New electric rate structure approved

The City of New Albany is changing the way it buys electricity, in order to keep customer costs the same.

The New Albany Board of Aldermen voted Tuesday to accept a recommendation by New Albany Light, Gas and Water Manager Bill Mattox to apply a modified time of use rate structure through its power suppler, Tennessee Valley Authority.

The TVA board recently adopted new rate structures that the authority will offer to the distributors that it serves, effectively ending its flat rate for demand and energy after September of this year.

“Under the modified time of use rate structure, we expect to save around $40,000 a year in the cost for the electricity,” Mattox told the board.

Currently, the city’s utility pays TVA approximately $23 million a year for electricity, while it collects $30 million in revenue from its customers.  Another $6 million of that revenue is used for operating costs, Mattox said.

According to Mattox, “time of use” refers to the amount of energy that customers pay during different times of the day.  The on-peak hours are the hours in the day when customers typically use a higher amount of energy than other hours.

“During the summer months, our on-peak hours are from noon to 8 p.m.,” Mattox said.  “These are obviously the hours when our customers are using the air conditioner a bit more.  Because of the higher demand during these hours, TVA has to supply more power at these times.  They’ve restructured their rates in order to try to offset their costs to offer that power.”

Mattox said that, with the modified time of use rate, LG&W customers will not see a rate increase in their utility bill.

 “We’re fortunate, because we have a pretty good mix of residential and commercial customers,” Mattox said.  “It helps to keep our rates down.  We’re in the middle to top range of TVA customers in terms of our affordable rates.”