A recent announcement by the Tennessee Valley Authority could lead to a nearly double-digit rate increase for Columbus Light and Water Department customers.
Because TVA officials last week announced the regional power agency is expecting a $7.2 billion budget shortfall between October and 2012, TVA may raise its rates by up to 9 percent over the next few years, members of the CL&W board of directors announced during a Thursday meeting.
As CL&W is a local TVA electricity distributor, local utility officials will pass on any rate increases to Columbus customers, CL&W board members said.
“For the new TVA budget beginning in October, they are projecting a $7.2 billion shortfall between fiscal years ”10 to 2012,” said CL&W General Manager Todd Gale. “TVA says the biggest reasons for the projected shortfall are down sales, environmental issues and pension plans. They have twice as many retirees as they do employees.
“The federal government a while back put a cap on how much TVA can borrow, and they are almost at that cap now,” Gale added.
If TVA attempted to compensate for the entire $7.2 billion shortfall through rates over the next three years, local customers would see about a 19 percent increase. However, TVA officials said they plan to fund about $2.5 billion of the projected shortfall through rates.
By funding $2.5 billion through rates, TVA would raise its rates by 8 or 9 percent, Gale explained. The increase likely would bring about a $10 increase on a typical $100 electric bill, Gale explained.
“Our rate payers have to pay for their pension plans? That doesn”t make any sense,” said CL&W Chairman Jabari Edwards. “I think that just boils down to poor management on TVA”s part.
“We will catch the flak locally on this because this rate increase is being shoved down our throats,” Edwards added. “We don”t have any choice but to pass it, and we don”t really have any leverage in the situation.”
Although CL&W voted to pass along the TVA rate increase, local customers may not see higher bills until next summer, Gale explained.
TVA each quarter adjusts its fuel cost fee based on the agency”s cost of producing power, among other factors. Because TVA recently announced its fuel cost fee in October will decrease by 11 percent, CL&W customers Oct. 1 likely will see about a 3 percent decrease, Gale said.
“They do the adjustment quarterly on the FCA (fuel cost adjustment),” Gale said. “When they increased it last quarter, they overcollected. Now, they will take that overcollection and spread it over the next nine months.
“The FCA will go down 11 percent in October, but the decrease will then go down to 3 percent and then 1 percent before customers start seeing higher bills in June,” Gale added.
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