Providing affordable electricity is part of our mission
The rates MTE members pay for residential service rank among the lowest in the nation...in fact, MTE's residential rate is about 25 percent below the national average.
Approximately 82 cents of every dollar MTE receives through member bill payments goes to TVA to purchase power, meaning the cooperative operates on 18 cents out of every dollar.
More information about rates is found below.
TVA's Fuel Cost Adjustment
MTE’s portion of the rate has remained steady for 15 years, but bills may be higher now due to an increase in the TVA Fuel Cost Adjustment (FCA) from the co-op’s power provider. TVA uses the FCA to help manage fluctuations in the costs of fuels it uses to generate electricity and those costs have risen dramatically in the last year. MTE has no control over the TVA’s FCA, and every penny collected for the FCA goes directly to TVA.
The Tennessee Valley Authority generates electricity for nearly 10 million consumers in the seven-state Tennessee Valley. TVA sells its power to local power companies (like MTE) that, in turn, distribute and sell the power to homes and businesses in their service territories. TVA uses the fuel cost adjustment (FCA) to help recover fuel and purchased power costs. In this case, fuel refers to what generates electricity — nuclear, natural gas, coal, hydro, and renewable energy — rather than gasoline. Various factors affect these costs, including weather and global supply and demand issues of these commodities.
The FCA is calculated monthly as generation fuel costs and the cost of power TVA purchases from other suppliers rise and fall. It is based on TVA’s forecasted fuel and purchased power costs for the month, adjusted for any over- or under-collections in previous months. TVA’s monthly FCA is listed on the MTE rate schedule and will vary each month.
TVA, like Middle Tennessee Electric, operates in a not-for-profit fashion. The FCA ensures TVA recovers costs as they occur, helping TVA better match its revenues to expenses.
When the costs for these fuels change, TVA’s costs to make electricity also change. The FCA is the mechanism TVA uses to pass along monthly increases and decreases in fuel costs to its customers, like MTE and its members. Market costs for the fuels used to generate electricity — natural gas, coal, nuclear and others — are influenced mainly by temperature and supply-and-demand conditions.
Many utilities across the country use similar mechanisms to adjust their rates. Often, it is called the PCA, standing for “purchased cost adjustment,” to cover variabilities in fuel costs for power generation and the impact of peak demand on the electricity markets.