Although more energy-efficient technology continues to develop, utility bills are currently at an all-time high in Knoxville. Knoxville Utility Board data reveals that utility bills have increased by as much as 80 percent in the last 20 years due to fixed-rate increases by KUB. According to the data, a house that uses 1,000 kilowatts per hour in a month would have paid $60.07 in 1998, but the same amount would cost a resident $108.25 today.
The Knoxville Utility Board charged customers just $5.32 in basic service fees from 1997 to 2003, which is the amount customers pay each month to use KUB's electricity. Energy usage on top of that was $10.28 per kilowatt-hour. In 2004, fixed rates increased by 77 cents and the cost-per-kilowatt-hour went up by about $2.50. In 2011, KUB decreased the cost-per-kilowatt-hour by $2 and instead added $1.91 to its basic service fees. Every year since then basic service fees have increased by $1 and will continue to increase by another $1.50 this year through 2020.
KUB spokesman Mike Bolin states that, "these rate increases of 1 percent or so per year have been about a plan to replace poles, substations, all the infrastructure to provide service."
Steven Smith of the Southern Alliance for Clean Energy said he would rather see rate increases applied to usage charges. "Increasing the fixed fee has a number of very important negative financial consequences for customers, particularly low-income and lower-electricity users like senior citizens," Smith told the KUB at a recent meeting.
Beyond financial costs, Smith said he is concerned the move toward fixed rates on utilities may destroy the economics around energy efficiency and renewable energy.
Environmental groups have explained that residential customers are trapped into the rate increases if they live in the inner Tennessee valley because there are no other power suppliers. Certain residential distributors on the outer ends of the valley can choose to get their power from other nearby suppliers. Unfortunately, distributors in the inner valley do not have this option. By federal law, no other power suppliers can use TVA power lines to reach customers in the Valley, so distributors like KUB must get power from TVA because it is the only local option.
Outraged ratepayers attended a November TVA Board meeting to dispute the new fixed-rate proposal and called the company a "monopoly."
At the meeting, TVA CEO Bill Johnson said the utility did not have a "monopoly" on power supply because its distributing utilities are free to get their power elsewhere.