2000px us tennesseevalleyauthority logo.svg

TVA Fuel Cost, Explained

Tennessee Valley Authority’s Total Monthly Fuel Cost seems to be the subject of conversation as TVA periodically increases or decreases the amount of the monthly charge. Not only is the change of the Total Monthly Fuel Cost being questioned, so is the purpose of the fuel cost and its effect on Fayetteville Public Utilities customers.
The Total Monthly Fuel Cost is not unique to FPU and its customers. All distributors of TVA power are charged the monthly fuel amount. Some of those distributors have chosen to present the fuel cost amount as a separate line item on monthly utility bills while others have decided to include it in with the monthly total. Regardless of how it is displayed on customer bills, all customers in the Tennessee Valley pay for the cost of fuel. The Total Monthly Fuel Cost is not a variable cost associated with “fuel” that most of us think of as “gasoline.”
About 75 percent of TVA’s power supply comes from fuels used to make electricity — nuclear, coal, oil and natural gas. TVA’s costs change when the prices of these fuels change because of weather, the economy and global supply and demand. This fuel cost increases or decreases monthly, depending on how much TVA pays for fuel and purchased power.
In the past, a portion of TVA’s cost of fuel was included in the base rate part of your electric bill — the part that primarily covers TVA’s cost of building and operating power plants and transmission lines (fixed portion of the TVA Total Monthly Fuel Cost). The rest of TVA’s fuel costs were recovered through the TVA Fuel Cost Adjustment on customer bills (variable portion of the TVA Total Monthly Fuel Cost).
Effective in April 2011, 100 percent of TVA’s fuel costs was included in the TVA Total Monthly Fuel Cost. These costs are a significant component of TVA’s overall costs, and the fuel cost part of your bill had to be changed to be consistent with the overall pricing structure changes.
It is also important to remember that the fuel cost charge on your electric bill may be different than that of your neighbor. The Total Monthly Fuel Cost is based on individual consumers’ kilowatt-hour charges, so this amount does vary from person to person and from month to month.
TVA makes the electricity used by nearly 9 million consumers across a seven-state region of Tennessee, Kentucky, Alabama, Mississippi, Georgia, North Carolina and Virginia. TVA sells its power to local distributors, including Fayetteville Public Utilities, which, in turn, sell the power to the homes and businesses in their service areas.
Total Monthly Fuel Costs are only part of your bill. Your bill is impacted by both use and cost. So by controlling your use, you control your bill and your cost. If you’re interested in lowering your electricity bill, you can take an Online Home Energy Audit at www.escore.com to receive a free conservation kit. These kits can help save up to 20 percent on annual utility costs if all the audit recommendations are implemented. If you have any questions, don’t hesitate to call FPU at 931-433-1522. For more information relating to energy-saving tips, visit the TVA’s energy efficiency website, www.2escore.com. The efficiency experts at TVA have compiled a collection of online tools, calculators and articles to help electric consumers make the most of their energy dollars.