Blog Archive

Monday, August 25, 2008

Now It Is Official

Last week the TVA Board of Directors met and agreed with a TVA staff recommendation to increase their base wholesale electric rates at the same time that their quarterly Fuel Cost Adjustment (FCA) takes effect. This latest increase in the cost of power will take effect October 1 and the two increases combined will amount to a staggering 20% increase in the cost of the energy we purchase from TVA. Of course, the Glasgow EPB will have no alternative but to pass this cost increase along to our customers in the form of higher retail electric rates. By the time these increases trickle down to your bill, the net cost of your electric power will likely go up about 17%.

Since this increase occurs on October 1, and since the bills you get in October and November are normally lower just because the weather is milder, which naturally reduces your consumption of energy, this rate increase will not be greatly noticeable until your December and January bills. Isn’t that when we all really need a surprisingly high energy bill . . . at Christmas time and in January as the bills are rolling in for holiday spending? To say that this is frustrating to us at the EPB would be the very definition of an understatement. We are very disappointed in TVA and in our inability to protect you from this sort of economic shock.

Should the FCA remain at this level for a whole year, combined with the upcoming increase in the base rates, this rate move will take an additional $4 million per year out of Glasgow’s economy. When we think of all the steps we are taking, and have taken, to keep rates low and keep more money circulating in Glasgow’s economy, those steps, while often painful to us, are insignificant compared to the dire effect that this rate increase will have on our economy. Try as we might there is nothing we can think of that might offset this $4 million annual raid on our community’s savings. But we must not give up.

While the "company line" on this rate increase is that an extended drought in east Tennessee has drastically reduced hydroelectric power production (it has) and the cost of coal and natural gas has risen drastically (they have), and that the cost of power TVA must buy from its neighbors is going upward (it is, but the shame is that they are buying power in the first place) the underlying reason for the spiraling cost of electric power in our region is that we have made bad decisions for the last twenty years. We have employed a rate structure that actually encouraged folks to use more electric power than necessary and at the wrong times of day. We have sought new industrial and big box retail customers for the region without any questions being asked about what energy reserves were available to serve them. We have, for much too long, sought out growth for growth's sake, without consideration of the true costs associated with that growth. All of those things have combined to put TVA, and Glasgow, in the position of having to meet each new announcement of a new factory with the need to purchase more power from the market or build more expensive generation to serve that new industry. Those are the real reasons why your power bill is going up.

We tried to purchase power from another supplier, but that attempt was successfully countered by TVA. We built a robust broadband network and have installed advanced meters capable of exploiting a new wholesale rate structure that will reward customers who are willing to change the time of day when they use the most energy, but that new rate structure is excruciatingly slow in being offered. Still, there is more we can do . . . we can all work together to respond to this attack on our treasury by trapping more money in our Glasgow piggy bank. We can fight back by doing this one simple thing. We can all redouble our efforts to spend what money we can in businesses which are owned and operated by our neighbors right here in Glasgow.

When we shop in locally owned businesses we are voting for ourselves. We are saying that we value our dollars and we long to help our neighbors be more successful, which makes us all more prosperous. Shopping from locally owned businesses is a move which cannot be interrupted or usurped by a move by a few folks on a distant board of directors. Local businesses also tend to spend their money locally. A local dress shop probably uses a local accounting firm, a local law firm, a local cleaning service and local electricians and plumbers. Eventually, those local dollars come back to benefit each and every one of us who live here. We will be talking with you a lot more about this concept of localism over the upcoming weeks, months, and years.

So there you have it. The upcoming electric rate increase that we have been warning you about for months is now official. We have worked hard to defend Glasgow from this sort of news, but have yet to be totally successful, but we are not quitting. Now lets all work even harder to find new ways to strengthen our local economy and protect it from those who would take more out of it than we can afford to lose.