Power Update (July 19, 2010)

"Electric Rates Have Increased" Read below about our "Smart Grid Pilot Project"

The Fuel Cost Adjustment, a pass through cost from TVA, has increased over the past three months after many months of being very low in late 2009 and early 2010.  The net effect for the next six months is that energy costs will be around 1 cent per kWh of energy higher than the previous six to nine months.. The FCA is expected to remain stable at its current level for the rest of 2010. The Fuel Cost Adjustment is a mechanism for adjusting the cost of power generation to the changing cost of fuels.

The Climate Change federal legislation, often called "Cap and Trade", is still being debated in Washington. Since over 54 % of TVA’s generation is coal fired, this legislation could have serious implications on electric rates in the nation and especially in the TVA valley. MUS and all distributors in the TVA valley have expressed their concerns about to our congressmen and hopefully serious dialogue will occur on the potential negative effect on our economy. This will amount to a carbon tax levied by the Federal Government and local utilities will ultimately be forced collect the tax and return to the EPA.  We encourage all constituents to express their concerns to elected officials.

"TVA Smart Grid Pilot Project"

In June 2010, MUS submitted a Request for Proposal to TVA to participate in a Smart Grid Initiative pilot program in partnership with TVA for the purposes of proving demand response capability and Smart Grid technologies. The FERC (Federal Energy Regulatory Commission) mandated by law several years ago for the nation to develop Demand Response plans with the goal to reduce peak bulk electric system loads and thereby reduce transmission line loading and defer building of peaking power plants.  Thus TVA has solicited distributors who can assist in demand response demonstrations as a way to prove the technology for the valley. Our application covered several areas: (1) demand reduction through voltage regulation, (2) demand reduction through internal loads such as water pumping in peak hours, (3) Smart Grid devices such as Smart Thermostats and Smart Load Control Devices for hot water which can temporarily operate to reduce loads for a limited number of hours, and (4) Advanced Metering technology that can provide customers with Time of Use Rates as an incentive to lower their cost by shifting load to Off Peak periods.

Regardless of the TVA project, MUS has begun installing advanced metering infrastructure to read all electric meters on a 15 minute basis and provide a method to usher in hourly based, Time of Use rate structures as requested by TVA. These rates and Smart Grid devices will be optional for customers who wish MUS to assist in lowering the electric bill.  These technologies will all MUS to reduce its operating costs, lower the wholesale power cost from TVA, and improve our level of services to the customer.

The City of Morristown is very fortunate to have FiberNET, a fully passive optical network with very high speeds and network reliability. The optical network will become the backbone of how electric services are delivered and monitoring in the future. FiberNET has the speed needed to allow MUS and customers to lower the cost of electricity.

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