A 20 percent increase in wholesale power rates approved by the Tennessee Valley Authority’s board of directors this week could raise local electric bills by as much as $20 a month.

The TVA board of directors voted Wednesday to approve a 2009 budget that includes a 20 percent increase in wholesale rates, effective Oct. 1.

That decision is forcing the Princeton Electric Plant Board (PEPB) to raise electric rates for its customers, PEPB General Manager John Humphries said Friday.

“This increase does not reflect any additional income for PEPB,” he said. “This comes directly from TVA to our customers.”

Residential Plant Board customers may see an increase of between $15 and $20 per month on their power bills.

TVA’s increase will cover increased fuel costs and related expenses.

The majority of the increase will go toward the escalating cost of fuels used to generate electricity, particularly coal and natural gas. That part of the increase is considered a quarterly fuel cost adjustment.

Price increases for fuel and purchased power are driving TVA’s costs up by more than $2 billion in fiscal year 2009, TVA officials said.

The rest of the increase is an increase in firm wholesale electric rates to cover higher costs in several related areas.

“We recognize that the increased costs TVA is experiencing are also driving up costs for the families and businesses we serve,” said TVA President and CEO Tom Kilgore. “The last thing we want to do is tell customers that our product is going up in price, but we have no alternative for paying for fuel.”

About 56 percent of TVA’s power supply comes from fossil fuels used to make electricity, including coal, oil and natural gas, Humphries said.

Continuing drought conditions add to the supplier’s woes. TVA has been able to generate only about half of its average supply of inexpensive hydropower because of the drought. Without that hydropower, TVA must buy replacement power at market prices.

“When the prices of these fuels increase, TVA’s costs increase. As a distributor of TVA power, when higher prices force TVA to increase its rates, we must pass those costs along to our customers,” Humphries said.

The rate increase follows a 12 percent hike that took effect April 1.

PEPB officials suggested customers use energy-saving practices to help reduce their electric bills.

The suggestions include:

• Turning up cooling system thermostats to 78 degrees Fahrenheit.

“Don’t pay to keep your furniture cool — raise it even more when no one is home,” said Humphries.

Electric fans can be used to maintain comfort with a higher thermostat setting.

• Turn off lights, appliances and other home electronics with a power bar when not in use.

• Use the sleep mode on computers.

• Use the microwave instead of a stove burner or oven for cooking.

• Operate dishwashers and clothes washers only with full loads and after 8 p.m. Air-dry dishes in the dishwasher.

• Replace incandescent bulbs with compact fluorescents, which use 75 percent less energy and last 10 times longer.

Customers can also contact the Plant Board at (270) 365-2031, for information on levelized billing.

The process allows a customer to pay the same amount every month even throughout peak cooling and heating periods.