TVA rate change draws concern new fixed fee will hurt poor

Dive Brief:

The Tennessee Valley Authority board of directors on Thursday approved a new fixed charge that has drawn the ire of customer activists who say it will add substantially to the energy bills of those who can least afford to pay.
TVA approved the establishment of a wholesale fixed rate equal to 6% of the wholesale rate, which works out to about $0.005/kWh. At the same time, TVA reduced the variable portion of the wholesale rate by the same amount, making the change revenue neutral.
According to TVA, the change is needed to "ensure rates remain as low as feasible and are fairly distributed." Opponents say it will discourage energy efficiency and hit the poor and elderly hardest.

Dive Insight:

TVA has several reasons for the increase, but opponents maintain it is just another way of shifting costs from larger corporate customers to low income individuals. While TVA officials concede there may be bill increases, they deny any cost shift.

The agency is "evolving our pricing structure to ensure rates remain as low as feasible and are fairly distributed to everyone who benefits ... while supporting increased customer interest in renewable and dispersed energy sources," TVA President and CEO Bill Johnson said in a statement.

TVA also said the new structure is "consistent with other utilities and service providers across the country." The agency will pass the charge on to local power companies, which can begin incorporating it into their own rate structures beginning October.

Rooftop solar proponents are worried the fixed charges will reduce the benefit of installing distributed generation. TVA maintains those customers are benefiting at the expense of those who do not have distributed generation installed.

The new rates reflect a growing trend. The North Carolina Clean Energy Technology Center says U.S. utilities petitioned regulators for fixed charge increases about 80 times in 2017, up from about 70 in 2016, and 60 in 2015.

Along with the new fee, the TVA board also authorized a three-year electric vehicle charging rate pilot, delegated modified land and equipment conveyance to senior management, and approved natural gas agreements.