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MLGW reviews options for lower energy costs

Now that a draft report has outlined potential savings if Memphis Light Gas and Water Division (MLGW) ends its 80-plus-year partnership with the Tennessee Valley Authority (TVA), the city-owned utility company still has serious discussions ahead before making a final decision.

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Last Friday (May 29), the public and members of the (MLGW) Power Supply Advisory Team (PSAT) reviewed a draft report outlining potential savings for the utility company.

Reduced costs would ultimately lower utility bills for MLGW customers.

MLGW contracted Siemens – a global innovator in energy systems, manufacturing and technology – to develop an integrated resource plan (IRP), examining alternatives to its current electric supplier, TVA.

TVA supplies electricity to 10 million customers in Tennessee, Alabama, Georgia, Kentucky, Mississippi, North Carolina and  Virginia.

Memphis is the federally-owned utility’s largest customer.

Siemens compared options for supplying electricity to MLGW customers over the next 20 years.

The study is timely since MLGW earlier notified city leaders of the need to increase electric bills by $14 monthly on average – a real concern in a majority African-American city with a 26.8 percent poverty rate on top of lost jobs due to the coronavirus pandemic.

During the four-hour long presentation, Siemens compared TVA’s 20-year contract proposal to alternative energy suppliers based on critical factors – affordability, sustainability, price risks, market risks and the impact on local economic development.

Switching to a new energy supplier could save MLGW $150 to $200 million annually, according to the report, which placed a solid number on how much MLGW could save.

Supporters of a TVA-MLGW split said earlier it would save Memphis anywhere from $453 million $547 million annually. Memphis and Shelby County collectively pays TVA about $1 billion a year for electricity.

Alternatively, TVA’s proposal would save MLGW about $120 million annually.

In addition to cost savings, the report indicated that a move to cleaner, alternative energy sources – natural gas and solar energy for electricity – would lower the city’s carbon dioxide emissions by 50 percent, producing better air quality and a healthier ecosystem.

To get the lower cost and better air quality, MLGW would need to switch from TVA to Midcontinent Independent System Operator (MISO) – a regional energy transmission operator serving 42 million customers across 15 states in northern, central and southern regions of the U.S., plus parts of Canada.

MISO, which began operations in 2001, finds the best deal on power needs for consumers, including renewable energy sources. The organization uses utility distribution systems like MLGW to provide power to homes and businesses.

MLGW would have to add three new transmission lines to connect to MISO power in Arkansas and Mississippi at an estimated cost of $728 million.

For MISO membership, the annual cost to MLGW would be about $730,000 annually.

The PSAT, comprised of 20 business and civic leaders throughout Memphis, was organized in 2019 in to provide diverse, collaborative opinions on the energy needs of Memphis.

J.T. Young, MLGW president and CEO, facilitated the meeting for PSAT and the public.

Southern Alliance for Clean Energy (SACE) – a nonprofit promoting clean and safe energy choices – appears to support a switch to a new energy supplier.

“We welcome the findings from this new study, which, although conservative, clearly supports MLGW leaving the TVA system, a move that will both lower costs for customers and benefit the environment,” says Stephen Smith, SACE executive director.

“The report conducted by Siemens strongly recommends that MLGW explore the market with a request for proposals (RFP), and indicates it is highly unlikely that staying with TVA will be good for Memphis customers in the long term.”

Siemens said MLGW should extend request for proposals to energy suppliers to confirm their 20-year energy cost estimates.

Young says MLGW may request such bids for its power supply, but not until the IRP draft report is finalized in a few weeks.

Here are the next steps to potential energy savings:

  • After PSAT members consider proposals in the Siemens report, the advisory team will present the study to the MLGW Board of Directors for review.
  • The board will make a decision to approve or deny the report.
  • If approved, the report will then be presented to the Memphis City Council for review.

No date is set, but MLGW estimates late July or August for that presentation.

Get engaged and ask questions:

 MLGW will host a public virtual/phone meeting that will include a question and answer period Thursday (June 4) from 6 p.m. to 7:30 p.m.

Following the June 4 meeting, citizens will have a 30-day period to make comments.

 (For more information about Midcontinent Independent System Operator, visit: https://www.misoenergy.org/.)

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