TVA rate hike opposed by business/industry group

By Kathy Helms-Hughes
Twenty-six members of the Elizabethton/Carter County Association of Business and Industry have come out in strong opposition to a Tennessee Valley Authority plan to increase residential and commercial electric rates by 7.4 percent, while lowering industrial rates by 2 percent.
According to Monica Feathers, secretary for the group, the association has sent a letter to the three-member TVA board, Gov. Phil Bredesen, and 30 U.S. senators and representatives, voicing their opposition and raising a number of concerns.
The TVA board is scheduled to vote on the proposed rate increase at its meeting Wednesday.
The city/county association, which employs approximately 2,000 employees, is asking members of Congress to act quickly to turn back the proposed hike in electric rates based on the following concerns:
* The recent blackout could bring new rules, regulations, policy, electric generating plants, transmission upgrading and reliability standards "which will be costly and may force further electric rate increases and impact the profitability and employment of corporations."
* TVA is a "monopoly" and its customers have no choice but to purchase TVA power, the group says. "Monopoly power should be carefully exercised with public hearings in Northeast Tennessee and other regions served by TVA."
* An increase in natural gas prices, predicted by Atmos Energy, coupled with higher electric prices, "will negatively impact corporate bottom lines," the group says. "Gasoline prices are also running high and no relief seems to be in sight, which contributes further to higher total energy costs."
* TVA's proposed 7.4 percent increase "far exceeds the general inflation rate of 2.4 percent, which makes the proposed TVA electric rate increase inflationary," according to the group.
* The U.S. Environmental Protection Agency has mandated scrubbers at TVA's coal-fired generating plants, but did not provide sufficient funding for the scrubbers, "a classic example of an unfunded federal mandate," the group says. Members believe the coal companies, "the prime fuel source leading to the emissions problems, need to be part of the solution without increasing the per-ton cost of coal to TVA and its customers."
* Higher electric bills could have a negative impact on senior citizens living on fixed incomes, as well as current employees of business and industry.
"As senior citizens struggle to purchase prescription drugs and survive on battered investments, including fewer earnings due to lower interest rates, TVA plans to force higher costs upon them. Higher electric rates may also force some firms to reduce employment and use more technology to increase productivity to compensate for the electric rate increase, if it is approved," the association states.
* The proposed 7.4 percent increase is "ill-timed and harmful."
* Increasing electric rates would hurt the economy and a region which has had many manufacturing plant closings and high unemployment rates," the group says.
TVA, the nation's fifth-largest electric utility, has annual power sales of more than $7 billion. At the end of 2002, the utility had outstanding bonds and notes of $25.3 billion. According to the Bush administration, "That amount, however, gives an incomplete picture of TVA's debt position because it excludes $865 million in lease/leaseback arrangements."
The Bush administration has said it is committed to identifying a TVA debt-reduction target within the "healthy" range, and having a plan by Sept. 30 to reach that number in a reasonable period of time.