TVA Board Votes to Simplify Fuel Charges, Streamline Purchasing System

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Feb 18, 2011, 11:32 ET

MURPHY, N.C., Feb. 18, 2011 /PRNewswire-USNewswire/ -- The Tennessee Valley Authority board of directors on Friday voted to simplify fuel charges on power bills and granted the chief executive officer broader authority for energy efficiency projects and corporate purchasing.

(Logo: http://photos.prnewswire.com/prnh/20100304/TVALOGO)

At its quarterly meeting in Murphy, N.C., the board also approved contracts for the purchase of uranium and uranium enrichment services for TVA's nuclear program.

"The board of directors has now met in all seven states TVA serves," President and CEO Tom Kilgore noted. "We believe that meeting across our service territory gives our directors and officers greater insight into TVA's operations and helps strengthen our relationships with our customers and the public."

To simplify the way fuel charges appear on power bills, the board approved combining all components of fuel into a single category called the "total monthly fuel cost." Previously, monthly bills had fuel costs in two separate categories: the "base rate" charge, which remains the same each month, and the "fuel cost adjustment," which changes each month to reflect fluctuations in the cost of coal, natural gas, nuclear fuel and related items. The new category, called the "total monthly fuel cost," will be adjusted monthly to reflect all the fuel costs. The total amount of customer bills will be the same as under the previous categorization.

TVA's electricity prices remain below the national average. TVA's base rate for electricity has not increased since October 2009. While electricity prices remain stable, except for fuel-cost adjustments, consumers' bills can rise when they use more electricity in unusually cold weather, as the TVA service area has experienced recently. Consumers can reduce their bills by lowering usage and through energy efficiency.

Adding insulation, using more efficient appliances, adjusting thermostats and unplugging computers and other devices when not in use can help lower usage and save money. TVA and many distributors of TVA power also sponsor home energy evaluation programs, which can identify ways to make homes more energy efficient. More information about energy efficiency measures and home evaluations is available online at http://www.energyright.com.

The directors also granted the CEO greater flexibility in creating and administering demand response programs to help reduce the growth of peak demand on the TVA power system. Slowing the growth of peak demand will help keep future electricity prices lower by lessening the need for expensive new power plants and additional fuel purchases.

In other business, the board delegated authority to the CEO to enter into contracts for materials and industrial equipment under a new "category management system" to streamline purchasing processes.

"TVA purchases about $3.5 billion a year in goods and services, and we expect this new approach to awarding and managing these contracts will reduce our costs by more than $250 million over three years," Kilgore said. "This action by the board will help TVA keep power prices competitive."

The board also approved a $53 million gypsum dewatering facility at the Kingston fossil plant in eastern Tennessee as part of TVA's project to convert its wet storage systems for ash and other coal byproducts to dry facilities.

The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities that can produce about 34,000 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA's service territory are below the national average.

SOURCE Tennessee Valley Authority