TVA is leaving decisions about customer rates to its 155 distributors that supply power in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.
The nation's largest public utility disputes claims that the move aimed at changing power use habits mostly means higher bills for retirees who are customers of small rural distributors and don't turn down their thermostats during the workday.
A TVA senior vice president, John Trawick, said the change in the 1992 rate structure is "revenue neutral" for TVA. He said some customers who use an average of 1,000 kilowatts monthly will pay about $3 more and some will pay $3 less, depending on how distributors pass along the cost.
TVA is making the change to promote energy efficiency and reduce peak power demand.
Initially, distributors will have the option to use a temporary seasonal demand and energy rate structure that has the highest charges in the summer. Eventually the rate that distributors pay to TVA will be changed to a time-of-use structure with costs based on seasons as well as times of day, with summer afternoons being the highest cost periods, followed by early winter mornings.
TVA spokesman Scott Brooks said TVA does not know how distributors will pass along the rate change to customers. Representatives of the association that represents the distributors also said they don't know how distributors will pass along the change.
Tennessee Valley Public Power Association, Inc., spokesman Phillip Burgess said there are 105 municipal distributors and 50 electric cooperatives with big size variations, such as Memphis with 425,000 customers and Courtland, Ala., with about 900.
Burgess and Jack Simmons, the association's president and CEO, said the association worked with TVA in developing the new rate structure and agree it is necessary to deal with the high cost of growing peak demand periods.
Simmons said the restructuring is intended to make people "change some of their usage patterns."
"The demand reduction is the focus," he said.
Etowah Utilities in southeastern Tennessee has about 5,100 customers. Two of its board members, Burke Garwood and Ann Abbott, said they question TVA telling them the restructuring means a $200,000 increase for their utility.
Garwood, the board chairman, said TVA told the panel that about half the distributors will have to raise rates but can't say which ones. He said Wednesday that TVA has promised more information.
"Who are the 77 that are going to have raise and the 77 that are not?" Garwood said. "And of the 77 that are going to have to pay more, how much are they going to have to pay?"
Both Garwood and Abbott said they also question the timing, with TVA giving out employee bonuses, making customers pay for a $1.2 billion coal ash cleanup and raising fuel costs in March due to work at the Browns Ferry Nuclear Plant in Athens, Ala.
"How can they tell us it is going to hit us with $200,000 if they don't know?" Abbott said. "They screwed up on that spill and they are making the customers pay for it. At the same time they are giving employees all these big bonuses."
Abbott said most customers in Etowah Utilities' rural service area are retired and elderly and TVA has said the most costly peak hours will be early mornings in winter and mid-afternoons in the summer.
"I'm on the board of our senior center and I know these people are not wasteful," Abbott said. "They are on fixed incomes. They are well aware of setting their thermostats."
Abbott said Etowah Utilities is "held hostage. I know we are going to have to vote in favor of it. We are being forced to."
Trawick said the change is a way to encourage power distributors to manage their total demand and encourage customers "to use less during the peak of the day."
"It is consistent across the board," he said. "Every distributor has the same rate options." He said that includes an option of not passing along an increase to customers.
Abbott said TVA is looking for efficiency from customers but neglecting its own inefficiencies.
"Where was your efficiency motivation with the spill and then turning around and giving the executives big bonuses?" she said. "They need to look within their ranks for the efficiency."
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