Tens of thousands of people in Walker and Catoosa counties who buy their electricity indirectly from Tennessee Valley Authority can expect higher bills, officials say.

TVA on Wednesday raised its rates by 20 percent. The hike will take effect beginning Oct. 1.

Chickamauga Electric System, which buys electricity from TVA, has about 1,000 customers in the city.

North Georgia Electric Membership Corp., which also purchases electricity from TVA, has about 17,400 customers in Walker and 26,000 customers in Catoosa.

The rate hike will be passed on to customers, officials said.

“Every quarter, they (TVA) see what their fuels cost,” Chickamauga City Manager John Culpepper said. “And in the next quarter we pass that on to the customers and then send that check directly to them (TVA). They put it (the increase) on our bill.”

Culpepper said Chickamauga Electric does not keep any of the revenue. “It all flows to TVA,” Culpepper said.

Culpepper emphasized that it is TVA, not the city of Chickamauga, that is implementing the increase, which will affect 159 TVA distributors.

“This is just a pass-through for TVA,” Culpepper said. “We are just collecting the money and it goes to TVA. None of it stays at Chickamauga Electric System. None of it stays at North Georgia EMC. None of it stays at the Electric Power Board or the other 156 distributors of TVA power.”

Jim Powell, office and zoning manager, said Chickamauga Electric has 867 residential customers, 131 commercial customers (including schools), and two industrial customers.

Powell said the No. 1 driving force behind the increase is the rising cost of coal, followed by the rising cost of fuel and the drought.

Powell said that since the value of the dollar has fallen so low, China is buying up most of the U.S. coal at cheap prices and adding a new coal plant every seven to 10 days and this is affecting the entire county, including TVA.

“That is causing TVA to have to pay larger prices,” Powell said. “TVA buys coal from four different basins around the United States and the best coal is in the Appalachian basin, where we are at. That is the most high-powered coal.”

North Georgia EMC

For North Georgia EMC customers, the typical household can expect to see a $15-$20 hike on their electric bills.

Ron Hutchins, North Georgia EMC president and CEO, addressed the issue recently at the company’s annual meeting in Dalton.

Hutchins stressed that the rising cost of fuel and ongoing drought will continue to drive up customers’ energy costs.

The fuel cost adjustment (FCA) portion of North Georgia EMC’s rates will rise in coming months because the fuels used by TVA to generate electricity continue to increase in cost, Hutchins said.

Most of TVA’s 20 percent increase that was announced Wednesday is covered by a quarterly FCA, which will increase rates 17 percent. The TVA board also voted to raise its base rates by another 3 percent to cover growing expenses for inventory and forward contracts used to help minimize rising fuel costs.

TVA is facing the same pressures from rising fuel costs as other utilities across the nation, Hutchins said.

“TVA, our power supplier, recovers fuel and purchased power costs through its quarterly fuel cost adjustment (FCA),” Hutchins said. “The FCA is necessary to recover the growing cost of fuels. Significant increases in fuel and purchased power will be reflected in future FCA adjustments, which mean your energy costs will be going up. Despite rising costs and tight supplies, I can confidently say that your cooperative has served you and its mission well with reliable, safe, quality power at the lowest possible costs.”

Sixty percent of TVA’s power is generated by coal, oil and natural gas.

TVA then must pass some of the costs to almost 9 million consumers it serves in the Tennessee Valley.

“Specifically, coal prices have more than doubled since the beginning of the year and continue to rise,” Hutchins said. “In addition, the TVA region continues to suffer from extreme drought conditions, causing the replacement of its cheapest form of generation, hydro/water, with one of the most expensive — power generated by natural gas or purchased power from other generators.”

Hutchins said North Georgia EMC strives to keep rates low while offering excellent service to customers on a very small margin.

Hutchins said that 80 cents of every dollar North Georgia EMC collects is paid to TVA for power supply. The remaining 20 cents covers expenses for consumer services, operating, maintaining, upgrading and expanding the system.