TVA Agrees To Increase Rates, Borrowing; Cut Costs

DUNCAN MANSFIELD

KNOXVILLE, Tenn. (AP) — The Tennessee Valley Authority agreed Thursday to increase electric rates, borrow up to $3 billion over three years and slash spending to pay for a massive coal ash spill, court-ordered clean-air improvements and a pension fund shortfall amid a historic slump in power sales.

Because fuel costs continue to decrease, most consumers will actually see their bills drop rather than increase, at least for now, despite the rate change.

"In the last nine months, I have never seen an industry that has had the number and severity of challenges that TVA has had to confront," said TVA director Dennis Bottorff, a venture capitalist from Nashville.

Yet Bottorff and the rest of the TVA board of directors praised management of the country's largest public utility for their plans to address those issues in a $10.2 billion budget for fiscal 2010 approved Thursday.

"I am really encouraged ... to see some light at the end of the tunnel," he said.

TVA saw electric sales, its primary source of revenue, collapse this year due to the poor economy, particularly among large industrial customers — only 20 of 200 counties in the TVA region had jobless rates below 10 percent.