TVA Raises Fuel Cost Adjustment, But Little Effect on Rates

The Tennessee Valley Authority’s fuel cost adjustment is going up by almost 6 percent in September, but that doesn’t mean customers will be paying more for power.

The fuel cost adjustment is kind of like a pressure valve that makes sure the utility has enough money for fuel as prices fluctuate. Increased demand for electricity during the summer means TVA had to spend more on natural gas, coal and uranium. TVA Chief Financial Officer John Thomas says even with the increase, the utility’s rates are seven percent less than September of 2011.

“Our overall fuel rates are lower than what they were last year and lower than what we had planned. So that has ultimately ended up with lower rates.”

Even with flat or falling prices for natural gas and coal, TVA’s fuel adjustment has gone up five times in the last twelve months.

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