Busting the Top 5 Rate Myths

When it comes to rates, TVA is delivering on its mission and doing what is right for the people of the Tennessee Valley. Here, we separate fact from fiction regarding our 2018 rate change.

There has been a lot of buzz about TVA’s proposed 2018 rate change. This makes sense because rate structures are complex and need to be studied to fully understand them. Unfortunately, not all media reports and social media posts have been accurate.

What’s important to remember is that as the marketplace evolves, TVA will continue to keep the 9 million people of the Tennessee Valley at the center of all we do. We are your friends and neighbors. We live here too, and we care about you. We know electricity is valuable—it keeps us warm (and cool); provides health, safety and security; and is always there when we need it.

We don’t want anything to come between us and the trust you put in TVA; which means we have to set the record straight by debunking some of the myths surrounding this rate change.  

Myth #1

You will pay exponentially more for electricity.

Fact: Some residents will actually see lower bills overall, and some residents may pay, at most, $2 a month more on their energy bills if their local power companies choose one of TVA’s recommended rate options.

Here’s a look at anticipated bill impacts.

Monthly Electricity Used (kWh)Current Monthly Bill ($)Monthly Bill under Proposed Rate Change ($)Difference ($)Percent Increase
250$40.79$41.29$0.501.2%
500$63.16$64.16$1.001.6%
1000$107.91$109.91$2.001.9%
1500$152.66$152.77$0.100.1%
2000$197.41$195.62-$1.79-0.9%
2500$242.16$238.48-$3.69-1.5%

The rate change is NOT a rate increase; it is a change in how we structure our rates: how much of the power cost is a flat monthly charge (like Netflix) and how much is a charge that varies with usage. The proposed structure is revenue neutral for TVA—meaning we are NOT charging more for wholesale electricity. We will actually be lowering local power companies’ energy rate while we add a grid access charge—both amounts will be equal to be net neutral.

Myth #2

TVA is implementing their new rate structure secretly.   

Fact: The fact is that since 2013, TVA has worked with customers to develop and implement a long-term pricing strategy, informing the public and stakeholders through every step in the process.  There is nothing secret here, because we’ve published media interviews, posted information on our website and social media accounts, and invited you to comment.

Myth #3

The rate structure hurts poor people.

Fact: In 1933, TVA was created to help the poorest people in the nation. That mission hasn’t changed in 85 years.

Under current rate structures, people who can afford to put solar panels on their homes are actually avoiding having to pay for their fair share of the grid, which still serves them when the sun doesn’t shine. That means customers who can’t afford solar panels end up paying more, subsidizing the solar panel investors.

Additionally, with this rate change, low-income people with high energy usage will see lower bills in the long term. The rate change will also help stabilize monthly bills and reduce higher bills in extreme summer and winter weather. 

Myth #4  

TVA’s new rate structure benefits industrial customers at the expense of residents.

Fact: Industrial customers will actually see a slight increase with the proposed rate change. Even with this industrial increase, residential and industrial rates will continue to be among the most competitive in the country.  

Myth #5

You’re charged for electricity before you turn on a light.

Fact: You still control your energy bill by choosing how much electricity you use and being more energy efficient. 

The rate change ensures that prices more accurately reflect the value of the power system— particularly the cost of the grid that serves all customers across the region and ensures your lights, heater, air conditioner, oven, refrigerator, etc., are on, come on and stay on when you most need them.

If you remember only one thing, remember this: we care about you and have structured the rate change with the goal of providing the lowest rates possible to all we serve for generations to come.