Memphis Is Evaluating New Electricity Suppliers

Memphis’ municipal electric provider is evaluating proposals for new suppliers of power, which could be one of the most consequential clean energy developments in the Southeast this year.

Chris Carnevale and Pearl Eva Walker | March 31, 2022 | Energy Justice, Tennessee, Utilities

Memphis’ municipal utility company, Memphis Light, Gas, and Water (MLGW), recently received the last of the proposals from companies bidding on providing the city with new supplies of electricity through MLGW’s requests for proposals (RFPs) issued last year. The company is now reviewing the 27 proposals for alternative power supply.

RFPs Seek Savings for Memphians

MLGW issued the RFPs after numerous expert studies showed that Memphians could save hundreds of millions of dollars by leaving their current electricity supply contract with TVA (the Tennessee Valley Authority) and switching to new suppliers, while preserving high reliability, attracting local investment, and transitioning to much cleaner sources of energy. One such study, produced by MLGW and published in 2020, found that benefits to Memphians of leaving TVA would could include:

  • $120-$150 million per year in savings, which by law must be passed onto consumers
  • nearly $3 billion in local capital investment in power infrastructure, including up to 1,000 megawatts (MW) of solar installed in Shelby County 
  • moving to a portfolio of approximately 75% renewable energy, mostly solar (3-4 gigawatts of renewable energy capacity by 2030)
  • 40% lower carbon emissions than power from TVA

These potential benefits for Memphians are highly important, especially considering that Memphis has some of the most unaffordable energy bills of major cities across the country. In addition to the direct financial savings offered by new energy suppliers, MLGW would also gain local autonomy by leaving TVA that would allow them to enact programs to further boost energy affordability and promote bill savings through energy efficiency, local solar, local storage, and other clean energy technologies. 

SACE has advocated that if MLGW leaves TVA, then 10% of any savings from switching to an alternative energy supply should be committed to energy efficiency programs – with a particular focus on customers with lower incomes – as well as other programs to reduce energy use at the times of day when it is most expensive. These programs are proven to reduce bills for all customers by reducing the utility’s costs to provide electricity.

The Evaluation Process

Now that MLGW has received all the proposals for alternative power supplies, MLGW staff and their contractor leading the RFP process are evaluating the bids. In the RFP documents published in 2021, MLGW indicated that they would announce a short list of finalists and invite presentations from the finalists around this summer. Following the presentations, MLGW would seek final and best offers from the companies, and then potentially — if MLGW staff determines that the offers provide ample benefits to Memphis — choose winning contracts by early December of this year. 

Proposals will be evaluated with the following principles in mind:

  • Certainty – Providing a high degree of certainty and predictability
  • Risk Mitigation – Reflecting the lowest risk to the success of the project and operating performance
  • Cost – Meeting all requirements at the lowest overall cost
  • Specificity – Providing a high degree of specificity and detail

Proposals will also receive bonus points in their scoring if they involve minority-owned; women-owned; or small, locally-owned business enterprises.

Should MLGW staff recommend signing new power supply contracts, the contracts would need to be approved by two levels of authority and oversight: the MLGW Board and Memphis City Council. MLGW’s board is composed of five voting members who are appointed by the City Mayor and confirmed by City Council. Mayor Strickland just appointed two new board members after reporting by the Institute for Public Service Reporting found that the Board members were serving beyond their terms’ expirations. The two new members were preliminarily approved in a City Council committee meeting last week, and will have a confirmation vote in the coming days, along with the three incumbent board members who have been nominated for reconfirmation.

While MLGW Shops Around, TVA Digs In on Risky Fossil Fuels 

While MLGW is seeking better contracts for reliably providing Memphians with low-risk energy, TVA is doubling down on its strategy to rely on risky fossil fuels. Even though Tennesseans would benefit greatly from transitioning to clean energy, and despite the clear call from experts that the U.S. must phase fossil fuels out of electricity production, TVA is taking initial steps to replace two coal plants with large natural gas power plants and accompanying gas pipelines. While experts increasingly recognize the widespread benefits of our country achieving national goals of 80% clean power by 2030 and 100% carbon-free electricity by 2035, TVA is positioning Tennessee customers to be on the hook for paying for polluting power plants for decades to come while denying them the full benefits of cleaning up the power sector.

Meanwhile in Memphis, TVA has drawn recent criticism from community members and leaders for its coal ash removal project from the now-closed Allen coal plant. The ash left over from historical coal burning at the Allen Plant, which is stored on site at the plant location, has leaked out of its pits and contaminated groundwater with arsenic. This situation risks polluting the aquifer that is the city’s drinking water source. TVA has committed to removing the toxic ash from its pits to remove its risk of further contaminating groundwater, but the utility has largely left the Memphis community out of the decision-making process and with big unanswered questions around how this will happen. TVA has been formally working out their plan to close the Allen coal ash ponds since 2019, but last summer, they announced they were planning to dump the ash at the South Shelby landfill in Southeast Memphis near Whitehaven by transporting the ash across town in hundreds of dump truck trips per day for about 8 or more years. Members of Memphis City Council, Congressman Steve Cohen, and others criticized TVA’s decision and decision-making process, having been taken by surprise by the announcement. In coming to their decision, TVA did not produce a site-specific environmental analysis for the South Shelby landfill or the hauling route to the site, even though some community advocates and environmental organizations had called on TVA to do this further study before making their decision.

In response to TVA’s announcement of their decision, Memphis City Council passed a resolution stating opposition to the plan to bury the ash in Memphis, and Congressman Cohen sent a letter to TVA’s CEO Jeff Lyash, saying in part: “it is perplexing to me that TVA would not take the adequate steps to analyze site-specific impacts of its decision and solicit ample community feedback before dumping its waste in the […] community. This is especially important considering the volume of truck traffic and accompanying noise, air pollution and safety impacts that will be endured by these residents for the next several years. It appears that TVA is woefully out of touch with the community it wants to impose its coal ash upon.”

While the disapproval of local elected officials was strong enough to prompt TVA to announce a temporary pause in their plans last year, they later began the ash transportation across Memphis’ roads after hosting a few community meetings.

Alternatives For Memphis

Memphis doesn’t need to be dragged down and held back by TVA. Memphis has the power to create its own future with affordable, equitable, and clean energy for all of its residents. 

This possible future was on display last week when the primary energy market for the Midwest held its board meeting in Memphis. The Midcontinent Independent System Operator (MISO) is a non-profit electricity market operator that delivers electric power across 15 U.S. states, including in Arkansas and Mississippi, as well as the Canadian province of Manitoba, right across the border from Memphis. MISO is not an energy generator itself, but rather coordinates and delivers energy across its transmission lines for its members. MISO members are likely alternative sources of power for MLGW, and are the basis of MLGW’s 2020 report that found that Memphis could receive massive financial savings and environmental benefits from leaving TVA.

Whether through buying clean energy on the MISO market, developing weatherization and energy efficiency programs to help lower families’ bills, and/or expanding customers’ access to solar energy, opportunities abound for MLGW and Memphians if the community continues exploring alternatives to TVA.

Sign the petition for affordable, equitable, and clean energy: Memphis Has The Power
Chris Carnevale
Chris is SACE’s Climate Advocacy Director. Chris joined the SACE staff in 2011 to help with building public understanding and engagement around clean energy solutions to the climate crisis. Chris…
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