On Friday, the Tennessee Valley Authority approved a 4.5 percent rate decrease in the wholesale electric rate, as part of the $9.3 billion fiscal budget, which takes effect October 1.
The rate reduction will save TVA customers approximately $405 million. The average consumer will save an average of $2.50 a month per household.
The rate decrease comes six months after they raised the rates 9.95 percent to cover rising fuel costs.
The 2007 fiscal budget has a new fuel cost adjustment mechanism built in. This will allow the TVA to keep a steady baseline amount, but adjust for rising or falling fuel costs quarterly. The baseline has been set as part of the 2007 budget and the fuel adjuster will be set at zero on October 1st.
“The fuel cost adjustment will help reduce the need for large rate actions in the future by better matching revenues to unpredictable changes in the cost of fuel and purchased power,” according to Tom Kilgore, TVA President and Acting Chief Executive Officer.
The budget also calls for $20 million feasibility engineering study of Unit 2 at Watts Bar Nuclear Plant to decide if it’s able to meet future power demand in the Tennessee Valley.
TVA is the largest public power provider in the nation. They receive no federal funding even though they are a federal corporation. They service 158 power companies who serve 8.6 million consumers in 7 southeastern states.