CHATTANOOGA, Tenn. (AP) - After a big jump in power costs, University of Tennessee officials facing a $100 million budget shortfall in 2012 are turning to the Tennessee Valley Authority for help.
The Chattanooga Times Free Press reports UT efficiency and effectiveness committee chairman Doug Horne said TVA has 50 large industrial customers and eight federal entities under individual contracts and receive power directly from TVA instead of distributors.
All UT campuses currently are served through local utility companies.
"Some of the biggest increases we see in overhead costs are utility costs," Horne told the newspaper. "We have got to work on it. We are a big institution, and we want TVA to treat us as such. We want a better rate."
Horne said the deal would involve a "long-term contractual agreement to buy power from TVA."
John Trawick, senior vice president of commercial operations and pricing for TVA, said that once an entity enters the system and signs on with a designated provider, it stays with that provider.
Both TVA and its distributors would have to agree to any changes, Trawick said.
"TVA has not been approached by the University of Tennessee board of trustees about the university's power rates," he said. "Since UT is not a direct-serve customer of TVA, the local power distributor for UT, UTC, UT Martin and UT Memphis provides power to these individual campuses."
UTC officials said lowering energy bills would curb tuition increases and help keep state universities financially accessible.
Richard Brown, UTC's vice chancellor of finance and operations, said "utility costs continue to challenge the budget."
Even with an enhanced energy plant and campuswide sustainability plans in place, UTC's electricity costs rose 23 percent in the last three years. The 2009 bill was 3.1 million, or 7.5 percent of state appropriations.
"That is pretty significant when we are challenged with budget cuts," he said.
Officials with the Tennessee Board of Regents said they will be watching. The board governs such four-year schools as Middle Tennessee State University, the University of Memphis and East Tennessee State University, the state's 13 community colleges, including Chattanooga State Community College, and its 28 technology centers.
So far, the Board of Regents has not approached TVA about becoming a direct-serve customer, said Dick Tracy, executive director of facilities at the Board of Regents.
"There are different programs that TVA has offered, but they are offered through the local utility," Tracy said. "We have never gone as a system and sat down with TVA. That would be interesting, if we could."
Information from: Chattanooga Times Free Press, http://www.timesfreepress.com
(Copyright 2010 by The Associated Press. All Rights Reserved.)