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TVA proposal draws skepticism as fight for power contract continues

Four climate and community activist groups rallied with 25-plus citizens outside Memphis City Hall on Tuesday (July 7) to respond to a community development plan proposed by Tennessee Valley Authority (TVA), the city’s electricity supplier.

The activists are advocating for Memphis Light, Gas and Water Division (MLGW), TVA’s largest customer, to cut ties with the federally-run energy supplier as a way to reduce the energy financial burden on the city’s residents, especially those who are financially challenged.

TVA wants a 20-year contract with MLGW, which includes $2 billion in economic development benefits to Memphis.

The proposal is drawing mixed reactions as MLGW considers switching to a new power provider.

Pearl Walker (Screen capture)

“The fact is, the timing is questionable,” said Pearl Walker of Memphis has the Power, a campaign to ensure affordable, clean energy that’s backed by the Southern Alliance for Clean Energy (SACE).

“Why haven’t they been offering this type of community support all along? It comes across as disingenuous if it’s at all dependent on a 20-year contract,” Walker said.

TVA CEO Jeff Lyash presented the community development component of the proposal during the Memphis City Council’s MLGW Committee meeting on Tuesday.

MLGW Proposal Summary_Final_06Jul2020

Memphis has the Power/SACE was joined outside City Hall by Freedom Community Development Corporation, a new nonprofit in North Memphis; 3-C Memphis Coalition for Concerned Citizens and the Sierra Club.

TVA President/CEO Jeff Lyash. (Courtesy photo)

Lyash’s proposal basically matches the amount estimated if MLGW switches to Midcontinent Independent System Operator (MISO) as its electricity provider.

TVA’s proposal includes:

  • $712 million in current economic benefits.
  • $535 million in added value through urban neighborhood revitalization, reduced energy burden, further solar development and other perks.
  • $750 million in paybacks is involving a 3.1 percent rate cut and MLGW’s freedom to produce some of its own solar power (capped at 5.0 percent).

Over the last decade, according to the SACE, TVA increased its rates by more than 10 percent.

TVA also proposes buying MLGW’s electric transmission system for approximately $400 million and adding about 100 jobs to its Memphis office site.

Dr. Kevin Brooks (Screen capture)

“That sounds pretty, but like my grandmother would say, ‘It’s a day late and a dollar short,’” said Dr. Kevin Brooks, a minister at Providence A.M.E. Church, 384 Decatur St., and executive director for Freedom CDC.

He continued, “In respect to the ideas, it makes sense to focus on economic development, environmental stewardship and energy efficiency for your largest customer base.

“But with customers taken for granted for more than 25 years and sucking the life out of them knowing their income levels, more discussion is definitely needed.

“The proposal makes you want to stay in the relationship, but I want to see the proposal from MISO. They (TVA and MISO) both need to say what they can do for shared prosperity. We have to drill down and ask more questions like, ‘How will you do certain things?’”

Brooks agreed with Lyash, who acknowledged that TVA has not always addressed Memphis’ “energy burden,” the term given to Memphians who pay relatively high utility bills because many live in older, less-energy-efficient structures and have lower incomes.

“I appreciate the fact that Lyash refers to the ‘energy burden.’ I’m not accustomed to him or anyone at TVA using that language, which speaks to a raised level of awareness about the real circumstances here in Memphis,” said Walker.

“I think the main takeaway is still that TVA doesn’t offer any real reason why MLGW shouldn’t issue an RFP (request for proposals).”

Siemens consulting firm recommended that TVA issue RFPs to test their savings estimates.

Lyash noted that the RFP process may take months, perhaps 24 to 36 in total, and that in that time, Memphians won’t be benefitting from the additional investment or discount that they could be receiving.

“MLGW and the City of Memphis have some significant work still to do,” said Dennis Lynch of the Sierra Club about the possibility of switching power suppliers.

“Making the decisions about what path to take will be difficult and will require significant thoughtfulness and introspection.”

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