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Your power bills may be going up.

At its meeting Thursday, the Tennessee Valley Authority board of directors approved a $10.7 billion budget for fiscal 2015 that includes a 1.5 percent rate increase.

A TVA press release said the budget achieves a sustainable $500 million savings in operations spending and a record $3.5 billion in capital investment in generating plants and system improvements.

"This budget reflects our continuing efforts to reduce our O&M spending while modernizing and diversifying our generating fleet with cleaner and more efficient technology, continuing our stewardship activities, and growing jobs and capital investment in the region," TVA President and CEO Bill Johnson said.

TVA said the rate increase, which is slightly below the rate of inflation in the Consumer Price Index, is necessary for new power capacity and environmental enhancements.

That rate increase would equal about $1.70 more a month for the average Tennessee Valley resident using 1,000 kilowatt-hours a month. It will take effect with the FY2015 budget year that begins Oct. 1, 2014.

"We have carefully considered the impact this might have on our customers and the businesses, industries and people of the region," said Johnson. "This small rate adjustment – in addition to our internal cost reductions – is necessary to meet revenue requirements for 2015."

TVA reduced its debt by $1.2 billion in FY2014

The approved 2015 budget also funds:

  • About $1 billion in base capital to fund continued operation of current assets
  • Completion of Watts Bar Nuclear Unit 2
  • A new gas plant at Paradise
  • Replacing the Allen coal-fired plant near Memphis with a new combined-cycle gas plant
  • Significant transmission work
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