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for demand and energy each month.

In order to keep this rate structure change revenue neutral, TVA will also be lowering the price of their wholesale energy charges, both onpeak and offpeak, by $0.005 per kWh. The current wholesale rate structure collects all of TVA costs through volumetric demand and energy rates. The purpose of the GAC is for TVA to start collecting some of their fixed costs through a fixed component.

How does this work for each LPC?

Each individual LPC will have their own GAC based on the five-year average of standard service kWhs purchased from TVA. Since TVA is lowering the wholesale energy rates by $0.005, they will apply the $0.005 rate to that historical five-year average and collect it on a monthly basis. This new GAC will be reset each year, meaning each LPC will receive a new GAC each year based on the new five-year average.

Even though the TVA Board has approved this new wholesale rate structure for this October, TVA is giving the option to each LPC to implement the new GAC in October 2018 or defer the rate structure until October 2019. LPCs can also change their retail rate structures in order to acknowledge the changes taking place at wholesale. For those LPCs choosing to defer the GAC until October 2019, their wholesale and retail rate structures will remain unchanged from their current structure.

TVA has requested that each LPC make a decision by June 1st, 2018 on whether they want to implement their GAC in October 2018 or defer it until October 2019. If it opts for this year, each LPC must indicate what retail rate design changes will be made.

How are we helping LPC’s prepare for these changes?

We have been working with our clients over the past few months to discuss which options are best for their respective systems. We calculate and discuss the GAC, look at potential retail rate designs to ensure each LPC is collecting the GAC appropriately, and assist with finalizing the TVA Rate Change Election Form.

In addition to these power costs changes, we are continuing to work with our clients on distribution costs changes along with the ever-changing utility industry. If any changes are to be made to distribution rates, those changes will need to be formally requested by LPCs and sent to TVA by July 1st, 2018. Our work includes providing cost of service studies for each of our clients guidance based on the results of the study.