Should MLGW Break Free From TVA?

Kate Tracy | March 6, 2020 | Energy Justice, Tennessee, Utilities

In the coming months, Memphis Light, Gas and Water (MLGW), which provides electricity to Memphis residents, will be evaluating its long-term plan for obtaining power. MLGW currently purchases wholesale energy from the Tennessee Valley Authority (TVA), but recent studies have indicated that Memphis could save hundreds of millions of dollars per year by sourcing energy from alternative supplies. There are a couple of routes MLGW could take and the path ahead is unclear, with many forks along the way. What is clear though is that Memphians Have the Power to help chart a course forward that will ensure affordable, equitable bills, more clean energy, and a healthier city.

Memphis Residents Feel the Heat and Pay The Price

For too long, many Memphians have been overlooked when talking about energy. TVA has limited the opportunity for low-income, single resident, elderly, and fixed income customers to lower their bills by reducing energy needs in their homes or installing solar on their roofs. Electric bills in Tennessee are some of the highest in the nation and Memphians in particular pay too much of their income for energy. The last thing Memphis needs is to be locked into an energy provider that doesn’t consider the needs of all the residents they are obligated to serve.

If you live in Memphis and want to raise this issue to your local leaders, take action and sign the Memphis Has The Power petition.

Memphis has the most unaffordable energy of any major city in the nation, with many families paying 25% or more of their income for energy. Nationwide, people pay on average about 3.5% of their income on energy. In Memphis, however, people pay about 6% of their income on average. Yet families with lower incomes pay much more. Low-income families in Memphis pay about 13% of their income for energy and more than a quarter of low-income families pay upward of 25% of their income on energy.  Unaffordable energy in Memphis is not only a housing issue but a health issue as well. Having to choose between keeping your heat or air conditioning on or paying for your groceries or prescriptions is a position nobody should be in.

We’ve said this before, but we’ll say it again: Access to healthy homes, affordable living, and clean, sustainable energy are the most basic of necessities–but Memphians are facing some of the highest percentages of health disparities, housing issues and unaffordable energy in the country. Institutional and environmental racism, along with other deeply rooted social factors, shape these inequalities in Memphis. In order to reshape the energy landscape in Memphis, we must approach it holistically.

Potential for Change in Memphis

MLGW is currently evaluating whether to stick with or break free from its current power supplier, TVA. Last Thursday, MLGW convened the Power Supply Advisory Team (PSAT), a group of stakeholders from varying interests in Memphis, to review and provide input on more analysis from an independent consultant that is looking at the costs, benefits, and risks associated with MLGW’s future power supply options. The consultant is considering two main options: either MLGW pursuing its own low-cost energy supply or MLGW continuing to be under contract with TVA. These options are tested under various future simulations to estimate the overall costs to MLGW, and identify any potential risks.

While the PSAT meeting should have served as a critical forum for education and public input, the independent consultant, Siemens, provided disappointingly little information and did not provide an adequate analysis of costs and risks associated with future energy scenarios for MLGW. 

We were disappointed when MLGW confirmed the meeting would be the last opportunity for this kind of stakeholder engagement, where stakeholders are able to meet face-to-face and ask questions of the consultant, even though full report findings have not yet been released and there is a need for more discussion. The previously-scheduled March PSAT meeting has been canceled and the format for a public presentation in April, followed by a public comment period, has not been well defined. The PSAT, of which the Southern Alliance for Clean Energy (SACE) is a member, should have another opportunity to interact with the consultants conducting the study, just as the program was initially scheduled to do. 

Last week, Stephen Smith, SACE’s Executive Director, commented,

“There is mounting evidence that Memphis has the power to break free of TVA and save Memphians money today. Every year, MLGW pays roughly one billion dollars to TVA for energy that electrifies the City of Memphis and its residents. Preliminary studies indicate there are hundreds of millions of dollars a year to be saved by leaving TVA, which would mean lower bills for Memphians who face some of the most unaffordable energy in the nation.” 

Maggie Shober, SACE’s Director of Utility Reform and member of the PSAT stated,

“The presentation to the PSAT from Siemens today was disappointing in the level of information provided and lacked context. Memphians will be on the hook to pay for whatever MLGW decides for decades to come and therefore need to be included as much as possible in the process–canceling stakeholder meetings, and providing minimal information at this meeting, is unacceptable.”

If Memphis decides to stay with TVA, the federal utility will likely pressure MLGW to sign a limiting long-term contract that will make TVA less responsive to MLGW, limit the amount of power that MLGW can generate on its own, and stifle bill-lowering opportunities for Memphians like renewable energy and energy efficiency.

Read our take on what would happen if Knoxville’s local power company, Knoxville Utility Board (KUB) were to sign TVA’s long-term contract.

What’s the Path Forward for Memphis?

If it takes leaving TVA to get affordable, equitable, and clean energy for Memphians, the City and MLGW need to keep rapidly advancing the search for alternatives to TVA. Every month the City delays making a decision on whether or not to leave could waste tens of millions of Memphians’ dollars. We look forward to seeing a robust request for proposals (RFP) from the utility soon that will give a clear indication of how many millions of dollars Memphians can save by breaking free from TVA.

If you live in Memphis and want to raise this issue to your local leaders, take action and sign the Memphis Has The Power petition.


Kate Tracy
This blog was written by a former staff member of the Southern Alliance for Clean Energy.
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