More Hydro Equals Lower Fuel Costs

January 17, 2019--TVA’s fuel cost adjustment for February will be the lowest for that month since 2013. TVA will not raise its base rates for Fiscal Year 2020 and has offered a 3.1% rebate for any of our local power companies that sign a 20-year long term partnership agreement.

The fuel rate for February is based on an overall system average that is approximately 15% lower than the three-year average February fuel cost. Thanks to abundant rainfall and lower rates for purchased power and natural gas, TVA can pass these savings onto its 154 local power companies and 52 large industrial customers.

The wholesale total monthly fuel cost for February will be 1.637 cents per kilowatt-hour for residential and business consumers, 1.615 cents per kilowatt-hour for Large Manufacturing customers, and 1.602 cents per kilowatt-hour for other large-usage customers served by TVA and local power companies.  

"The overall system average fuel rate for February is approximately 15% lower than the three-year average February fuel cost," TVA spokesman Scott Brooks said. "This is primarily due to lower than forecast purchased power and gas rates and higher expectations for hydro generation in February."

Average participation for 2020 is already above average and after 2018 and 2019 setting records for the wettest years, TVA’s hydro plants have plenty of water for generation. In fact, hydro production at TVA's 29 power-generating dams is more than 16% above normal this month.

Hydroelectric generation is TVA's cheapest source of power. Milder winter temperatures also have limited how much power TVA must purchase or generate from its most expensive combustion turbines.

"TVA's planned mix of low-cost nuclear, hydro and natural gas power generation is a benefit to the people of the Tennessee Valley," Doug Peters, president of the Tennessee Valley Public Power Association, said in response to the drop in February's fuel cost adjustment. "Local power companies across the Valley and their customers will benefit from that combination and the good fortune of heavy rains and low natural gas prices early this year."

Read more about total monthly fuel costs.