The Tennessee Valley Authority (TVA) made a move today which could significantly impact the economics of customer-sited solar in the service areas of the utilities to which it sells power.
At its annual meeting in Muscle Shoals, Alabama, TVA approved a “wholesale fixed rate” equal to 6% of its wholesale rate, or around $0.005 per kilowatt-hour. This will be passed on to the 154 public utilities that TVA serves, who can choose how to incorporate it into their billing structures.
Meanwhile, it will lower its wholesale sales by an equivalent amount, meaning that the change will be revenue-neutral for TVA.
TVA President and CEO Bill Johnson describes this as a means to “ensure rates remain as low as feasible and are fairly distributed to everyone who benefits from the safe, reliable energy Tennessee Valley public power providers deliver.”
However, the Southern Alliance for Clean Energy (SACE) says that the charge is likely to increase fixed charges, which will mean an increase in the bills of those who use the least power, including not only PV system owners but low-income and elderly customers.
SACE notes that despite lengthly final documents being released days before the vote, the proposal drew more than 1,700 comments.
“TVA’s intent all along has been to use its self-regulated federal monopoly rate authority to negatively distort the market for energy efficiency and customer owned solar power and shift a greater share of the perceived risk for lower demand growth on to its captive LPC servants,” stated Dr. Stephen A. Smith, Executive Director of SACE.
The claim that TVA is pushing a fixed charge on the utilities it serves in an attempt to wipe out distributed solar is supported by TVA’s own assessment of the charge, which complains that customer-sited solar is “over-incentivized”, and repeats the repeatedly disproven claim of a “cost-shift” from PV system owners to other customers.
TVA has also noted that such investment in distributed energy resources such as rooftop solar reduces the incentive for it to build more power plants.