World Business

KNOXVILLE, Tenn. —

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The Tennessee Valley Authority on Wednesday approved its largest electric rate increase in more than 30 years, citing skyrocketing fuel costs and a three-year drought that has sharply reduced its ability to generate cheap hydroelectric power.

Directors for the realm’s largest public utility adopted a 20 percent berate increase worth about $2 billion. The increase is expected to be passed along by TVA’s 159 distributors to some 8.8 million consumers in Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.

The change will raise monthly electric bills betwixt $15.80 and $19.80 beginning Oct. 1 for the average residential customer, based on the exercise of 1,320 kilowatt hours a month.

Most of the set a value on hike is a temporary firing material accommodation charge that varies quarterly, nevertheless TVA officials predicted the charges force of will continue to grow end smaller increases in the future. A smaller allot of the hike is a dishonorable price increase taking affect inferior to a $12.6 billion budget adopted Wednesday.

The combined rate augment is the largest at Knoxville-based TVA because a 20.2 percent hike in 1974, and follows a 7 percent increase in April. TVA officials reported similar increases are being implemented throughout the advantageousness industry.

“My message to the representative homeowner is the same thing to my wife,” TVA President and CEO Tom Kilgore said. “And that is: prepare to live by this until affair changes.”

The drought has reduced the flows of rivers and the level of lakes that feed hydroelectric power plants, forcing the agency to buy costly extra power from other producers. The utility also has been burdened by the rising require to be paid of coal, which supplies about 60 percent of TVA’s generation mix.

The utility will spend about $4.3 billion this year without ceasing fuel and purchased power. It expects to spend $6.3 billion next year.

TVA’s distributors were resigned about the increase.

“If the cost of fuel is going up, there is not much we can do about it. That is just reality,” said Jerry Collins, president and CEO of Memphis Light, Gas and Water Division.

But Collins, who represents TVA’s biggest distributor, urged TVA directors to delay a base standard increase, especially because of the impact on the poor.

Bobby Glenn, general manager of a 300-employee Panasonic aluminum foil operation in Knoxville, told the TVA board the increases will add around $3 million to his found’s annual power bill and “threatens the very survival of our occupation.”