Tennessee Valley Authority in long-term deals to sell power

Tennessee Valley Authority President Jeffrey Lyash speaks with the Times Free Press from the TVA Chattanooga Office Complex on Tuesday, April 23, 2019 in Chattanooga, Tenn.

MEMPHIS, Tenn. (AP) - Most of the local companies that receive power generated by the Tennessee Valley Authority have signed long-term partnership agreements, but some larger customers still have not agreed to the 20-year deals, officials said Thursday.

TVA President and CEO Jeff Lyash said during a Board of Directors meeting in Memphis that 85% of the 154 local companies that buy TVA power in the South have agreed to the new deals, which carry a 3.1% monthly rebate on wholesale power rates. Lyash said the local companies could pass on those savings to their customers, invest in infrastructure and give companies flexibility to receive some of their power through locally sourced options.

The 20-year deals were rolled out this year. They'll replace existing agreements of varying lengths, or follow expiring ones, TVA spokesman Scott Brooks said. TVA officials say many smaller utilities have agreed, as have larger ones, including Nashville Electric Service.

But TVA's biggest customer, Memphis, Light, Gas & Water, has not signed a long-term deal. The Memphis utility is exploring other power generation options, including alternate suppliers. Memphis has been a TVA customer for 85 years and represents about 10% of TVA's revenue, Lyash said.

Consultant reports provided to the Memphis utility have suggested it could save hundreds of millions of dollars per year than under its current agreement with TVA. The Memphis company has received reports discussing alternate power sources, including the MISO transmission system, which delivers power across 15 U.S. states and the Canadian province of Manitoba.

A report by consultant The Brattle Group for the Friends of the Earth environmental organization said a local mix of gas and solar power and battery storage, combined with energy efficiency and other strategies, "would result in wholesale power supply costs substantially below the current TVA rate."

TVA supports Memphis' "very broad approach to considering what their energy future looks like," Lyash said after the meeting. But he said TVA's reliability, support of economic and community development, risk mitigation and other factors make it the best option.

"Our objective is to keep this public power model intact," he said. "We think it's a strategic advantage for the whole Tennessee Valley in the decades to come."

Memphis, Light, Gas & Water did not immediately comment on the status of its decision-making process Thursday.

Across the state, the Knoxville Utility Board was mulling the deal.

"Moving from a five-year contract to a twenty-year contract is a big decision that KUB does not take lightly," the east Tennessee city's utility said in a statement Thursday. "The proposal must be fully vetted before a decision can be reached."

The Middle Tennessee Electric Membership Corp., which provides service to Williamson, Wilson, Rutherford, Cannon and surrounding counties, also has not agreed to a long-term deal, TVA officials said.

Critics of TVA's long-term agreements say they hurt a local company's ability to seek other power sources.

"TVA wants to limit cities like Memphis' options, even as renewables become cheaper to run than TVA's aging coal fleet," said Amanda Garcia, managing attorney of the Southern Environmental Law Center, an environmental public interest law firm.

Other issues discussed during the meeting was the removal of coal ash from the retired Allen coal plant in Memphis and the departures of Ron Walter and Virginia Lodge, two directors whose terms are ending.

TVA is the nation's largest public utility, providing power to more than 10 million people in parts of Tennessee, Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.