LCUB passes 4.5 percent rate hike
Increase sparked by TVA fuel cost adjustment

Lenoir City Utilities Board discussed a rate increase passed down from TVA at its meeting Monday, Sept. 20.

“We are just passing that rate on and not adding anything to it,” Lenoir City Vice Mayor Eddie Simpson said.

LCUB’s residential customers will see a 4.5 percent rate increase after TVA decided to up its fuel cost adjustment rate. The FCA rate is adjusted monthly in relation to oil prices.

“August was a very long and hot month, and we are in a reactive market,” LCUB general manager Shannon Littleton said.

TVA spokesman Michael Scalf also appeared at the Sept. 20 LCUB meeting with a glimpse into the future for TVA customers.

That’s going to include a drastic shift in how electricity prices are calculated.

“We need to address the hours where [TVA’s] cost is exceeding our sale price,” Scalf said.

Under a new “smart rate” system, which goes into effect April 1, 2011, electric rates will be calculated based on when electricity is used. In other words, if you use a significant amount of electricity in the afternoon on a hot day, your price will be higher than if you use that same amount in the morning or at night.

This time-of-use system will go into effect next year, but the new pricing rates likely won’t be effective for a few years after that.

“Sometimes it’s a little slower, but I’d rather do it right,” Scalf said.

Scalf also said TVA will be working on updating its grid system, including upgrading to fiber connections and smart meters, which would allow the company to see when people are using electricity.

“We’re trying to reduce peak energy use by going toward energy efficiency,” Scalf said.

Also on TVA’s list of goals is reducing the company’s reliance on coal and joining “the nuclear game.” By 2020, Scalf said TVA hopes to have 50 percent of its production be from carbon-free sources.

Finally, LCUB approved a host of bids for right-of-way clearing that will be completed by October 2011, including along several routes in Farragut, Cedar Bluff, Solway and in the Lovell Road area.

Contractors included Nunley Construction, Galloway Construction LLC, Wolf Tree Experts and Lancaster Tree and Lawn Service. Altogether, the contractors will be paid $330,547.

In other business, LCUB:

• Appointed a property search and needs assessment committee to search for new LCUB building facilities. That committee will be made up of the entire LCUB board, plus Littleton and the city attorney, as well as various managers from LCUB.