TVA power rate increases worry Duncan

Knoxville News-Sentinel

RICHARD POWELSON,
March 9, 2006

WASHINGTON - U.S. Rep. John J. Duncan Jr. told the Tennessee Valley Authority's chairman Wednesday he is concerned about the impact of recent and future power rate increases on low-income residents in TVA's region.
"We still have a lot of lower-income people," Duncan, a Knoxville Republican and chairman of the House water resources subcommittee, told TVA Chairman Bill Baxter at a budget hearing. "I hope that you keep in mind there are still a lot of people who will have difficulty with their utility needs."

Baxter, who did not have much time to comment before House members dashed away for an hour of voting, said the expanding board of directors will have to discuss how to handle future financial pressure, including much higher costs of fuel used at TVA power plants. Six new board members soon will be sworn in and join the two current members.

TVA's board last month announced a 9.95 percent wholesale rate increase to become effective April 1. Last July, the board approved a 7.5-percent boost.

In a written statement given to the subcommittee, Baxter explained that TVA managers are cutting internal costs and raising rates to deal with much higher prices for coal, natural gas and for buying some peak power from other producers that burn coal or natural gas.

"We appreciate our customers understanding the problem of rising fuel costs and that this national problem is coming at us" from different directions out of TVA's control, his statement said.

Duncan for many years has complained about TVA's high total debt, but he has praised the agency for steadily lowering it in recent years. The total is about $25.6 billion now after reductions of $225 million to $278 million in each of the past two years.

On Wednesday, Duncan said he is pleased that the current TVA management has made debt reduction "a high priority."

During a break in the hearing, Duncan said he was happy that TVA has cut a variety of expenses the past decade because they were low priority or ill-advised.

But he continues to complain annually, he said, about TVA's board giving large bonuses. Last year, for example, 146 top managers received varying portions of $12.9 million in bonuses, including as much as $840,000 to the chief operating officer.

"I think those bonuses are ridiculous," Duncan told reporters in the hallway. "They are unnecessary."