TVA announces lower fuel cost

Published 6:15 am Wednesday, December 21, 2016

The Tennessee Valley Authority announced this week its monthly fuel cost has dropped below this summer’s peak, which could help keep power bills low as temperatures drop.

TVA officials credited a balanced energy portfolio that reduces carbon emissions and responds to fluctuations in coal and natural gas prices.

“Just like your retirement portfolio, you avoid putting all of your eggs in one basket if you want safe, reliable returns over the long haul,” said Scott Brooks, a TVA spokesman. “We want the ability to switch between the cheapest fuels to keep power bills as low as possible.”

Electricity demand in the Tennessee Valley normally peaks in winter, but officials are forecasting a mild winter. That means TVA is not seeing as much energy demand now as in the summer.

TVA’s January 2017 total monthly fuel cost declined five percent month-over-month to 2.143 cents per kilowatt-hour for residential customers served by TVA and local power companies.

The monthly fuel cost is below this year’s summer peak rate of 2.688 cents per kilowatt-hour for residential customers by about 20 percent.

This summer, coal was less expensive than natural gas so TVA used more coal-fired plants to generate energy. When natural gas prices began to decline in November (as low as 2.08 dollars per million BTU), TVA increased gas-fired generation.

As December’s cold weather arrived, gas prices rebounded abruptly (to a high of 3.80 dollars per million BTU on Dec. 7) making coal a more favorable fuel.

Greg Nunley, director of coal services for TVA predicted it would be a very “interesting winter,” given it will be the first winter for the Unit 2 reactor at Watts Bar Nuclear Power Plant near Spring City, Tennessee. The unit began producing commercially available power in October.

Athens Utilities announced a wholesale power rate increase in October, which equated to an increase of $1.46 to $2 per month for the average residential customer. Athens Utilities General Manager Gary Scroggins said such increases occur once each year, usually in October.

He explained that while the base rate would not be rolled back, customer rates could still be lower based on a lower fuel cost for TVA. He added those rates are adjusted each month based on costs for the previous month.