Today, during a special called meeting of the Memphis Light, Gas and Water Board of Commissioners, MLGW President and CEO J.T. Young recommended awarding a long-term power supply contract to the Tennessee Valley Authority under MLGW’s renewable and other alternative resources RFP.
MLGW’s Power Supply Evaluation Team, led by GDS & Associates, determined that TVA’s Long-Term Partnership Proposal “demonstrates the greatest value and least risk” for MLGW customers compared to all other RFP alternatives. MLGW is expected to see $152 million in power supply cost savings over the next five years and $944 million over 25 years. These savings would start once the contract is executed.
For the first five years, the average residential customer would save about $32 a year on their electric utility bill.
In addition, the team concluded that TVA’s contract “includes more flexibility,” allowing MLGW to install solar generation to support local renewable and sustainability goals and be more directly involved in TVA’s planning and decision making.
In response to this announcement, TVPPA President and CEO Doug Peters said “The greatest benefit of being part of a public power community is that local leaders put the needs and interests of the customers and communities they serve first. Certainly, MLGW demonstrated that throughout the painstaking process of assessing affordable, reliable, resilient and sustainable power supply options for the future.”
During the RFP window, MLGW received proposals from 24 vendors responding to MLGW’s Transmission, Thermal Generation, and Renewables and Other Requests for Proposals. Numerous changes including increased interest rates, high inflation, and supply chain constraints have impacted the energy market over the last two years and were noted as just a few of the risks MLGW would be forced to navigate by changing power suppliers.
Peters spoke to these risks in his statement, noting “The power industry is more dynamic at this moment in time than perhaps any other in history, and as demand for clean energy, renewable technologies and EVs grows, so too does the need for stability in the generation, transmission and distribution of electricity. While cost savings is at the heart of MLGW’s recommendation, the benefits of TVA’s reliable and resilient operations cannot be overstated in the board’s final decision.”
The Long-Term Partnership Proposal being offered differs from what MLGW currently has with TVA. The existing contract with TVA has a five-year notice of termination and no discounts on base rate charges and no flexibility to own or deploy MLGW renewable projects. The new TVA proposal is identical to that of TVA’s other wholesale customers: a 20-year termination notice, a 3.1 % decrease in base rate charge, and up to 5 % in acquired renewables to meet the utility company’s energy needs.
“The relationship between TVA and its distributor customers is unlike any other in the nation, and it has served to build the economy and fuel life in the Tennessee Valley for more than 80 years. Today’s recommendation serves as confirmation that, individually and collectively, upholding the Tennessee Valley’s public power model is best for our region’s power distributors and those they serve,” said Peters.
The MLGW board of commissioners will take the matter under advisement. The public will be allowed a minimum of 30 days to comment and ask questions about the plan by emailing PowerSupply@mlgw.org.