Front Porch Blog

New TVA rate structure likely to harm low-income families

On May 10th, the Tennessee Valley Authority’s Board of Directors voted against low-income families, low energy users and a clean energy future for the Tennessee Valley by passing a rate structure that will force local power companies to pay TVA a new “Grid Access Charge.” The GAC will serve as a new “fixed” or “mandatory” fee that will reduce both local power companies’ and end users’ ability to control their monthly energy costs. As a result, the cost-effectiveness of residential renewable energy and energy efficiency will also suffer.

Widespread opposition

In a letter addressed to the TVA board, a diverse coalition of service agencies, nonprofits and community groups, including Appalachian Voices, asked that the board reject the rate change because of the disproportionate burden that will be forced upon low-income families. Over 1,700 additional public comments documenting these concerns were submitted to TVA prior to their decision.

The new rate structure will go into effect in October of this year. Though local power companies will have the option of passing the rate structure on to their customers and members or choosing a default rate set by TVA, TVA’s own Environmental Assessment for the rate change estimates that the new structure will result in higher energy bills for most residential customers, regardless of how it is implemented.

With hundreds of thousands of households in Tennessee already paying 20% or more of their annual income on energy costs, many are asking why TVA is prioritizing the needs of industrial customers (who will benefit from the new rate structure) over the residents they are obligated to serve.

Dangerous precedent

According to a presentation shared by TVA, future increases to the Grid Access Charge will not be required to go through a public input process. This provision sets a dangerous precedent that will enable TVA to increase energy costs for residential customers in the valley with little to no public oversight.

On top of these changes, TVA is slated to consider another 1.5% retail rate increase this fall, which would be the fifth annual rate hike implemented by TVA since 2014.

Looking forward

As local power companies adjust to TVA’s new Grid Access Charge, it’s hard to know how quickly the impacts will be felt by ratepayers throughout the valley. While some power companies already have fixed fees in place and clearly label those fees on their bills, many may introduce or increase their fixed fees without making them visible to their customers. Bill transparency will be an essential demand of customers and members who want to monitor the effects this rate change will have on their energy costs.

Rate hikes for the 10 largest local power companies in the TVA system. Overall rates have increased by an average of 4.5% across the system, thanks to rising mandatory fees, masking a relatively stable price for electricity. Source: Southern Alliance for Clean Energy

In order to track bill transparency across TVA, we’re working with the Southern Alliance for Clean Energy to collect copies of electric bills from the customers and members of local power companies throughout the valley. If you’re willing to support this research and share your most recent energy bill, please scan and send to nina@appvoices.org (no personal information from your bill will be shared).

Contact Brianna Knisley, Appalachian Voices’ Energy Savings Outreach Coordinator in Tennessee, at brianna@appvoices.org to find out more about how you can join the fight for increased bill transparency.


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One COMMENT
  1. Vera Watts says:

    TVA and Local Distributors, such as KUB (Knoxville Utilities Board which is no longer run by the city, but is privately run) have lost their original objectives. They were formed to serve their local users, but are now run by high paid directors and board members who only serve Land/Housing developers and big business. The losers in this arrangement are the private citizens, who were the ones for which these organizations were formed to serve!

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