HUNTSVILLE, Ala. (WAFF) - The Huntsville City Council discussed the future of the city’s relationship with the Tennessee Valley Authority (TVA) Thursday. While in the midst of contract negotiations, the big question for many council members is the contract length and impact on customers.
First thing on the mind of any customer is whether their bill will go up. The short answer is that no increases are expected.
“This is not a rate action. We’re not asking to increase rates. TVA is not asking to increase rates," stated Huntsville Utilities CEO and president Wes Kelley. “This is about extending our relationship with TVA and creating some new opportunities within that contract. But like all contracts there is a balance.”
The proposed contract is a 20-year agreement between Huntsville Utilities and TVA. The current agreement is only 10 years.
TVA president nd CEO Jeff Lyash explained the business benefits of the longer contract. He highlighted company goals to become more environmentally friendly, continuing to cut costs and be at the forefront of new energy initiatives.
Councilwomen Frances Akridge & Jennie Robinson along with Councilman Bill Kling expressed concerns with such a lengthy contract.
Lyash and Huntsville Mayor Tommy Battle ensured the contract is setup in away that protects the customers.
“We were looking for what protected the taxpayers here. What protected the citizens of Huntsville? What protected the citizens of Madison County," explained Mayor Battle.
As an incentive for the longer contract, Lyash agreed to cut TVA costs to Huntsville Utilities to 3.1%. This will generate roughly a $10.1 million return annually from TVA to Huntsville Utilities as a bill credit.
Additionally, Lyash says TVA does not anticipate any rate increases for the next 10 years.
Should something force a rate increase, the contract details that it can be no more than 1% in the first five year period and no more than 10% in any five year period thereafter.
“If rates go up more than what is fundamentally inflation over a period of time you would have the option to come out of the contract," explained Lyash.
Councilman Devyn Keith requested a potential outline on how the $10 million savings would be used from Huntsville Utilities officials.
The presentation on the potential outline and council’s vote on the contract will happen at their next meeting February 27.