The TVA board of directors on Thursday approved changes to its rate structure that drew criticism from some groups at the meeting held at Muscle Shoals, Ala.
The board approved the establishment of a wholesale fixed rate equal to six percent of the wholesale rate – the equivalent of about $0.005 cents per kilowatt-hour. The variable portion of the wholesale rate will be reduced by the same six percent, or $0.005/kWh, making the change revenue neutral for TVA, it was stated.
TVA officials said the new structure "is consistent with other utilities and service providers across the country. Individual monthly power bills across the region may vary slightly as local power companies incorporate this change into their own rate structures beginning Oct. 1, 2018."
TVA said the measures are designed "to help ensure the continued evolution of services that add value to Valley residents and businesses."
TVA officials said, "Since its beginning in 1933, TVA has changed to meet the needs of those it serves. Taming the Tennessee River system has led to transportation, community water supplies and recreation that today generate annual economic impacts of $1 million per shoreline mile.
"Hydroelectric power and rural electrification have grown to include a diverse generation and transmission system that produced more than 50 percent of the power used in the Valley in the last six months from carbon-free sources and delivered it with 99.999 percent reliability. Agricultural improvements and reforestation has evolved into an economic development partnership with hundreds of state and local agencies that attracted or retained 42,000 jobs and secured $8.5 billion in capital investment in the Valley over the past six months."
TVA President and CEO Bill Johnson said, “These successes are the legacy of generations of TVA employees whose ability to adapt to changing times allowed them to evolve how we serve the needs of more than 9 million people each day.
“Today, we build on their legacy by evolving our pricing structure to ensure rates remain as low as feasible and are fairly distributed to everyone who benefits from the safe, reliable energy Tennessee Valley public power providers deliver while supporting increased customer interest in renewable and dispersed energy sources.”
In another action to address the evolving energy marketplace, the board authorized a three-year pilot program to establish an optional electric vehicle charging rate. The growing public interest in electric vehicles could further reduce carbon emissions and improve air quality in the Valley while providing another effective use for TVA’s cleaner energy, it was stated.
Opponents said the new rate structure "will hike bills on the Tennessee Valley’s most vulnerable residents and diminish clean energy progress. The vote followed a rushed and inadequate public engagement process, with lengthy final documents released days before the TVA Board vote. A new 'Grid Access Charge' in the approved rate proposal is likely to increase fixed fees – mandatory monthly charges paid regardless of energy use. Residential and small business customers will likely see their monthly fixed fees increase.
"TVA’s original proposal envisioned total fixed fees increasing up to a minimum average of $350 per year for residential customers, and today’s vote was the first step in what is expected to be a pattern of increasing monthly fees and costs with little to no public input, transparency, or regulation. The approved rate proposal means that TVA will be incentivizing and rewarding higher energy users, while slashing savings for families and small businesses who attempt to keep electricity bills low through conservation, efficiency, or building their own solar. This represents the opposite of effective rate policy.
"Despite the rushed nature of the entire process, over 1,700 comments were submitted to TVA speaking out about the the flaws in this proposal and several made the trip to Muscle Shoals to deliver public comment at the board meeting."
Nashville Mayor David Briley said in a letter to the TVA board of directors, “The new rate structure will interfere with our city’s efforts to be the greenest city in the South. It will place an undue burden on our poorest residents, and will hurt our ability to attract new companies and jobs to our region… The 'Grid Access Charge' also hurts smaller businesses, which are the foundation of Nashville’s prosperity. More than 300 small business owners around the state have signed an open letter to you expressing their concerns about the proposed rate change.”
Lenda Sherrell of the Tennessee Small Business Alliance said, “There are over 580,000 small businesses in Tennessee alone, employing 1.1 million, and functioning as the true 'economic engine' of TN… We strongly urge TVA leadership to go back to the drawing board and create a plan that helps small businesses throughout the Tennessee Valley unleash our economic potential, and allows us to compete fairly with our big business counterparts. TVA should be thoughtful, deliberate, and transparent, and develop a rate structure plan which recognizes the key economic impact that small businesses make throughout the Valley. TVA should promote our economic growth, not stifle it.”
Sandra Upchurch, Co-chair of NAACP Tennessee State Conference of Environmental Justice Committee & National NAACP ECJ-Co-Lead stated, “TVA gives big industries a break on their energy usage, the more they use, the more they save, while imposing fixed fees and a mandatory grid access fee on to the local power companies who will then pass those charges on to struggling people and families to pay more…Where is the EQUITY here? The opposite of poverty is justice. There will be no Peace in the Valley without Energy Justice."
Elder Jimmie Garland, vice president of the Tennessee Conference of the NAACP, said, "TVA’s own materials admit that the rate shift will increase bills for those who use less energy. What they don’t show is the faces of those low energy users: our lower- and fixed-income brothers and sisters, and studies show some of them are already being forced to make life-threatening tradeoffswhen faced with high energy bills."
Dr. Stephen A. Smith, executive director of the Southern Alliance for Clean Energy,” said “TVA’s intent all along has been to use its self-regulated federal monopoly rate authority to negatively distort the market for energy efficiency and customer owned solar power and shift a greater share of the perceived risk for lower demand growth on to its captive LPC servants. The sad, and yes immoral, unintended consequence will be adding more cost to our region’s low and fixed income citizens. The only silver lining in this insidious plot is that you have AWOKEN us to the lack of transparency in the fixed charges on 80 percent of the residential customers monthly bills you 'regulate', a fact the executives likely conveniently forget to tell you, and when coupled with the explosive increases of these mandatory monthly fees over the past few years, we now move to a different playing field then this pretense we are witnessing today. So Bill [Johnson], congratulations for jamming this one through, and take solace while you and your millionaire jet set execs are zipping around in the clouds, knowing that we the people will be working the long game at the grassroots."