The fuel cost is going down significantly in September - 33 percent from August, TVA officials said. But the bad news is that even with the month-to-month decrease, the September fuel rate is still higher than the three-year average by 100 percent.
Beginning with bills on Sept. 1, TVA’s total monthly fuel cost will be 3.064 cents per kilowatt-hour for residential and business consumers, 2.76 cents per kilowatt-hour for Large Manufacturing customers and 2.80 cents per kilowatt-hour for other Large General Service customers served by TVA and local power companies.
Officials said the higher fuel rate is mostly due to higher commodity prices, relative to the comparative three-year time frame (which includes COVID impacts). Gas, purchased power, and coal rates remain much higher than the three-year average rates, and volatility is still prevalent (especially in natural gas pricing).
Lastly, an increase in the sales forecast is also contributing to the higher fuel rate (sales are nine percent higher compared to the three-year average).
Scorching heat, record electric consumption, and volatile natural gas prices have increased power bills across the nation.
This summer, there were especially hot temperatures in the U.S. Combined with record-high electric consumption and natural gas prices, customers are seeing higher than regular electric bills. TVA says consumers should start seeing lower power bills this fall due to milder temperatures and lower electric demand, giving families relief from the heat and higher bills.
"This summer has been a perfect storm of hot weather, record-high energy demand, and rising fuel costs," said Doug Perry, TVA senior vice president, Commercial Energy Solutions. "We've been using every tool in our toolbox to keep your power bill as low as possible."
According to TVA, electric load hit a June record of 31,617 megawatts, natural gas prices are 141 percent higher this June versus last year, and this summer is shaping to be one of the hottest - July was Nashville's second-hottest on record.
Mr. Perry said that temperature is the biggest driver for power bills, not the cost of power. TVA has kept rates flat for the past 10 years and has among the lowest electricity prices in the country, according to the most recent data from the U.S. Energy Information Administration.
"When it is 100 degrees outside, your A/C is running around the clock to try to keep your home cool. That means you are using much more electricity than you normally would," he said.
Your power bill is made up of three parts:
- Usage: The amount of electricity that you use each month. If it is very hot or very cold outside, you use more power to keep your family safe and comfortable. You can control this amount by making more informed energy choices.
- Base Rates: These rates are necessary to collect the costs for generation plants, transmission from the generation plants to local power companies, and power distribution from your local power company to your home.
- Fuel: The cost of the fuel TVA needs to generate electricity each month. To protect customers, TVA updates the fuel cost each month so you can realize the savings as fuel prices go down. TVA is a non-profit and only recovers the actual cost of fuel.
In terms of fuel, Mr. Perry said TVA is focused on protecting customers' pocketbooks by using hedging strategies to lock in prices through longer-term contracts and by choosing the least-cost generation available from among TVA's diverse generation resources.
This year, over half of the energy TVA generates is carbon-free and not affected by fuel prices. TVA's long-term vision is to achieve a 70 percent reduction in carbon emissions by 2030 and 80 percent by 2035, without raising costs or impacting reliability, and achieve net-zero emissions by 2050. Decarbonization can help stabilize the risk of higher power bills due to fuel price volatility, it was stated.
To help achieve carbon reductions, last month, TVA made a request for up to 5,000 megawatts of carbon-free energy and plans to add 10,000 megawatts of solar by 2035 – enough solar electricity to power 1.6 million single-family homes.
Nationwide, utility customers are experiencing higher bills than in the Tennessee Valley, as TVA's residential power rates are lower than 80 percent of other utilities. Last month, Duke Energy announced its intent to increase its current electric rates for residential by 7.2 percent, or 29.8 percent over what these customers paid for the same period last year, due to fuel costs. This is Duke Energy's second request for a rate increase in its Fuel Adjustment Clause over the previous four months. Cape Coral, Fla., residents experienced a sharp rise in their electric bills last month - $32.70, or 27 percent - from the city's power provider, Lee County Electric Cooperative, due to high fuel prices.
"We recognize the effect any cost increase has on families right now, and I can tell you that TVA is highly focused on doing everything possible to support communities by keeping power bills as low as possible," said TVA's Perry.