A half century after splitting with Georgia Power and joining the Tennessee Valley Authority, the city of Chickamauga has become the latest local power company to sign a long-term agreement to buy most of its electricity from TVA.
Chickamauga Electric, which is one of the smallest of the 153 municipalities and power cooperatives that buy wholesale power from TVA and distribute it to its customers, signed a new agreement this week with TVA that requires a 20-year notice before the local power company can use another wholesale supplier for all but a small share of its power.
Chickamauga becomes the 142nd local power company to sign the new long-term pact with TVA, which the federal utility began offering last fall. To entice distributors to sign the rolling 20-year power purchase agreements, TVA began offering 3.1% wholesale rebates last year to local power companies that agree to the long-term partnership with TVA.
Chickamauga, which buys about $2.5 million a year of TVA power, will begin getting the rebate from TVA this month.
"We're already one of the lowest priced utilities for our power rates in Georgia and this rebate will save us even more," said Michael Haney, city manager for Chickamauga. "TVA has been a good long-term partner for us."
Chickamauga Electric System serves the original city limits of Chickamauga, but both Georgia Power and North Georgia Electric also serve some residents that have been annexed into the city. Incorporated in 1964, Chickamauga Electric has about 980 residential and industrial customers, and serves 25 miles of transmission lines. Chickamauga is the fourth newest of the 153 local power companies that buy TVA power.
TVA Vice President Buddy Eller said the 20-year contracts TVA began offering last year to replace the former 5-year power purchase agreements provide more stability for TVA and its distributors for long-range planning. More than 90% of TVA's $11 billion a year in power sales is now a part of the 20-year contracts.
"This speaks to the strength of the public power model and the acceptance of the long-term contracts by most of our local power companies," Eller said.
But 11 TVA distributors, including its biggest in Memphis, have yet to sign the 20-year contract with TVA and many are soliciting proposals from other wholesale power providers to replace TVA. Consultants for Memphis Light, Gas & Electric estimate Memphis could save $122 millon a year by building its own generation or buying wholesale power on the grid through the Mid-Continent Independent System Operator (MISO).
MLGW is preparing to hire an outside company to solicit wholesale power offers on the market and could select a successor to TVA by the end of the year. Memphis must give TVA a 5-year notice, if it decides to buy power from another suppier.
In the eastern half of TVA's 7-state service territory, Volunteer Energy Cooperative and North Georgia Electric Cooperative also are studying their supply options for the future. A 2018 rate comparison study by the Atlanta-based energy consulting firm EnerVision for Volunteer Energy found that TVA wholesale rates at that time were 28% higher than the average of 10 other neighboring utilities.
TVA President Jeff Lyash insists when local power companies consider all of the economic development and power reliability services offered by TVA, "we're still the best overall value."
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.