In Alabama Meeting, TVA Votes to Increase the Cost of Power, Double Down on Natural Gas

FLORENCE, Ala.—At Thursday’s meeting of the board of the Tennessee Valley Authority, members got a friendly reminder from among their ranks. 

Michelle Moore, a board member, spoke before the body voted to increase TVA’s base electricity prices by 5.25 percent, a decision that may lead to higher bills for customers of the public utility. In her comments, Moore reminded her colleagues of what is written above the entrance of the TVA building. 

“‘For the people’…is written over TVA’s front door,” she said. “And in that spirit, I just encourage TVA to find right ways to share any proposed future rate adjustment proposals broadly, so that everyone has the opportunity to get informed, get engaged and bring their perspectives forward.”

Her comments came after criticism from consumers and advocates over transparency related to the rate hike’s rollout. The proposed rate increase came largely as a surprise to members of the public, with word of the adjustment coming only in the release of Thursday’s meeting agenda. No additional materials about the proposed rate increase were available to the public before the meeting.

The rate increase will fund construction and other efforts, TVA officials said, including continued investment in fossil fuel infrastructure. 

Moore would go on to vote with every board member to approve the proposed rate increase, which will go into effect in October. 

The board, with Moore dissenting, also approved its budget resolution, which provided for the additional spending related to the increase in revenue expected from the rate increase. Moore said she chose to vote against the budget resolution because, like past budgets, it delegated decision-making authority on capital projects, including fossil fuel investments, away from the board. 

Thursday’s meeting was held in Alabama, where TVA supplies electricity to local power companies across the northern part of the state. Board members heard from TVA officials who argued that a rate increase was necessary to fund continued investments in nuclear and natural gas facilities and fund updates in human resources infrastructure. 

Board members had heard from skeptics of the rate increase during a two-hour listening session at a Florence hotel on Wednesday afternoon, a day prior, where some members of the public criticized the lack of transparency around the rollout of the proposed price hike. 

That session was not streamed or recorded, according to TVA officials, and public comments sent to the agency in writing are considered private, a spokesperson wrote in response to questions about the session.

During Thursday’s meeting, John Thomas, TVA’s chief financial strategy officer, laid out TVA’s case for the rate increase, telling board members that the move was necessary to continue infrastructure investments, including in fossil fuels. 

“Natural gas is becoming a larger portion of our capacity needs, and we need to make sure that we’re a top performer in that area,” Thomas told board members. 

At one point, Moore asked executives to provide a more understandable explanation of what the impact of the rate increase may be for a TVA customer. 

“People pay bills, not rates, so can you please share a kitchen table view of what this rate increase would mean for working families in the valley?” she asked. 

President and CEO Jeff Lyash said that the average bill of a TVA-supplied customer is about $138 a month. The given base price increase, if not offset by fuel cost adjustments later, would result in a monthly increase of about $4.35 to that bill. 

Multiple times during the meeting, executives emphasized that fuel cost adjustments over the last year have balanced the impact of past rate hikes, including a 4.5 percent increase in 2023. Fuel cost adjustments that result in lower bills in the short term aren’t guaranteed, and natural gas prices may have reached a low point, according to TVA estimates. 

Given Thursday’s rate hike, TVA officials have little room left to increase base rates. Contracts with local power providers supplied by TVA include provisions that allow for renegotiations or other changes if rates increase above 10 percent within a given timeframe, providing an incentive for the utility to hold back on future adjustments. 

The investments planned by TVA with the revenue generated by the rate hike aren’t carbon neutral. Natural gas, documents show, will remain a key investment for the utility, though a press release issued after Thursday’s meeting called its portfolio “increasingly carbon-free.”

SEC filings show that last year, around 46 percent of TVA’s electricity supply was sourced from fossil fuels, with the other 54 generated from nuclear, hydroelectric or other renewables.

During the meeting, board member Beth Geer, who voted to approve the rate hike and budget resolution, shared concerns about the utility’s continued long-term investments in natural gas. 

“I share concerns that many people have voiced to me about shifting from one fossil fuel to another, mainly natural gas,” she said. “The projects being planned today have a 20- to 30-year life span, and we must move quicker to address the climate crisis.”

Geer emphasized TVA’s current commitments to solar and other renewables but said that the board is sometimes forced to make hard choices and tradeoffs.

“Our goal is a cleaner region for the future and to be able to deliver to the people of this region,” she said. 

Gaby Sarri-Tobar, energy justice campaigner at the Center for Biological Diversity, criticized the board’s decision to double down on fossil fuel investments. 

“It’s outrageous that TVA is raising rates again to pay for more dirty fossil-fuel plants and pipelines,” she said. “The country’s largest public utility is planning to build more methane gas capacity this decade than any other utility, defying its duty to be a clean-energy role model. By approving this rate hike the TVA board is responsible for making lifesaving power more unaffordable for millions of people as our climate spins out of control.”

Staff with the environmental nonprofit said the agency should have provided supplemental material about the proposed hike for review before the meeting. 

“It’s highly unusual for a utility the size of TVA to issue a rate increase with zero independent review.” 

Unlike many other utilities across the nation, TVA’s board holds the sole authority to raise its rates, a power given to it by U.S. Congress. In other places, including much of Alabama, energy suppliers are required to submit to rate regulation by entities like a public service commission. 

Stephen A. Smith, executive director of the Southern Alliance for Clean Energy (SACE), said that the TVA board’s unique, unchecked power to raise rates is antithetical to the institution’s purported role as a public utility. 

“Only in an Orwellian world of misinformation do we see our nation’s largest ‘public’ power utility pass a massive rate increase while providing the public the least amount of information compared to ‘private’ utilities,” he said. “It’s highly unusual for a utility the size of TVA to issue a rate increase with zero independent review. This is a broken process, and every ratepayer in the Tennessee Valley is literally paying the price.” 

TVA supplies electricity to more than 150 local power companies, many of which are expected to pass the rate increase on to customers.

“People across the Tennessee Valley will see electric bills increase because their public power utility has spent their hard-earned money on plans that it refuses to release to the public,” said Maggie Shober with SACE. “But what is perhaps most disappointing is the fact that the people of the Tennessee Valley have never known anything different. They do not know that most utilities must present a detailed case for public scrutiny before raising rates. TVA has a visage of public power as a federally-owned utility but operates as an unregulated private monopoly.”