TVA up to old misleading tricks
August 24, 2009
It may be interesting to know where TVA stacks up relative to “Average Retail Rates of the 100 Largest U.S. Utilities” (2008) that showed TVA’s cents/kWh a penny below the median of 8.8 cents/kWh. A timelier (and more accurate?) figure from the Energy Information Administration for May 2009 is significantly different for the state of Tennessee.
Electricity Tennessee U.S. Avg. Period
Residential* 9.56 cents/kWh 11.86 cents/kWh May-09
(7.8 cents/kWh TVA reports)
Commercial 9.54 cents/kWh 10.12 cents/kWh May-09
Industrial 6.61 cents/kWh 6.89 cents/kWh May-09
* Click for all other states – Source: Energy Information Administration
It is so easy to lie with statistics (see “How to Lie With Statistics”, Darrell Huff, 1954) that almost every report with graphs and charts leans toward information most favorable to the preparer, not neutral. For example, in TVA’s report (Page 68), TVA tries to compare its own rate increase of 8% in October to ten other electricity producers in the country.
TVA boasts that “recent” requests for increases in rates by these companies average a 14% increase. (Were there any companies who did not request an increase?) There are two problems with this figure; first the representative companies do no include all of the power companies competing with TVA, e.g. the Southern Company which includes Alabama Power Company, Georgia Power Company and Mississippi Power.
Of course, their chart does not include the fact that TVA needed to increase rates by a total of 16%, the added 8% to be borrowed by TVA. All this does is to postpone the day when the borrowed money will have to be included in another rate increase.
Secondly, the ten companies “average” a 13.7% increase request (no time frame), not 14% as stated. But you cannot add raw averages to arrive at anywhere an accurate comparison. So rounding up (favorable to TVA), a lie, also results in grossly inaccurate information for comparison.
TVA’s numbers just do not accurately compare with EIA reports. One difference not divulged by TVA is that TVA does not collect taxes nor do their figures include additional charges by TVA’s distributors. Therefore, a consumer looking at TVA derived data in their report may believe something that is absolutely untrue.
And TVA rates do not include collection of taxes, taxes that every other investor-owned utility must collect. From the very start, you cannot compare apples with oranges and expect any kind of reasonable comparisons. It’s all skewed in favor of the TVA.
When TVA says “Recommend an ~8% increase in average total wholesale rate effective October 1st”, they mean they are blessing their own prayer, nobody but the board can “approve” it. The decision already was made before the meeting anyway.
All other normal utility companies must get state approvals for rate changes and their requests are subject to negotiations between the utility and the various state public service commissions.
Where does TVA get its income from other than ratepayers? Good question you may say, since that is supposedly the only source perhaps excepting some interest income. God forbid, it is not from “outside the fence” sales.
Another source, grant money, of some $200 million with the TVPPA has been requested from the Department of Energy from “stimulus” money for a “smart grid”.
If you believe it is illegal for the TVA to accept “grant money” from the DOE, I am in your corner. Every dollar from other sources to the TVA is a dollar not paid by ratepayers and that is a good thing. Except it is in violation of the law TVA is supposed to work under.
The decision for Congress to do something about the TVA mess should be an easy one, dissolve it. If TVA were to have any kind of continuing federal role (I can’t think of one) at least its continuing disruption of the Tennessee Valley would be at a minimum.
Next, a look at TVA expenses.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com