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Thursday, August 18, 2011

Rates and Network Investments to Increase on October 1

The cost of electric power from Glasgow EPB will increase on October 1. And even though no one likes to hear that, and we certainly don’t like to implement it, there are many good things that will come from this move.

A part of the increased cost will come from TVA’s recent decision to increase the wholesale rates they charge the distributors of TVA power like Glasgow EPB. Their increase of 2% comes on the heels of their change to Time Of Use (TOU) wholesale rates which became applicable to Glasgow in April. Even though TVA’s monthly fuel cost adjustment keeps their wholesale rates variable each month depending on their luck in generating power with hydroelectric dams and the market conditions for the coal, natural gas, and uranium it takes to fuel the generators which provide our power, this increase is applicable to their base rates. Their increase will go toward TVA’s plans to idle 18 coal fired generation units over the next five years and replace those units with additional natural gas and nuclear generation facilities. Some of this money will also be used to place additional environmental controls on the coal-fired units they are going to maintain. It is virtually certain that we will see continued increases in our wholesale costs each year as they work through their aggressive plan to transform and clean up their generation resources.

Of course, the best steps that TVA can take to clean up their generation portfolio are those relating to TOU rates which can convince us all to use less power during peak times and more power in the off-peak times. You have surely heard us talking about this a lot over the last six months, and even though most have heard about it, and some have really gotten on board with the plan to change the times of day that we use electricity, most have not yet begun to change their usage patterns. The problem has been right in front of us all each day during the hot summer. A graphic showing our daily energy usage has been in the upper right hand corner of the Glasgow internet homepage all summer, and every afternoon we have had dramatic peak demands – the kind that makes the cost of generating electricity much higher. Obviously, we still have a lot of work to do!

While TVA ponders their revenue needs and how they will further implement TOU rates, locally, Glasgow EPB has been continuing its preparations for the TOU environment. We have been steadily investing and building our electric system and our broadband system to be capable of delivering TOU rates to our customers as soon as TVA makes them available. The local electric rate increase, amounting to about 4.6%, that we will implement on October 1, which is in addition to the TVA mandated increase, will be used to fund projects that continue those system upgrades, and a few other things as well.

We will use the additional revenue to put more technology in place which we hope will make us more successful at convincing customers to change the way they use electric power. TOU rates are already being charged to Glasgow EPB by TVA, and one prime reason for our need to increase electric rates is the poor participation we got from most customers this summer as we asked them to conserve on summer week day afternoons. Since the cost of power from TVA is also going steadily upward, we will use some of our additional revenue to rebuild certain electrical circuits with larger conductors. Some energy is lost in transmission and when the cost of energy goes up, it makes great economic sense for our future to install larger conductor that is less prone to losses than the older, smaller conductors. We also have additional expenses that must be funded. One of those is the large increases in our annual in lieu of tax payments we make to local governments and schools. The addition of our new East Glasgow Substation and the transmission lines coming and going from it have dramatically increased the value of our system. When that happens, just like when the value of your property increases, we are required by law to increase our payments to local schools and governments proportionately.

So, even though no one would wish for electric rates to increase, as you can see these increases will result in additional investment in the local network which is so essential to life in Glasgow, as well as improvements in the TVA network which is so important to our region. Unlike some segments of our country’s highways, bridges, airports, and other infrastructure, TVA and EPB are continuing to invest and rebuild our networks such that they remain modern and increasingly reliable. This is the way we make life in Glasgow better than life in other communities. That is what we are here for and we are determined to do this work for you.

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