Increased Material Costs and Power Demand Require Electric Rate Adjustment

March 5, 2008
The CDE Lightband Power Board approved an overall 7.85 percent electric rate adjustment effective for meters read on and after April 1, 2008.  The action came at the company’s monthly board meeting on February 20.

Approximately 5.85 percent of the increase is the result of the higher cost of wholesale power CDE Lightband purchases from the Tennessee Valley Authority (TVA). Currently, CDE Lightband pays TVA about 83 percent of its total revenue for purchased power.  The estimated $300 million of additional revenue is needed by TVA to fund the addition of new power plants and work to complete Unit 2 at Watts Bar Nuclear Plant.  TVA officials report the need for additional power plants to meet power demand that is growing about 2 percent annually during peak periods.

The additional 2 percent is needed by CDE Lightband to offset higher material costs for electric system operations.  “We recently looked at several of the common items we use to build and maintain power lines and serve customers” states Ken Spradlin, CDE Lightband President.  “The average price we paid for these items has increased by more than 50 percent since 2005. These drastic increases are directly related to the higher prices of metals, such as copper and steel, and petroleum. We use a significant amount of metal to build substations and power lines. Transformers are filled with mineral oil and the price of all material is affected by increased transportation costs,” Spradlin added.   

In addition to the rate adjustment, TVA’s Fuel Cost Adjustment will also increase about 3 tenths of a cent for all TVA distributors such as CDE Lightband.  TVA says this is a direct result of the drought experienced this past year. The lack of much needed hydro generation necessitated greater purchases of electricity on the open market as well as energy production from higher priced fuels. 

Residential customers, who account for about 80 percent of CDE Lightband’s customer base, will see their monthly customer charge increase from $8.00 to $10.00.  In addition, the energy charge will increase from 7.067 cents per kilowatt hour (kwh) to 7.776 cents per kwh.  The average residential bill of 1,240 kWh which was $95.63, will now be $106.42.