Small business group criticizes TVA plan to add ‘grid access fee’ to wholesale electricity cost

The Tennessee Valley Authority’s proposal to add a “grid access fee” to wholesale power rates is being criticized by a coalition of small businesses, reports the Times Free Press. TVA says the move will make power bills more stable and better reflect actual expenses without raising overall rates. The coalition says it unfairly rewards big industrial users at the expense of small businesses and low-energy individual power users.

“This proposal from TVA is a bad deal across the board, continuing preferential treatment for a handful of large industrial customers, while passing the cost along to Tennessee families and small businesses,” Lenda Sherrell, state director of the Tennessee Small Business Alliance, said during a news conference Tuesday in front of TVA‘s power headquarters in Chattanooga.

Over the past five years, TVA rates have declined by an average 2 percent and electric rates in TVA‘s seven-state region are below those in 70 percent of the country. But the biggest cuts in power rates since Bill Johnson become TVA‘s CEO in 2013 have been provided to large, direct-served industrial customers which have benefited from incentive plans, off-peak purchases and changes in how fuel costs and interruptible power contracts are priced.

A study by Synapse Energy Economics Inc. found TVA‘s average rates for industrial and direct-served customers dropped 20 percent from 2011 to 2016 while residential rates rose an average 5 percent.

Consumer and environmental groups claim a proposal the TVA board will vote on Thursday could continue that trend by imposing additional fixed, or grid access charges, to wholesale power rates charged to the 154 municipalities and coops that distribute TVA-generated power.

But in a new web video outlining the proposal, TVA contends that the proposed rate change will not generate any net increase in revenue for TVA since the grid access fee will be offset by lower energy charges per kilowatthour sold. The changes will help reduce the variability of bills by raising the fixed costs for the typical user by about a half cent per kilowatthour, while cutting the energy use charge by a comparable amount.

Johnson said TVA developed the rate change over the past year working with its local power companies and he said the change should help reduce some of the winter and summertime spikes in power bills during severe weather months and help to better reflect a portion of the fixed costs TVA incurs to maintain its generation and transmission assets to serve its customers.