A new study suggests that TVA’s biggest customer could save at least $120 million a year by generating its own natural gas and solar power and joining a nearby regional transmission organization to replace the electricity supply it has gotten from the Tennessee Valley Authority over the past 81 years.
Memphis Light Gas & Water, the city-owned utility that now pays TVA about $1 billion a year for power, commissioned the Siemens consulting firm to analyze its power supply options for the future after four previous studies suggested that MLGW could save anywhere from $100 million to $450 million annually by splitting with TVA and getting its power elsewhere.
In a 75-page study released late Friday, Siemens analysts found that the Memphis utility could save $1.9 billion over the next two decades, or at least $120 million a year in 2018 dollars, by replacing TVA with a combination of self-generated power by MLGW and purchased power from the Midcontinent Independent System Operator (MISO). The study suggests that Memphis solicit requests for proposal from power suppliers to test the market and get cheaper and cleaner power than what TVA has provided for the 421,000 customers of MLGW.
The report, which studied 11 different alternative power options for Memphis, said the least cost option could reduce carbon emissions by 50% from what TVA provides by 2030.
Gary Vicinus, the project manager for Siemens, said MLGW will have to spend billions of dollars to build its own generation and install new transmission connections which limit some of the advantages of the cheaper solar and gas power prices quoted in previous supply studies. If it separates from TVA, MLGW would also have to make up for the tax-equivalent payments TVA provides Memphis and Shelby County.