TVA Approves 7.5 Percent Rate Hike -- Higher Coal, Natural Gas Prices Prompt Increase
Posted on: Tuesday, 26 July 2005, 12:01 CDT
Memphis-area residents shouldn't expect too much relief from high utility bills after the air-conditioning season ends this fall.
As expected, the Tennessee Valley Authority board on Friday approved a 7.5 percent increase in wholesale electric rates, effective Oct. 1.
The rate hike, TVA's second in three years, will boost the bills for Memphis Light, Gas and Water Division customers by an average of about $5 a month, said MLGW corporate communications supervisor Nicole Ritchie.
MLGW is the largest of the 158 retail distributors of TVA power. The utility is required by its contract with TVA to pass on wholesale rates to its customers.
"MLGW will have no additional revenues as a result of this increase," Ritchie said.
The rate hike, which should generate $524 million in extra revenue during fiscal 2006, was prompted largely by the soaring costs of coal and natural gas that fuel most of TVA's power plants, said agency spokesman Brooks Clark.
The 2006 budget approved by chairman Bill Baxter and director Skila Harris on Friday projects a 16 percent jump in fuel and purchased power costs compared with this year.
"All the other utilities are facing the same challenges," Clark said.
The prices paid for coal by electric utilities nationwide this year have been running about 14 percent above 2004 levels, according to the U.S. Department of Energy.
Two years ago, TVA approved a rate hike to help fund clean-air modifications at its power plants.
The latest increase also will generate funds for further anti- pollution work, as well as money to reduce the agency's debt, restart the Browns Ferry Nuclear Plant and conduct other capital projects.
TVA provides power for a seven-state region encompassing more than 8 million people.
- Tom Charlier: 529-2572
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LEGAL OPINION
Sale of MLGW requires council approval
In an opinion issued Friday, City Atty. Sara Hall said that while the Memphis Light, Gas and Water board of commissioners has broad powers to operate the utility, its actions are subject to the oversight of the City Council and it could not sell the utility on its own.
Details
Mayor Willie Herenton requested the opinion last week in an effort to put the issue to rest.
State law and covenants with MLGW's bondholders and its electric power supplier, the Tennessee Valley Authority, require a referendum before the electric system could be sold.
A public referendum is not required to sell the utility's water and gas systems, Hall said.
- Jacinthia Jones: 529-2780
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Source: Commercial Appeal, The
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