Seven States Power offers aid, partnerships as utilities develop their own generation

Contributed photo / Betsey Kirk McCall
Contributed photo / Betsey Kirk McCall
photo Contributed photo / Betsey Kirk McCall

The municipal utilities and power cooperatives that distribute electricity generated by the Tennessee Valley Authority formed their own power company more than a decade ago to assume ownership of some of their own generating assets for the first time in TVA history.

Although the group's initial venture didn't work out as initially envisioned, the cooperative of TVA distributors known as Seven States Power Corp., is moving ahead now to help its members take advantage of the changing energy market for distributed power and TVA's more flexible power purchase agreements with its customers.

"The power industry is evolving more rapidly than ever before and consumer demand for innovative technologies and environmentally conscious energy solutions has reached a new level," said Jeff Dykes, president and CEO of BrightRidge in Johnson City and chairman of the Seven States Power board. "Seven States Power is focused on empowering its members to meet consumer demand in an evolving utility marketplace."

The nonprofit venture formed in 2007 was spun off last month from the Chattanooga-based Tennessee Valley Public Power Association (TVPPA) and is using a portion of its assets to pursue new distributed energy options and to aid its members in promoting electric vehicles sales and usage through rapid charging stations across the Tennessee Valley.

"We're an energy solutions company and we're focused on leveraging innovative technology," said Betsey Kirk McCall, the president and CEO of Seven States Power who joined the power venture in 2018. "We hope to help local power companies to explore their options and serve as an extension of their operations so that we can provide them a service from concept to completion of a project without taking time away from their focus on power operations."

Last year, TVA granted its 153 local power companies the flexibility under their purchase power contracts to generate or buy from other sources up to 5% of their electricity, rather than TVA. TVA's Green Invest program that allows customers to directly purchase renewable energy could push that share of distributed energy even higher.

Previously, TVA has supplied all of the power to its local power companies since its creation in 1933.

As municipalities and power cooperatives look at alternatives to TVA for a portion of their power, Seven States will provide assistance and, in some instances, could arrange shared ownership and development partnerships in new generation or storage capabilities.

"We've focused on this space to empower our members so they can focus on the growing demands in their community," McCall said.

Already, Seven States has installed over 80 electric vehicle chargers and helped purchase three backup generators for its member utilities. Last October, the company helped install a small microgrid with a solar canopy and battery storage in front of the U.S. Space & Rocket Center in Huntsville, Alabama as a demonstration project on distributed energy.

Seven States Power is jointly owned by the 153 municipalities and power cooperatives that distribute TVA's electricity to nearly 10 million consumers across TVA's 7-state service territory.

TVPPA initially established Seven States Power as a vehicle for TVA distributors to collectively own some of their own power generation. At the time, White House budget planners had suggested that TVA could be spun off from the federal government or privatized to help get its debt off of the federal budget ledger. Municipalities and coops in the Tennessee Valley that fund most of TVA didn't want to see such generating assets sold in a manner that could leave them with higher electric rates in the future so they helped capitalize and fund most of the costs of a natural gas plant in Mississippi and hoped the model would work with other power plants in the future to limit TVA's debt and give distributors more energy options.

Seven States Power acquired a 90% stake in a Southaven Mississippi gas generating plant nearly a decade ago. The plant is operated by TVA, which also agreed to buy back the facility under the terms of the lease buyback arrangement with Seven States.

In 2013, Seven States sold its interest in the Southhaven combined cycle gas plant in Mississippi back to TVA after determining that TVA could operate and finance the facility better on its own.

Although Seven States helped limit TVA's debt in the past when TVA's debt was approaching its $30 billion cap set by Congress, TVA has since paid down its long-term obligations by more than $6 billion and shored up its balance sheet so that it can more easily borrow money for major capital projects. Because TVA enjoys the implied backing of the federal government, TVA can borrow at lower interest rates than investor-owned utilities or even the tax-free rates on bonds issued by the local power companies in the Tennessee Valley.

Wih stagnant or even declining power demand in the Tennessee Valley, TVA also isn't pursuing expensive new power generation that helped swell TVA's debt in the past.

"I think the days of trying to bring a large generating facility online for TVA have lost their luster and our focus at Seven States has changed over time," said Greg Williams, president of Appalachian Electric Cooperative and a member of the Seven States Power board. "We have a new niche now at Seven States and that's really in helping local power companies meet their flexibility option. TVA put 2,000 megawatts of generating capacity on the table for local power companies to grab and Seven States is helping us figure out how to do that."

Appalachian Electric Cooperative and Morristown Utilities are jointly working with Seven States Power to identify the developer of a proposed 25-megawatt solar farm the local utilities hope to use to get even cheaper power than from TVA at certain times of the day.

To help its members identify and develop such opportunities, Seven States has shifted from a financing and ownership vehicle for its members to more of a research, development and consulting or development partner on solar, battery and other distributed energy projects. Seven States also is helping develop new services such a fiber optic connections for telecommunications, cybersecurity projects and charging stations for electric vehicles.

In April, four TVPPA staff positions will transition to Seven States Power. McCall will serve as president, Clint Wilson as senior vice president overseeing engineering and market innovation, Steve Noe as vice president leading sustainability and energy resilience initiatives, and the team will soon add a vice president of partnerships and project development.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

Upcoming Events