Tennessee Valley Authority customers will likely see a decrease in their electric bills soon. The TVA board voted today to a 4.5 percent rate reduction effective October 1.
It’s the first time TVA has reduced rates in 14 years. The last reduction came in 1988 when rates were lowered by 6 percent. It also follows two rate hikes within a year, the latest was a nearly 10 percent increase in April.
Board members also voted to start using what’s called the fuel adjustment clause. As TVA’s Chief Financial Officer, Mike Rescoe, explains, the clause attempts to regulate TVA’s fuel costs by passing on market increases and decreases to the customer.
“Basically what happens is that we create a forecast, and if it turns out that prices rises more than the prices assumed, the difference will be recovered through adjustments on customers bills. Likewise, if prices are lower than what is assumed, customers will benefit on the bill.”
The rate reduction and fuel adjustment clause were passed as part of TVA’s $9.3 billion budget that begins in October.
TVA serves seven states in the Tennessee Valley region and is the country’s largest public utility.
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