Wednesday, February 13, 2008

Cause and Effect

Maybe I'm being totally simplistic about such matters, but after reading this the yesterday:

TVA board will vote on rate increase (Knoxville News Sentinel, 2/12/08)
Tennessee Valley Authority board members will vote Friday on a rate increase that would add between $4 and $7 to monthly bills for residential customers, starting April 1.


"The reason for it is we are going to do these long-term investments and meet new power generation," said TVA spokesman Gil Francis. "It is a combination of gas turbine plants and Watts Bar 2 and it is going to allow us to continue to have the resources to keep the lights on."


TVA is spending $423 million this year to build and buy more gas-fired plants and recently began a $2.5 billion program to finish its second reactor at the Watts Bar Nuclear Plant by 2013.
Ok, higher power rates you just have to deal with. If they're for increasing capacity to meet future demands, I'm kinda ok with that - I'm not sure an addition $4-$7/month ($48-$84/year) would be that big of a burden on anybody...

But then I saw this in the paper today:

Drought induces TVA's $17M first-quarter loss (Knoxville News Sentinel, 2/13/08)
TVA reported a loss of $17 million in the first quarter of fiscal 2008, as the federal utility continues to feel the pinch from a drought that has stretched on for more than a year across the Tennessee Valley.


To make up for the gap between power demand and TVA's generation capacity, the utility is spending $423 million this year to build and buy more gas-fired power plants and is launching a five-year, $2.5 billion project to finish a second reactor at Watts Bar Nuclear Plant.
I'm not trying to make more of this than there is, but the separation of the two stories makes it seems like TVA's increasing our rates to pay for increasing infrastructure, but then the next day it comes out to appear they're only trying to recoup a significant 1st quarter loss that, even allowing for the intensity of the drought, should've been handled to a tune of less than a $17 million loss.

Am I being needlessly suspicious here, that execs are raising rates not just to increase generation capacity but make up for the loss of the bottom line on their paychecks?

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