I've got a commercial client in Huntsville getting billed by Huntsville Utilities (TVA distributor) with a new line item called "System Benefits Charge" at $0.0045/kWh. This started showing up in July 2016 bills. The client uses about 850,000 kWh monthly so we're talking $3,800+ per month. I can't find this charge in any published tariff schedules. Has anyone seen similar charges from other TVA distributors? The utility claims it's for "grid modernization" but won't provide documentation.
Tennessee Valley Authority adding mystery charges - help needed
Albert, that sounds fishy. TVA distributors can't just make up charges without regulatory approval. In Tennessee, municipal utilities still have to follow due process for rate changes. I'd demand to see the city council minutes where this was approved. KUB tried something similar here in Knoxville in 2015 and had to refund customers when they couldn't produce proper authorization.
We saw the same charge appear on Alabama Power bills here in Birmingham around the same time. Turns out it was related to new smart meter infrastructure costs. But Alabama Power at least filed it properly with the PSC. If Huntsville Utilities is TVA-fed, they might be trying to pass through costs without proper regulatory review. Check if they held public hearings before implementing.
I work with several TVA distributors here in Georgia and haven't seen this specific charge. The rate you're quoting ($0.0045/kWh) is pretty substantial - that would add about $540 annually to a typical 120,000 kWh commercial account. Definitely challenge this. Municipal utilities sometimes think they can slip charges by without proper notice, but they still have legal requirements for rate changes.
Thanks everyone. I filed a formal complaint with Huntsville city clerk demanding documentation. They finally provided a city council resolution from June 2016 authorizing the charge, but the public notice was buried in the back pages of the local paper. The resolution references "federal grid modernization requirements" but doesn't specify what those are. Still feels like they're making it up as they go.
Albert, you might want to check if other large commercial customers are being charged the same rate. Sometimes utilities will apply these "special assessments" inconsistently. We had a case with Indianapolis Power & Light where they were charging some customers a facilities charge that others weren't getting. Turned out to be a billing system error that took 8 months to fix.
Good suggestion Greg. I requested billing data for similar accounts and found the charge is being applied to all commercial customers over 500kW demand. However, the rate varies - some are getting $0.0045/kWh, others $0.0035/kWh. When I asked about the discrepancy, they claimed it's based on "cost allocation methodology" but won't explain the methodology. This is getting more suspicious by the day.
The varying rates are a red flag. In North Carolina, any charge has to be applied consistently within a customer class unless there's documented justification. Duke Energy got in trouble for similar inconsistent billing practices. I'd file a complaint with the Tennessee Regulatory Authority even though it's a municipal utility - they sometimes have jurisdiction over discriminatory practices.
This reminds me of issues we had with PG&E's "Public Purpose Program" surcharges. They were supposed to be uniform but were calculated differently for different rate schedules. The key is getting them to show their math. If they can't explain the calculation methodology clearly, it's probably improper. Document everything and consider getting other affected customers involved.
Update: Found two other large commercial customers willing to join a group complaint. Combined we're looking at about $12,000/month in questionable charges. The city attorney finally agreed to meet next week to discuss "cost allocation transparency." Will report back on what we find out.
Albert, how did the meeting with city attorney go? We're starting to see similar charges from Eugene Water & Electric here in Oregon. Would love to know what arguments worked for you. Our charge is called "Infrastructure Modernization Fee" but same concept - no clear tariff basis.
Sorry, realize that was just 5 days ago. Take your time, but definitely interested in hearing how it plays out. These mystery charges are becoming epidemic.