VOL. 133 | NO. 52 | Tuesday, March 13, 2018
TVA Proposal Would Calculate ‘Grid Access’ Fee in Utility Rate
By Bill Dries
The Tennessee Valley Authority is formally considering a change in the structure for what it charges local utilities, including its largest customer Memphis Light, Gas and Water Division, for wholesale electricity. And it includes a percentage of the rate for underlying fixed costs, or what the federal agency calls a “grid access charge.”
The grid access charge is determined by a formula that takes into account how much of a utility’s historic sales come from residential, commercial and manufacturing customers.
TVA estimates the proposal would translate to no more than a $2 increase to a consumer’s monthly electricity bill.
TVA’s coal-fired Allen Fossil Plant is about to be replaced by a $1 billion natural gas-fired plant just south of it. It is one of several changes TVA is undertaking locally and nationally, including a proposed fixed cost or “grid access” fee that utilities would pay on wholesale electricity without raising the per-kilowatt-hour fee utilities pay. (Daily News File/Andrew J. Breig)
“Our business has a high fixed cost,” TVA CEO Bill Johnson told the Memphis City Council in January during a visit to the city. “We need to make sure we are recovering the cost of that from everybody who uses that system. “Every gas company in the country does this, every water company and most electric utilities.”
TVA considered two other alternative methods to charging for wholesale electricity.
“TVA found that none of the alternative rate changes is substantive enough to result in market responses and customer behavior changes that would require TVA to modify its power generation operations or to alter its power generation and transmission systems,” TVA’s executive summary of the proposal reads.
If approved by the TVA board, the new rate structure would start being used in billing local utilities in October.
TVA opened its public comment period of the proposal last week. The period runs through April 9.