TVA Says New Pricing Structure Aims At Eliminating Sticker Shock Brought By Extreme Temps

Tuesday, February 13, 2018

TVA said it is moving to a new pricing system aimed at averting "sticker shock" during periods of extreme heat or cold.

Officials said, "Let’s face it: January 2018 in the Tennessee Valley was brutal. With weather dropping into the teens and twenties, conditions were harsh - for humans and for heaters. As a result, many consumers were surprised with unusually high power bills caused by the unusually low temperatures.

"If you were one of those people, you’ll be glad to hear that TVA is working on a new pricing structure that will normalize your electricity bills during the lowest lows of winter and the highest highs of summer - preventing sticker shock on both ends of the spectrum.

 Cass Larson, TVA’s vice president of Pricing and Contracts, said, “We are very focused on keeping rates low for everyone and providing more bill stability over the course of the year.”

He said TVA is working on a wholesale rate change that will modernize its pricing structure by lowering energy rates and adding a fixed rate charge to access the power grid.

He stated, “TVA and local power companies in the Valley really provide two products - reliability (ensuring the power stays on around the clock) and energy (the electricity used to power lights, heating, cooling and so forth).

We need to better balance how we charge for both pieces.”

Mr. Larson said, "One of the key benefits of modernized pricing is bill stability. Lower energy rates with higher monthly charges mean that bills get more stable for consumers. In months with naturally low bills, like spring and fall, bills may be slightly higher. But in the coldest winter and hottest summer months, bills will be noticeably lower. This will especially help low-income families who tend to have the highest cost of electricity relative to their income.”

He said TVA’s modernized pricing structure will also:

  • Keep rates low
  • Stimulate economic growth
  • Help consumers make more informed investment decisions

Mr. Larson said, “The grid is our shared resource; it’s what powers our lives and keeps us all comfortable. With hard work and investment, we’ve kept our grid 99.999 percent reliable for the past 17 years, and there’s real value to that.

"With TVA now placing a price on the reliability of the power grid itself, it’s important to point out some of the grid’s benefits:

  • Fuels modern life, from air conditioners to computers
  • Saves lives during extreme weather
  • Power quality attracts high-paying jobs in high-tech industry and technology companies

He stated, “Since everyone benefits from reliable power, everyone should share the cost of maintaining that reliability. We all expect the lights to come on when we want them—24/7. Maintaining the equipment and systems needed for that takes continued investment.”

Mr. Larson said, "It’s important to emphasize two points about the pricing change.

"First, consumers still have the power to control their bills through conservation and energy efficiency. The second is that the new rate structure change will not bring additional revenue to TVA.

“We are a not-for-profit, public power company whose mission is to keep rates as low as feasible. We are always on the side of the people of the Valley. In fact, we cut more than $1.5 billion annually in costs over the past few years to protect consumers and keep power bills low for years to come.”

Mr. Larson said he and his team are still working through the details of the rate change in partnership with local power companies, but consumers will have a chance to provide feedback through a public comment period before TVA’s Board meeting in May.


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