By Aaron Butler, Volunteer Writer
Wherever you are in Memphis, whether you're strolling into a bar on Beale Street or flipping your lights on in the Cooper Young area, there's one thing that doesn't change: the power keeping the lights on is generated by the Tennessee Valley Authority (TVA) and delivered locally by Memphis Light, Gas and Water (MLGW). This relationship has been ongoing for approximately eight decades, but the winds of change are blowing and presenting Memphis residents and the environment with an exciting opportunity.
In the fall of 2018, MLGW received multiple proposals from energy consultants to leave TVA and potentially save hundreds of millions of dollars. Fast forward to April 2019 when MLGW began taking this opportunity more seriously and put the word out that they were interested in partnering with a consulting firm to research and analyze their options.
Technological innovations have paved the way for competition in the industry. The cost of clean, renewable energy has fallen to the point where it may be possible for MLGW to simultaneously save money and provide energy from cleaner sources to their customers. In August 2019, MLGW selected Siemens Industry, Inc. to study their options and develop an Integrated Resource Plan (IRP) analyzing the costs and benefits of making such a change.
The IRP from Siemens was made available for public review in May, and since then stakeholders have had much back-and-forth as to the accuracy of Siemens' analysis.
Here's what we know: Siemens analyzed 11 different portfolio options. Ten portfolios consisted of power generated from a mix of various providers and self-generation options, and one portfolio consisted of all power being purchased from Midcontinent Independent System Operator (MISO). By contractual agreement, should MLGW choose to sever their exclusive power agreement with TVA, they must provide TVA with a five-year notice. The IRP projects that Memphis could save as much as $120–$150 million annually if MLGW leaves TVA for a power portfolio that consists of a combination of self-generation and power purchasing through MISO. Additional non-financial benefits of cleaner air and water would also be obtained.
What is the “Energy Burden”?
The term “energy burden” describes the percentage of household income that goes toward energy costs. Homes are often described as being “energy poor” when they spend over 10% of their household income on energy. Memphis residents have the highest energy burden in the country with an average of 6.2% of household incomes being spent on power. But Memphis has a relatively large percentage of the population that falls below the poverty line, which puts the energy burden for low-income households at a whopping 13.2%. Energy burden is one of the issues that the local activists including the organization Memphis Has the Power insists that MLGW consider when reviewing RFPs.
TVA immediately hit back against the IRP from Siemens with criticism. TVA claims that the savings projected by the IRP are far too optimistic. TVA President Jeff Lyash stated, "We believe that critical assumptions, such as construction costs and schedules, capital recovery costs and ongoing operating expenses are understated in the IRP."
Both the Southern Alliance for Clean Energy (SACE) and the Sierra Club have reviewed the alternative portfolio options presented in the IRP and believe that the lowest cost option also happens to be the cleanest portfolio for power generation in terms of renewable energy sources and carbon emissions. The gist of Sierra Club's formal response was that the savings projections provided in the IRP are actually too conservative and don't account for the following benefits: A conservative estimate of up to 1000 megawatts in local solar capacity: Memphis could purchase even more if it so chooses. This increased capacity would lead to a further reduction in carbon emissions Future improvements in energy efficiency Future ability to import clean power and reduced investments in gas-fired power generation. What comes next? The Sierra Club and others are encouraging MLGW to send a Request for Proposal (RFP) to various power generation companies like TVA, MISO, solar installers and others. It won't be until MLGW receives and evaluates the RFP responses that we will have more clarity as to whether or not these companies can do what Siemens says they can do at the price Siemens says they can do it.
MLGW struck a nerve with TVA by even broaching the subject of leaving. TVA quickly came back in July of this year with a proposal providing 500 million dollars in incentives if MLGW would drop the subject and stay with TVA. These proposed incentives include everything from community initiatives and reducing the energy burden (see box) on customers to helping Memphis expedite the development of a 5 billion dollar Port of Memphis. Generally companies don't offer such concessions without a legitimate concern that they may lose a valuable customer.
Something else that local activists encouraged MLGW to consider is TVA's long history of environmental degradation and spreading of misinformation to cover it up. In just the last two years: Tennessee Department of Environment and Conservation (TDEC) sued TVA over issues at their plant in Gallatin. TVA agreed to clean up over 12 million cubic yards of coal combustion residuals and further remediate the area. In 2019 the United States Supreme Court unanimously ruled against TVA's claim of immunity from environmental and other injury lawsuits related to their crimes against the environment. TVA is currently in court with Roane County over what has been called their "coal ash disinformation campaign" in which they've compared coal ash, a toxic by-product from coal fired power plants, to being as safe as dirt. That's right, as safe as dirt. TVA has a history of "planning for" more clean renewable energy in their own IRPs, but then failing to make much real progress when the rubber meets the road. TVA has argued that it has been 100% reliable and never failed in its job to provide power to Memphis, but it's been shown that they've been reliable in taking responsibility for their actions and the environment only when forced to do so in a court of law.
What comes next is anyone's guess, but as of right now MLGW is exploring their options and TVA is offering concessions to entice them to stop exploring. It is important to note that should TVA make any concessions in a contract with MLGW, other local power companies could opt to have the same concessions applied retroactively to their contracts with TVA. Looks like Memphis is onto something.
Contact Aaron at thegoodfightnow@gmail.com.