Beginning in April, TVA will change the way it charges distributors like Middle Tennessee Electric. However, that won’t mean members of the electric cooperative will see much change in their bills.“The average member will see little difference between the total amount of their March and April bills,” said MTEMC President Frank Jennings. “The biggest changes, at this point, are really between TVA and the distributor. We are working to cause as little effect to our members as possible.”
The biggest difference residential members will see is in the “Customer Charge” component of the bill. This monthly charge, which is a charge all electric utilities have, is to cover the electric cooperative’s fixed monthly costs. It is changing from $9.79 to $13.75 a month.
“We, and most distributors in the Valley, have had very low Customer Charges historically,” Jennings said. “Our Customer Charge is not sufficient to cover our fixed costs. One thing TVA’s rate structure change has made us do is to pay more attention to that, as the cooperative is more at risk if we do not appropriately cover our fixed costs.”
Jennings said a cost-of-service study performed by an independent consulting firm suggested MTEMC’s Customer Charge could appropriately be more than $20. “Think of it this way,” he said. “For every dollar the cooperative takes in, 80 cents goes straight to TVA to pay for power, and we operate on the other 20 cents.”
But while the Customer Charge is going up, MTEMC’s residential energy charge is going down.
“From March to April, these changes will mean slightly higher costs for those using less than 1,500 kilowatt-hours a month and slightly lower for those using more,” Jennings said. “The 1,500-kwh mark is about average for our residential members.
“I would want our members to know three things about the changes. First, this change is revenue neutral, which means the cooperative will earn no extra money. Second, this will help our members a little in the summer and winter months when consumption and TVA’s rate are higher. Third, we’re making the changes in the best interest of the membership as a whole…to better protect our rate stability.”
TVA’s Fuel Cost Adjustment, a line item on MTEMC member bills since 2006, will remain.
“The FCA will continue to fluctuate monthly,” said Jennings. “Everything we collect for that charge goes straight to TVA. TVA uses that money to cover changes in their costs for fuels to make electricity – coal, natural gas, power purchased on the open market.”
