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TVA Fuel Cost Adjustment on your Monthly Bill

A Message from Kevin Doddridge, General Manager of Northcentral EPA


The Tennessee Valley Authority (TVA) began to assess a Fuel Cost Adjustment (FCA) in October of 2006. This mechanism allowed TVA to help recover mostly uncontrollable fuel and purchased power costs.  When first implemented, this represented a small amount of money.  As the amounts have changed, this topic needs to be addressed again.

In the wake of Hurricane Katrina and Rita, fuel commodities needed to generate electricity fluctuated greatly. TVA decided to pass this cost on every 3 months to consumers. This cost is paid by the end use consumer, and represents a direct pass through to TVA. Northcentral receives no revenue from this exchange.

Later it was determined to adjust the amount monthly to more accurately reflect current generating costs. A recent change was to pull some “base fuel” out of the rate base and place it in the FCA. This, in effect, lowered the rates, but raised the FCA proportionately.

Overall, rates are up approximately 4% from last year, and the FCA is higher than previously forecasted. Recent tornados in Alabama resulting in hundreds of millions of dollars in damages, as well as replacement power purchases when the Browns Ferry nuclear reactors were shut down by the weather.

Forecasts show a declining FCA, and staying the course of the last several years, Northcentral has no budgeted rate increase. With these things in mind, we are hopeful to see a little rate relief in the upcoming months.

A situation did occur this past month that we at Northcentral regret. Some 2,900 meters were unable to be read at the proper time due to a communications failure at a Northcentral substation. We were unable to get this communication problem corrected quickly, and these accounts were billed for 35 days of consumption or more. This resulted in higher monthly bills. Even though the days billed for July will be less, and bills may come down, we at Northcentral regret this and will work to assure our consumers that this will not happen again.

Even though not the lowest, Northcentral rates are on average 10% less than other Electric Cooperative’s in the area. Also, 80% of all Electric Cooperative’s in the country have higher rates.

Click here for more information on the TVA Fuel Cost Adjustment