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088863 1 (1981-03-16)

handle is hein.gao/gaobadxhh0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. FOR RELEASE ON DELIVERY EXPECTED AT 9:00 AM MARCH 16, 1981 STATEMENT OF J. DEXTER PEACH DIRECTOR, ENERGY AND MINERALS DIVISION BEFORE THE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS U.S. SENATE Mr. Chairman: We appreciate your invitation to discuss some of our re- cent work at the Tennessee Valley Authority as it relates to the electric power rates paid by Valley ratepayers. As you know, in recent years, rate increases have been a subject of intense public interest. From 1960 to 1970, TVA's wholesale rates went up annually less than one percent in real terms, but from 1970 to 1980, rates rose annually about 9.2 percent in real terms. For 1980-1990, TVA presently forecasts real increases of up to 3.8 percent a year. TVA recently announced a rate increase of 9.3 percent beginning April 1, 1981, and will jump to 12.8 percent effective October 1, 1981. In our view, the rate increases foreseen by TVA basically will be unavoidable. Fundamentally, TVA's rates are governed by production costs and the interest charges on money borrowed to construct new facilities or to make additions and improve- ments to existing facilities. In fiscal year 1980, production costs and interest charges accounted for about 86 percent of costs paid by ratepayers. As these costs rise, so must rates. C -%, )

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