The Tennessee Valley Authority Board will increase its firm wholesale power rate by seven percent and increase its Fuel Cost Adjustment effective April 1, 2008. 

Gibson Electric Membership Corporation will pass through TVA’s wholesale rate and FCA increase to its customer-owners, but Gibson EMC will not raise its distribution rate. 

“We would rather not pass through the TVA increase, but because approximately 75 cents of every dollar Gibson EMC collects goes directly to TVA, we cannot absorb them,” says Dan Rodamaker, Gibson EMC President and CEO.

The impact of the increase will depend upon a customer-owner’s individual energy use. For a customer-owner using 1,000 kilowatt-hours per month, the TVA base rate increase will add about $4.24 to the monthly Gibson EMC electric bill. 

Why is TVA raising the wholesale rate?

TVA says it needs the rate increase to help fund new power generation to meet the Tennessee Valley’s growing demand for energy and to help fund energy efficiency initiatives.

“We certainly recognize the financial challenges that consumers face as we make a recommendation to the Board on the need to increase power rates,” said TVA President and CEO Tom Kilgore. “TVA is taking steps to reduce its non-fuel operating and maintenance costs by more than $400 million over the next three years. However, additional revenue is needed for long-term investments to keep the power system reliable and lessen our dependence on volatile energy markets. That will help us keep electricity reliable and affordable in the years to come,” Kilgore said.

TVA’s 2008 budget includes $2 billion in capital expenditures for the addition of new power plants and work required to complete Unit 2 at Watts Bar Nuclear Plant. TVA needs additional power plants to meet power demand that is growing by about 2 percent a year during peak periods.

TVA met three all-time winter records for electricity consumption in the Valley since Jan. 1. Last summer, TVA met 13 all-time summer records for power demand during the record-breaking August heat wave. When power demand is at its peak, TVA often pays four or five times normal costs for additional power from other energy suppliers.

TVA’s 2008 budget also includes $22 million for the first phase of expanded energy initiatives and development of a plan to help make the delivery of power to consumers more efficient.  As part of this initiative, the TVA Board appointed an Ad-Hoc energy efficiency oversight committee. Gibson EMC President and CEO Dan Rodamaker supports the energy efficiency initiative and is serving on the Ad-Hoc energy efficiency committee. Rodamaker and other committee members will work with TVA to craft a comprehensive, long-term energy-efficiency plan. 

Why is TVA increasing the FCA?

Kilgore also reported on the lingering effects of the drought and its continued impact on reduced hydro generation – TVA’s least expensive generation source – and increases in purchased power costs. These and all other fuel-related costs are recovered through TVA’s Fuel Cost Adjustment mechanism. The FCA, which shows up as a line item on Gibson EMC customers’ bills, is adjusted by TVA each quarter and can be a charge or a credit. The FCA for the quarter beginning April 1, 2008 will add $5.88 per 1,000 kilowatt hours; the FCA for the previous quarter that ended March 2008 added $2.85 per 1,000 kilowatt hours.

What can you do?

To learn how you can help reduce the demand for energy and help hold down your energy costs, you may want to take advantage of Gibson EMC’s free energy right Home e-Valuation. All you have to do is answer a brief questionnaire to receive customized recommendations on how you can save energy dollars and a free energy conservation kit. For more information on Gibson EMC’s free energy right Home e-Valuation, go to this Web site’s Home Page or stop by or call any Gibson EMC customer service center.