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Memphis power company rejects TVA’s long-term deal

December 7, 2022 GMT

MEMPHIS, Tenn. (AP) — The utility company in Memphis, Tennessee, said Wednesday it has rejected a 20-year contract with the Tennessee Valley Authority but will remain the power provider’s largest customer for the “foreseeable future.”

Memphis Light, Gas and Water’s Board of Commissioners unanimously voted to turn down the contract offered by TVA, which provides power to local distributors in its seven-state region. Board Chairman Mitch Graves stated the contract was “too long of an agreement.”

MLGW will remain in its current five-year rolling contract with TVA, a deal that automatically renews unless the Memphis utility opts to cancel it, TVA spokesman Scott Brooks said. The Memphis utility will have to give TVA a notice of five years if it intends to end their partnership of more than 80 years, Brooks said.

“MLGW will remain a TVA customer for the foreseeable future,” the board’s statement said.

MLGW has undergone a yearslong review process as it considers its long-term power options. On Sept. 1, its senior leadership recommended keeping the TVA as the utility’s power supplier.

“MLGW’s process has been a thorough, disciplined, and unbiased consideration of potential energy suppliers,” said TVA’s statement on the decision.

Brooks said TVA and the Memphis utility could continue to discuss a long-term deal.

“Over the last four years, we’ve said we want to continue being the power provider for MLGW, and that’s what today’s vote did,” Brooks said.

TVA has signed most of the local power companies it serves to the 20-year-agreements, which have been the target of a federal lawsuit. The contracts offered by TVA carry a 3.1% monthly rebate on wholesale power rates and allow local power companies to seek up to 5% in acquired renewable energy.

Brooks said six of 153 TVA customers have yet to sign the 20-year agreements.

Three environmental groups have sued TVA over those contracts, which require a 20-year notice to terminate and renew each year. The groups allege the contracts amount to “never-ending” agreements that deprive local power distributors the opportunity to renegotiate with TVA to obtain cheaper, cleaner electricity.

TVA has said the environmental groups have no standing to sue and that the contracts provide the utility with contractual certainty, help fulfill its mission to provide power at the lowest feasible rates, and give local power companies rate stability and protection.

As the nation’s largest public utility, TVA provides power to distributors that serve 10 million people in parts of Tennessee, Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.