TVA - Massive Job Losses to Cause Power Rate Increase
August 1, 2009 Knoxville, Tenn. (AP) - The Tennessee Valley Authority has reported a $167 million loss for the third quarter blamed on slumping electric sales and rising costs to clean up a massive coal ash spill in Tennessee. The nation's largest public utility reported the loss Friday on $2.5 billion in revenue, compared to a $100 million gain for the same period a year ago.
Power sales were down 8.4 percent, mostly from large industrial customers. TVA says it has raised its recognized expenses for the cleanup of the Kingston Fossil Plant coal ash spill last December to $933 million, and has actually spent $143 million so far. TVA Chief Financial Officer Kim Greene says an electric rate hike is likely.
BHC (December 7, 2008) reports TVA's top 11 executives and two former executives who left during that year received about $11 million in salaries, incentives and deferred compensation, according to salary and compensation records requested by the Bristol Herald Courier. The authority's nine-member, part-time board of directors was paid a combined $371,800. In recent months, TVA imposed a nearly 20 percent average increase in rates - blaming the hike on skyrocketing power-production costs. The increase kicked in Oct. 1 and means the average residential customer is paying about $18 more a month.
TVA is a federal corporation overseen by the U.S. government, TVA supplies power to about 9 million people in seven southeastern states, including about 50,000 Tennessee and Virginia customers residing in the greater Bristol area. Earlier this decade, Congress approved a new governance structure for TVA that mandated significant changes and shifted responsibilities to executives who replaced the former three-member, full-time board of directors that oversaw operations. TVA will be stuck with the cost of a massive sludge spill that will be charged back to customers.
Tennessee Valley Authority President and CEO Tom Kilgore claims that 124 industrial plants in the TVA service area have slammed the doors since October 2008. That's a loss of 20,000 jobs and this troubles Mr. Kilgore. He claims, "When we sell less kilo-watt hours, every kilo-watt hour sale has a fixed cost recovery in it. To recover some of the depreciation, and some of out interest, and some of our taxes, so as we sell less, the pressure is there. We still have to pay our taxes, we still have to pay our interest, and we still have to account for our asset investment."
That means when electric demand decreases, electric rates will increase! So efforts by customers in Bristol to cut back to save on their staggering power bills will only mean more rate increases. They did get a small decrease recently due to lower fuel charges, but now that will be gone too in addition to all the job losses.
The Johnson City Power Board being hit on the bottom line like Bristol Virginia Utilities did when Crowley Foods Dumps Bristol. To quote Robert White of the Johnson City Power Board, "If customers relocate, we lose customers. If they stay in the area, it still can impact our customers, because if customers don't have jobs, then they are really under the gun to pay electric bills."
While the press claims "nothing is set in stone," they again can't connect the dots. On the one end we will be charged for over capacity and incompetence at TVA, and on the other we will be charged perhaps $800 million (they already spent almost $70 million) for an ash spill in Kingston, Tennessee. In addition to all of these problems TVA's retirement accounts have "shrunk" from $8 billion to about $5 billion due to Wall Street stupidity. Guess who gets to make all of that up?
In the middle of all of that chaos the TVA Board voted purchase 2000 megawatts of so-called "green" energy by 2011. This is all part of the power provider's plan to get fifty percent of its total supply by 2020. According to the New York Times (March 29, 2009) this is the most expensive way to generate power costing even more than a nuclear power plant. What about all the over capacity they already have? To quote:
wind and solar power are generally more expensive than the fossil fuels they are meant to supplant. If carbon dioxide penalties made coal power more expensive, as some environmentalists argue is inevitable, the relative cost of renewable energy might decrease. But consumers will still pay more...
The cost of solar thermal electricity, made by using the sun's heat to boil water and spin a turbine, would be nearly three times that of coal and more than twice that of natural gas. (It would be almost double the cost of wind energy, too.)...
A modern coal plant of conventional design, without technology to capture carbon dioxide before it reaches the air, produces at about 7.8 cents a kilowatt-hour; a high-efficiency natural gas plant, 10.6 cents; and a new nuclear reactor, 10.8 cents...
But if a utility relied on a great many wind machines, it would need to back them up with conventional generators in places where demand tends to peak on hot summer days with no breeze. That pushes the price up to just over 12 cents, making it more than 50 percent more expensive than a kilowatt-hour for coal...
The entire concept of "carbon capture" is just asinine. And even more problems. To quote BHC April 2 2009, "TVA has also been named in a lawsuit by the State of North Carolina for air emission problems at four of their coal fired power plants. Locally, the John Sevier Plant in Hawkins County (TN) is one of the facilities named in the suit."
Local Electric Utilities cut December 2009 power rates by 18% and 20%
The 16,417 electric customers of Bristol Virginia Utilities in December will see lower electric bills reduced 18 percent below this time last year. The average BVU customer will pay $119 for electricity use next month, significantly less than last December's $145 bill. The company was able to reduce its December rate because the Tennessee Valley Authority That supplies BVU's power adjusted its figures lower to reflect lower wholesale energy costs.
Among other factors, TVA has been able to produce more much cheaper hydroelectric generation because of heavy rainfall this year. This time last year due to low rainfall TVA was forced to use more coal and buy power from other providers. The choice of going with TVA has proven wise and the BVU Board and Wes Rosenbalm deserve a lot of credit.
Note: Wes Rosenbalm and I think 10 others went to Federal prison for assorted white collar crimes.
The 33,000 area customers of Bristol Tennessee Essential Services will also get a rate cut of 20 percent in December electric bills. Like Bristol Virginia Utilities the cut has come from TVA due to higher rainfall in 2009 and more hydro power generation. BTES consumers will be charged $40.12 for every 500 kilowatt-hours while last year it was $50.31 to use the same amount of electricity. Officials called the cuts "significant." This is a plus in a community staggering under massive job losses and double-digit unemployment. Ref. BHC 11-19-2009
Updated November 22, 2009
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