If you’ve ever flipped on a light switch in the TVA service area, then you are a part of the equation that determines what TVA pays for the fuel—like natural gas and coal—that runs their power plants.
The total monthly fuel cost is part of TVA’s wholesale rate, which is passed on to the 154 local power companies they serve. Those local companies in turn pass the cost on to the roughly 9 million consumers of TVA power across 7 states. Some local power companies list the fuel cost adjustment as a line item on monthly bills, others don’t.
Either way, that cost is still reflected in your electric bill.
One of the biggest drivers of fuel cost is demand. When the weather is very cold or very warm, people use more power. That means TVA uses more fuel to provide that electricity. The fuel cost portion of the power rate rises and falls every month, with demand as a major factor. TVA recovers the cost of that fuel through monthly electric rates.
The good news for consumers is that when the weather is considerably mild, wet or both—as it was in December 2015 and January 2016—fuel costs go down.
Fuel costs for 2016 thus far are 10 to 20 percent below the three-year average, thanks in part to abundant hydro power. Hydro production is the least-expensive generating resource. The fuel, in the form of rain and runoff, turns TVA’s turbines. As water is a renewable resource, it can be used repeatedly. December and January featured above-normal hydro production, which translated into some of the lowest fuel costs since 2010.
TVA also continues to strive for a balanced portfolio. "We are making sound investments in diversified generation sources—such as hydro, nuclear, gas and other renewables—so the region’s power supply is reliable, cleaner and at the lowest feasible cost to consumers. By doing this, we are also able to take advantage of lower fuel prices, which we pass on to Valley residents," officials said. "TVA is committed to keeping electricity affordable for everyone."