10.37 billion budget is $330 million less than the agency planned to spend in 2016.

According to a report in the local Chattanooga Times Free Press, the rate increase will raise another $192 million next year for TVA and the budget calls for TVA to trim another $104 million in its operating costs beyond the $600 million that TVA has already cut over the past three years.

TVA also will trim its capital spending from the record levels of last year. TVA’s capital spending, which grew to a record $3.4 billion in 2015, declined to $2.9 billion this year; and is forecast to be $2.8 billion in fiscal 2017.

Of that, the authority will invest more than $2 billion in cleaner energy sources in the coming year as it continues to reduce operational costs and debt.

“Our work is bounded by certain strategic imperatives – rates, debt, assets and stewardship – that require us to deliver excellent performance in order to maintain low rates, be responsible stewards, live within our means and manage TVA’s power system to deliver reliable, low-cost energy,” said TVA CEO Bill Johnson. “

Johnson highlighted TVA’s continued work in diversifying the energy generation fleet including the completion of Watts Bar Nuclear Plant Unit 2 as it nears commercial operations; the Paradise, Kentucky, plant’s new natural gas units are expected to begin operation next summer; and, the Allen gas plant in Memphis that’s nearing 25 percent completion and scheduled to begin operations in 2018.

In addition, TVA stated, the authority is investing more than a billion dollars in clean air equipment at its Gallatin (Tennessee) and Shawnee (Kentucky) plants.

Cost-effective, renewable energy is also playing a more important role in TVA’s diverse portfolio, Johnson said. “Our diverse portfolio has helped us deliver superior financial performance in recent periods. We are making significant investments to balance our asset portfolio further in order to keep rates affordable and stable for our customers under a variety of conditions.”

During Johnson’s report to the board, he said that energy demand is not growing and even with healthy economic growth overall, the growth in power demand has been essentially flat for the past five years. “We expect load growth to stay flat for the foreseeable future,” Johnson said. “Our market is changing, and we and our customers are working to adapt to new business conditions that include reduced energy needs and increased demand for energy efficiencies and renewables.”

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