On May 10, the Tennessee Valley Authority Board of Directors passed a highly debated change to their rate structure. TVA reduced wholesale energy rates by five cents per kilowatt-hour but added a new grid access charge.
Local power companies that purchase energy from TVA will individually decide whether to pass the rate structure on to their customers, which could mean a new fixed charge for consumers in addition to costs based on the amount of energy used.
The rate changes will go into effect in October, and according to a TVA presentation, TVA will not be required to go through another public process to increase the grid access charge in the future.
TVA received widespread criticism on the proposal from social justice and environmental groups and agencies, such as the Sierra Club, the NAACP, the Southern Alliance for Clean Energy and the State of Tennessee Department of Environment and Conservation, as well as from citizens, politicians and Appalachian Voices, the publisher of this newspaper.
A fixed charge can increase the percentage of customers’ income that goes to their energy bills by giving ratepayers less control over their bill. This will be detrimental to low-income families and small businesses, according to Rory McIlmoil, Energy Savings Program Manager at Appalachian Voices, who says that “many families in Tennessee already pay 20 percent or more of their annual income on energy costs.”
Fixed charges also decrease residents’ financial incentive to make energy-efficient home upgrades or install solar panels, as a smaller portion of their bills will be based on how much energy is consumed. The NAACP and the Tennessee Small Business Alliance, among others, have also argued that the rate change favors large commercial energy users over the average citizen. — By Sara Crouch