Despite below-average power rates, households in the Tennessee Valley still pay, on average, a bigger share of their income for electricity due to less energy-efficient homes, more year-round energy use and lower average incomes, according to the Tennessee Valley Authority.
During a quarterly TVA board meeting Wednesday in Young Harris, Georgia, TVA officials pledged to work with others to try to do more to reduce the energy burden many households face in the authority's seven-state region.
TVA has already helped 3,700 low-income households cut their energy use and power bills by an average of 25% or more through its Home Uplift program since 2015. TVA has also helped fund most of the $6.2 million in school energy upgrades made in 54 schools through its School Uplift program, which resulted in an average 13% reduction in energy consumption.
TVA officials Thursday pledged to expand their energy efficiency efforts over the next five years to save consumers in underserved communities at least $200 million annually.
"I think we have established a framework and program that sets an outstanding example for the nation," TVA President Jeff Lyash told the utility's board of directors Wednesday. "Now the question is, how can we draw people's support to that from business, the states, the federal government and others to channel money to those most in need? It all involves partnerships."
But environmental groups eager to promote more energy conservation and use of renewable energy think TVA could do far more to help its customers lower their power bills.
"If you look at TVA's commitment to energy efficiency broadly, they are not performing in any sort of leadership way, and the dollars they are spending on energy efficiency investments are a fraction of what they once provided and far less than what many other utilities and states are doing," Stephen Smith, executive director of the Southern Alliance for Clean Energy, said in a telephone interview Wednesday after the TVA board meeting.
TVA pioneered some of the first major energy efficiency programs in the 1970s, with loans and grants available to make energy efficiency upgrades for nearly all TVA customers. But TVA now spends less per capita than most other utilities in the South in encouraging consumers to utilize more energy efficiency heating, cooling and insulation.
A study by the Southern Alliance for Clean Energy found TVA got less than 3% as much energy savings from its efficiency programs compared to the U.S. average in 2019. Only Alabama Power ranked lower in the South.
Although TVA continues to offer free energy audits and advice, its weatherization assistance programs require matching funds from local power companies or others, and many previous TVA loan and assistance programs for energy efficiency were eliminated five years ago, except in targeted areas.
Higher poverty rates in the South
The share of households in poverty was higher than the U.S. average in all the biggest areas served by TVA in the 2020 census.* Mississippi, 18.4% in poverty* Alabama, 13.9% in poverty* Kentucky, 13.8% in poverty* Tennessee, 13.1% in poverty* United States, 11% in povertySource: U.S. Bureau of Census
Unlike in the past, officials with the federal utility said they are now targeting investments in energy efficiency in low-income and underserved areas, where officials say it is needed most and can offer the biggest gains.
"Using dollars spent is not the right metric for success," Lyash said. "We have to focus on how effective we are."
Lyash said TVA's role is to keep energy costs low and work with other partners in the region, but he said state and local governments, local power companies and nonprofit organizations and businesses will need to help support efforts to improve the energy efficiency standards for buildings and to work to improve energy efficiency in homes, schools, churches and businesses in a variety of ways.
TVA's Home Uplift and School Uplift programs require matching funds to pay for the energy upgrades that typically save the average household about $500 a year in electricity costs, in addition to yielding improved health outcomes for residents.
TVA has also come under fire from some Democratic leaders in the U.S. House Committee on Energy and Commerce who want TVA to do more to decarbonize its power portfolio to align more with President Joe Biden's climate action goals and to help ease the energy burden in the region. In a letter to TVA earlier this year, House Energy Committee Chairman Frank Pallone Jr., D-New Jersey, said TVA's business practices are inconsistent with its broader mission to help limit the costs of energy and protect the environment.
"Specifically, we are concerned that Tennessee Valley residents pay too much for electricity, which particularly impacts low-income households in Tennessee," the House Energy panel leaders said in their letter.
Energy burden is measured as the percentage of household income spent on energy bills. A high energy burden occurs when more than 6% of household income goes toward energy costs, and levels above 10.9% are considered extremely high.
(READ MORE: TVA seeks to promote more diversity in staff, contracts)
Low-income households in Memphis face one of the highest energy burdens in the country, with half the low-income households there paying more than 13.2% of their income for electricity and more than a fourth of such households paying more than 25.5% of their income in monthly power bills.
"That's a major reason I think that MLGW [Memphis Light Gas & Water] is considering alternative suppliers to possibly replace TVA," Smith said.
The Memphis utility has received power proposals this year from more than 20 wholesale suppliers, including TVA, to become the city's long-term power supplier in the future.
Tom Rice, vice president of financial operations and performance at TVA, said energy burdens are higher in the Tennessee Valley because of the income, housing and climate of the region, not higher power rates by TVA.
More than 10% of the roughly 10 million people who live in the Tennessee Valley live in manufactured housing, which typically are less energy efficient than site-built homes, and a fewer number of TVA consumers live in more energy-efficient multi-family housing units or apartments than in the country as a whole, Rice said.
Additionally, the poverty rate in the Tennessee Valley is well above the rest of the country, requiring most households served by TVA to use a bigger share of their more limited income to pay for electricity, Rice said.
Lyash said TVA is seeking the right balance in its approach to future energy planning to ensure electricity is affordable, reliable and cleaner than in the past.
TVA, which was created in the 1930s to harness the power of the Tennessee River with its 29 hydroelectric dams, continues to get a bigger share of its power than most utilities for renewable sources. So far this year, 57% of TVA's generation came from carbon-free sources, compared with the 36% among all U.S. utilities last year.
"Today, the need to work together and drive toward a clean energy economy is as important as taming the Tennessee River was for us decades ago in TVA's early days," Lyash said. "We aspire to be net-zero carbon emitters, and we will get there as soon as we can. But in addition to being clean, which is critically important, the system has to be affordable, reliable and resilient. If you sacrifice any one of those, it is not a sustainable solution."
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340. Follow him on Twitter @dflessner1.