TVA blasted for shifting costs from industry to homeowners
The Tennessee Valley Authority is shifting more of the cost of its electricity from industrial to residential customers, keeping power rates relatively stable for homeowners while giving the biggest businesses in the Valley rate reductions of 20 percent or more over the past six years, according to a new study of TVA rates.
A review of government rate information by Synapse Energy Economics found that TVA shifted more than $1.4 billion from industry to homeowners and commercial customers from 2011 to 2016, costing the typical homeowner in Chattanooga nearly $14 more a month than what they would have paid without the rate realignment.
TVA and its customer groups said the rate changes were made to bring rates more in line with TVA’s costs, to make the Tennessee Valley more competitive for industry and to respond to changing patterns of energy use.
But environmental and consumer advocates Tuesday said the rate changes are contrary to the founding purposes of the New Deal agency started in 1933 to help electrify and develop the impoverished Appalachia.
Former TVA Chairman S. David Freeman, a Chattanooga native who served on the TVA board from 1977 to 1984, said TVA’s current management is not focused enough upon the individuals TVA serves in its seven-state region and accused the utility of forcing poor people to pay higher power bills to subsidize industrial customers.
“Franklin Roosevelt and countless others would be turning over in their graves at what TVA is doing today,” Freeman said. “TVA is in violation of its contract with the people of the Tennessee Valley.”
Freeman said TVA is shifting its fixed costs to its captive customers in homes and local businesses while lowering rates for industrial users which are most apt to relocate or shift to other power sources.
“Instead of power for the people, it’s running rampant as the largest unregulated power company in America, with its CEO as the highest paid federal employee,” Freeman said, referring to the $6.45 million of compensation paid last year to TVA CEO Bill Johnson.
Melissa Whited, principal associate at Synapse Energy Economics, said the rate study showed industrial customers benefited by economic incentives, fuel cost adjustments and other rate realignments more than residential and commercial customers.
“While TVA’s industrial rates have fallen steeply in recent years, other industrial rates in the region have remained relatively flat,” she said. “These trends raise many questions about what is driving TVA’s rate-making process.”
The Southern Alliance for Clean Energy, which commissioned the rate study by Synapse Energy, urged TVA to do more to disclose the contracts it negotiates with its 55 direct-served industrial customers and called upon Congress to do more to oversee TVA’s rate-making process.
“TVA is hiding the ball on how it’s manipulating rates to the advantage of big industrial customers at the expense of families and small business,” said Dr. Stephen A. Smith, executive director of the Southern Alliance for Clean Energy.
Industrial customers of TVA complained in the past that power rates in the Valley were not competitive and that industrial customers were paying too big of a share of TVA’s overall costs since industrial customers generally cost far less in transmission expenses and usually generate a more stable, consistent load.