After three successive quarterly rate increases this year, the Tennessee Valley Authority announced today it will lower its power rates by 6 percent in January.

Electric rates will decline on bills mailed to customers in January under the fuel cost adjustment TVA makes every three months in response to changing fuel prices. The decline is the biggest since TVA adopted its quarterly fuel-cost adjustment program two years ago and reflects the drop in the prices of natural gas, oil and purchased power since the peaks reached this spring and summer.

While savings will vary across the Tennessee Valley, residential consumers can expect a decrease ranging from about $4 to $8 in their monthly power bills, TVA Chief Financial Officer Kim Greene said.

“Recent reductions in purchased power and natural gas prices have helped reduce our actual costs and forecast for the second quarter of 2009,” she said in a prepared statement today. “Unfortunately, coal prices remain significantly higher than they were a year ago, and sustained drought conditions across the Tennessee Valley have cut TVA’s hydro generation by more than 50 percent, preventing TVA’s fuel costs from dropping further.”

Ms. Greene said economic conditions led to a decrease in wholesale power sales July through September, which also helped lower the fuel cost adjustment by reducing TVA’s reliance on its most expensive power sources.

About 60 percent of TVA’s power supply comes from fossil fuels.

In October, TVA raised rates by 20 percent, including a 17 percent jump in fuel cost adjustments. TVA made other rate increases in April and July of 2008 to boost the overall price of electricity by nearly 35 percent this year.

Read more in tomorrow’s Times Free Press