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Current CEMC
Rates:
November
2009 |
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Last
Months CEMC
Rates: October 2009 |
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Why Does
CEMC Rates
Change Every
Month?
CEMC is one of many
power
distributors
across a
seven-state
region that
purchases
electricity
directly from
TVA and
distributes it
to it's members.
TVA produces
electricity
through
multiple
sources,
including
nuclear power
plants, fossil
power plants,
combustion
turbines, and
electricity
provided by
other power
suppliers.
When the costs
of these fuels
change, the cost
to produce
electricity also
changes.
TVA
uses a Fuel Cost
Adjustment
recovery tool
that helps
control the cost
of a
unpredictable
fuel and
purchased power
market.
CEMC member
rates are based
upon the TVA
Fuel Cost
Adjustment that
can change each
month.
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Why an FCA?
I n
order to provide
affordable, reliable
power, TVA supplies
generation from multiple
sources, including
nuclear power plants,
fossil power plants,
combustion turbines, and
electricity provided by
other power suppliers.
This means that TVA is
continually purchasing
large amounts of
generator fuels like
uranium, coal, and
natural gas. TVA also
purchases electricity
from other power
suppliers during periods
of high electric demand.
The increasingly
volatile costs of
generation fuel and
purchased power present
significant budgeting
challenges for TVA. By
recovering changes in
these costs as they
occur, the FCA helps TVA
meet its cash-flow
requirements, avoid
large, permanent rate
adjustments, and plan
for the long-term
electricity needs of the
Tennessee Valley.
Additionally, if the
cost of these
commodities decreases,
then customers may
experience an immediate
benefit through an FCA
credit on their bills.
How the FCA
works
The FCA works by
capturing the per
kilowatt-hour difference
between the amount that
TVA actually pays for
fuel and purchased power
in a given month and
the amount that TVA
expected to pay when the
baseline was set. The
baseline represents the
amount of fuel and
purchased power costs
that TVA expects to
recover through base
rates.
Before the start of each
month, TVA compares
the forecast of fuel and
purchased power costs
for the upcoming month
to the baseline. The
difference between the
forecast and the
baseline is applied as
part of the FCA for the
upcoming month,
allowing TVA to recover
any difference in fuel
and purchased power
costs as they are
incurred.
Following the close of
the month, the amount
that the FCA collected
throughout the month
is reconciled with the
amount that should have
been collected based on
actual costs. Any
resulting difference is
carried forward in
future FCA amounts.
FCA Facts
• Fuel and purchased
power costs account for
about one-third of TVA’s
overall costs.
• The price of wholesale
power in the southeast
region can move up and
down by as much as 100
percent in a single
month.
• Nearly
all other surrounding
utilities have an FCA,
and TVA had a similar
mechanism in the 1970s.
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