The Tennessee Valley Authority Board of Directors approved a fiscal year 2014 budget of $10.5 billion Thursday, along with a 1.5 percent retail rate increase that marks the utilityâs first increase in two years.
TVA President and Chief Executive Officer Bill Johnson said the rate increase was necessary to meet the utilityâs 2014 revenue requirements and operate the system safety and reliably. The adjustment, which TVA said is less than the economyâs growth in inflation since its last increase in 2011, will add about $1.50 monthly to the bill of a residential customer using 1,000 kilowatt-hours of electricity.
The budget anticipates a 4.6 percent drop in sales year over year and is about 6 percent less than 2013, including capital expenditures of $3.3 billion for Watts Bar 2 nuclear plant and clean air controls at Gallatin Fossil Plant, according to the TVA.
TVA is working to reduce operations and maintenance costs by $500 million by 2015 by identifying efficiencies, cost reductions and cost avoidance opportunities. The utility stated it has reached around $150 million in reductions this fiscal year, with plans to reduce costs by another $150 million by the end of 2014 and $200 million in 2015.
The new budget and rate adjustment will go into effect on Oct. 1, which is the beginning of TVAâs new fiscal year.
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