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High Electric Bills? TVA Rates Questioned by TN Groups

Executive director of the Southern Alliance for Clean Energy Stephen Smith comments on the report. (SACE)
January 31, 2018

KNOXVILLE, Tenn. – Your high electric bill this winter may have to do with more than just cold temperatures.

A study of Tennessee Valley Authority rates for residential and industrial customers, released Tuesday, raises questions about TVA's rates for each of those groups.

The Southern Alliance for Clean Energy commissioned the study by Synapse Energy Economics.

Melissa Whited, principal associate at Synapse Energy Economics, was one of the study authors who found residential rates have increased at the same time rates for industrial customers are going down.

"The burden is really on TVA to show that these rate reductions for large industrial customers are justified,” Whited states. “If you are simply subsidizing large industrial customers in a manner that actually increases costs for all customers, that's not beneficial from an efficiency standpoint."

By comparison, industrial rates at non-TVA utilities have not decreased at the same rate as those offered by TVA utilities.

The report found that residential customers paid $1.4 billion more between 2011 and 2016, compared with what they would have paid if they'd received similar breaks that industrial customers received.

The Tennessee NAACP and Friends of the Earth are supporting the Alliance's efforts.

In a statement, TVA says it was not contacted to verify numbers in the report and that it has a mission of economic development to attract large companies to the region.

The Tennessee Valley Authority Act, which created the agency, mandates the utility make power available to consumers at the lowest possible rates.

David Freeman, who chaired TVA from 1977 to 1984, says the agency is failing to fulfill its contract with the people it serves.

"They're looking at it just like an ordinary utility, which is they've got a bunch of captive customers so they're socking it to them and cutting rates to the industrial customers who've got the flexibility to go to solar power or otherwise," he states.

Whited says the impact it has on consumers' ability to invest their dollars in other aspects of the economy cannot be underestimated.

"Rate increases for residential – and, to a lesser extent, to small commercial – customers certainly have an impact on a household's ability to use their hard earned money for any other needs they have, any other investments," she states.

Freeman and others are calling on Congress to step in to enforce the contract TVA has with the American people.

The Southern Alliance for Clean Energy and Friends of the Earth are considering legal action against the agency.

Stephanie Carson, Public News Service - TN