News Release

HU Customers to Pay Less for Power in July

May 21, 2009

Huntsville Utilities customers will see a decrease in their power bills when the latest TVA rate reduction goes into effect in late June.

The Tennessee Valley Authority notified distributors last week that they were reducing the Fuel Cost Adjustment (FCA) that is charged to the distributors of TVA power for the third quarter of the fiscal year. TVA supplies all of the power distributed by Huntsville Utilities. HU is passing the TVA rate reduction directly to customers.

A Fuel Cost Adjustment is a variable energy rate that can fluctuate each quarter (January, April, July, October) as TVA's fuel and purchased power costs rise and fall. In 2005, the price of natural gas, oil and coal used to generate electricity increased dramatically. Since then, TVA has found it difficult to predict the amount of revenue that is required to cover the cost of producing power. The Fuel Cost Adjustment allows TVA to more quickly match costs with revenue and avoid implementing permanent rate increases.

TVA has had twelve Fuel Cost Adjustments since they began in October 2006. Of the twelve, seven have been increases and five have been decreases. This is the third consecutive quarter though that TVA has decreased the FCA since the record 17% increase in October of last year.

On average HU residential customers will see a savings of over $4.00 each month. Over the past five years, the average residential monthly electric usage was 1467-kilowatt hours. Under the current rates, a customer’s bill would be $123.17. With the new rates, a customer’s bill would be $118.76. This includes a $5.77 monthly customer charge.

The new rates for HU customers will be $0.07666 for the first 1400 kilowatt hours used and $0.08467 for all kilowatt hour usage over 1400 kWh. This represents a 4.4% decrease in the rates.

For a number of customers, part of their June power usage will be billed at the new lower rate. The rate change will go into effect with meter readings on and after June 28.

For every dollar a HU customer pays for electricity, approximately 14 cents stays with HU to maintain and operate the system and 86 cents goes to TVA for purchased power.

Huntsville Utilities is a Publicly-Owned, Not-for-Profit utility serving over 159,000 customers in Huntsville, Madison County and northern Marshall County.