TVA raises rates Sunday but lower fuel costs keep electricity prices below year-ago levels

Meters track the electric generation from solar panels at Dennis Kaech's home in Olympia, Washington, on December 18, 2012. (Tony Overman/The Olympian/MCT)
Meters track the electric generation from solar panels at Dennis Kaech's home in Olympia, Washington, on December 18, 2012. (Tony Overman/The Olympian/MCT)

The Tennessee Valley Authority is raising its wholesale rates for the first time in four years Sunday, but power costs will still be lower for Chattanooga electricity users than a year ago due to cheaper fuel costs.

TVA directors last month approved a 4.5% increase in TVA's base rates starting Oct. 1, ending what utility officials had hoped would be a decade of stable wholesale rates after only four years. Increases in inflation, interest rates and power demand had pushed up costs and changed the market from 2019, the federal utility's directors said.

Electricity prices rose for power users in the Tennessee Valley last year even before TVA approved its latest increase in base rates due to record increases in the price of the fuel.

TVA adjusts a portion of its power bill each month to reflect what it pays to buy natural gas, coal and other fuel. After the Russia-Ukraine war disrupted oil and gas markets last year, fuel costs jumped to record highs for TVA, and electricity prices in Chattanooga rose by last August to a record high nearly 27% above the previous year.

The fossil fuel market has since stabilized, and prices have declined. The drop in fuel costs from a year ago has more than offset the increase in wholesale rates that begins for TVA with the start of the new fiscal year Sunday, EPB President David Wade said Friday following an EPB board meeting.

"Year over year, the rates that the customer pays are not significantly different," Wade said. "Fuel prices were unnaturally high last year, so people are going to pay slightly less now than a year ago."

TVA spokesman Scott Brooks said the fuel price adjustment for next month by TVA will be nearly 28% less than what it was a year earlier, Scott Brooks said. The lower fuel rate combined with the base rate increase will leave the typical Chattanooga electricity user with rates about 1.7% cheaper than they were a year ago.

"This lower October fuel cost more than offsets the overall rate increase year-over-year," Brooks said. "Fuel costs are now in line with the three-year average, making up about a third of the overall wholesale rate."

  photo  Staff Photo by Angela Lewis Foster The Tennessee Valley Authority building (TVA) is lit Wednesday, Nov. 2, 2016.

EPB eyes new power options

EPB is still working to hold its costs down to benefit more than 160,000 power customers in its service territory, Wade said. EPB is soliciting proposals for both solar generation and battery storage and is considering plans for a potential geothermal plant to limit its peak power demands and to take advantage of TVA's flexible power agreements that allow local customers to generate up to 5% of their own power.

About a third of EPB's costs charged by TVA for the power delivered to the Chattanooga utility are demand charges driven by the peak periods of consumption, Wade said. Battery storage could help level EPB's load and hold down its demand charges, Wade said.

Energy pro help

As colder weather approaches, EPB also is working to help consumers limit their peak and overall electricity consumption.

Customers may call EPB to get an Energy Pro to assess how a home or business can reduce its energy use, EPB spokesperson Sophie Moore said. The utility offers free home energy advice and resources to all customers to help improve efficiency through in-person or phone consultations. Those interested in such energy savings advice can call or text 423-648-1372 or visit online at

Contact Dave Flessner at [email protected] or 423-757-6340.

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