KNOXVILLE - The Tennessee Valley Authority will raise electric rates by 1.5 percent in October, marking the second consecutive year of such a rate increase.

TVA President Bill Johnson said the base rate increase is less than the rate of inflation and should cost the typical household about $1.70 more per month, or just over $20 more a year for the average residential electric user.

The higher rate for fiscal 2015, which begins Oct. 1, matched the 1.5 percent rate increase adopted by TVA a year ago. TVA directors approved the rate increase as part of the agency's budget plan for next year.

"We have carefully considered the impact that this rate increase might have our our customers," TVA President Bill Johnson said. "This small rate increase is necessary to meet revenue requirements for 2015. We believe we've achieved the prudent balance between rates and debt."

TVA will spend a record high $3.5 billion in new capital projects in fiscal 2015 to pay for completion of the Watts Bar Uni 2 reactor, new natural gas plants to replace the Paradise and Allen coal plants, and new scrubbers at the Gallatin Fossil Plant near Nashville, among other major projects.