TVA benevolence highly suspect

TVA benevolence highly suspect
February 28, 2011

You’d think that TVA would have gotten the message by now, that more and more people are seeing through their haze of deceptions, obfuscations and deceit. But no, TVA continues to shovel out the rhetoric such as their latest billing change approved at the February 18 board meeting.

How does it affect consumers? Why, not at all because their bill will read the same amount by years’ end but the breakdown will be gone. Why is that? Some have speculated that with the change it will be possible to get a lot more cash in hand to oil their squeaky budget. Seems like a desperate act to me.

Let’s look at what TVA says about this new scheme. “We’re really just changing the allocation of the cost”, said Kimberly Greene, Group President. “No impact to the total rate, essentially moving one component over to another”. “You shouldn’t see, uh, our actual fuel charge shouldn’t be that much”, said CEO Tom Kilgore.

But the question, always the question when it pertains to the TVA, is why would TVA want to change the way fuel cost adjustments are made when it has no effect on consumers?

TVA leaves an entirely incorrect assumption that because TVA plans to shut off, involuntarily, the power to customers in five minute and sixty minute intervals when the system is reaching its peak power production that everything will be just fine, that everything evens out at the end of the year.

This TVA calls a “credit” which is nothing more than the ability to charge more in the summer and winter peak periods and then “credit” those shut off periods when demand is lower. Take it away, give it back.

TVA has not defined how much those”credits” will be but you can assume TVA will make a couple of bucks on the switcheroo transactions. Therefore, as the analogy goes, no one will drown in a pond whose average depth is 2 inches and whose maximum depth is 500 feet. So it all averages out so the customer is paying the same sleight of hand rate for electricity and TVA is the gainer.

Let’s call this more TVA trickery else why would TVA insist on the way fuel cost is accounted for? Also, it would be easier to dump high cost electricity say from the Midwest and not have to reveal how much extra it costs the ratepayer.

“Time-of-use-Rates” will be higher at peak demands for electricity. All of this can be found in the TVA statement, “Modification to TVA’s 5 and 60 minute response interruptible products are needed to align with Time-of-Use rate structure. Annual credit values will be allocated to seasons consistent with seasonal Time-of-Use rate design”. Got it? Simple as pie, TVA is hiding something.

This means they haven’t figured out how much higher the rates will be yet. One report quoted a TVA representative as saying that TVA’s 155 distributors will have to determine rates for 9 million customers. Talk about passing the buck! As I interpret the TVA Act, it also would be illegal.

“Can you just clarify what you want to achieve by the reallocation with the interruptible product, what are we and the customers going to get out of it”, asked Board Member McBride. Continued was a restatement by Ms. Greene that because energy costs more in the summer and winter…etc. I would like to see the basis in fact that TVA-produced electricity necessarily would cost more at any particular time of the year affected only by the vagaries of the cost of production materials.

This means that, oh well, the cost of importing electricity just went up, oh my, here’s your bill for that Mr. Customer. Move fuel costs from the base rate to fuel costs only. “No impact to the total rate,” said Group President Kimberly Greene.

Two questions; why did TVA choose to mix fuel costs with base rate costs in the first place? Why now, do they have to remove it? Ms. Greene talks ahead by focusing on “credits” when in fact the forced shutoff of electricity whether for 5 minutes or 60 minutes could be a great inconvenience to TVA customers, maybe even dangerous.

I suspect the reason was because of TVA’s tortured and arcane accounting procedures. At one time, TVA had overcharged customers about $800,000 in “fuel cost adjustments”. What happened next is a travesty, they then told the SEC in a report that they were planning to “refill” the $800,000 “loss” they in effect had stolen from ratepayers with more borrowing or rate increases.

TVA later started “refunding” the money to ratepayers over a period of months making it appear that they were getting a rate decrease. More of TVA dissembling.

Ernest Norsworthy

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