On Thursday, August 24, 2023, a unanimous decision was reached by TVA’s Board of Directors to implement a 4.5% across-the-board increase in their wholesale rates. This adjustment in rates is aimed at generating the necessary revenue amounting to $15 billion, essential for funding the construction of additional power generation assets.
Over the past four years, TVA has experienced unparalleled expansion within the Valley. Remarkable economic progress, combined with a significant influx of people into the Valley at a rate three times higher than the national average, has started to exert pressure on TVA’s power generation capability. Despite making substantial investments in their power infrastructure, TVA’s basic power rates have remained stable during this period.
While the prospect of any rate hike is regrettable for customers, it’s worth noting that TVA’s energy costs continue to remain lower than those of 70% of the nation. Anticipating a 30% increase in energy demand over the upcoming decade, TVA plans to counteract this growth through an investment of $100 million in energy efficiency and demand response initiatives. These efforts aim to mitigate the impact of such growth while concurrently assisting in reducing energy bills for end-users.
In response to an increase in the wholesale rates by TVA, ACE Power’s Board of Directors has approved a 3.1% adjustment in retail rates. The generated funds will be allocated towards securing capital for significant infrastructure projects and essential system enhancements. This adjustment also encompasses the inclusion of the Pandemic Relief Credit, previously a 2% wholesale credit provided by TVA, which is now being phased out.
This marks ACE Power’s first alteration to rates since 2015. The result of the combined rate adjustment represents an approximate $10 increase in the average monthly electricity bill for residential members. Rising pressures from inflation, combined with significant limitations in the electric distribution sector’s supply chain, have put strain on the association’s financial needs. Additional revenue streams, primarily stemming from ACE Fiber, continue to offer some relief, as the subsidiary’s profits are reinvested in the cooperative. These funds are utilized for capital expenditures and to mitigate potential future rate increases.