TVA president and CEO Jeffrey Lyash
Protect Our Aquifer and other environmental advocacy agencies sued the Tennessee Valley Authority (TVA) Tuesday, August 18th, for what they claim are unfair, long-term contracts.
TVA began offering long-term contracts with lower rates last year to local utilities that would sign 20-year purchase agreements with the federal power provider. The contracts would cut suspend rate increases and offer a 3.1-percent rebate to those utilities, according to The Chattanooga Times-Free Press
The Southern Environmental Law Center (SELC) filed a suit challenging the contracts in federal court on behalf of Protect Our Aquifer, Energy Alabama, and Appalachian Voices. The groups call the contracts “never-ending contracts, designed to keep local power distributors captive customers of the federal utility forever.”
“TVA is using these eternal contracts to stamp out any competition for the next century,” said Amanda Garcia, SELC’s Tennessee office director. “These never-ending contracts threaten to prevent local distributors from ever renegotiating their contract with TVA, let alone consider leaving the utility if it continues to lag behind in transitioning towards cheaper, cleaner renewable energy. These contracts will take the public’s interest completely out of public power.”
The groups claim the contracts place a “harsh cap on the ability of local power companies to use renewable power from non-TVA sources, and they seek to guarantee that TVA’s customer base, made up of municipal and member-owned local utilities, never leaves the utility.”
TVA's natural-gas-fueled Combined Cycle Plant in Memphis
Scott Brooks, TVA spokesman, said the long-term contracts were developed “at the request of our local power company partners.”
“It is a completely voluntary agreement that provides both an annual 3.1 percent credit on wholesale power rates, as well as the flexibility to self-generate a portion of their own power, primarily through renewable energy,” Brooks said. “Since being introduced late last year, 141 of 153 local power companies have chosen to participate. Prior to the current long-term partnership agreements, several local power companies already had 20-year agreements with TVA and all had rolling terms.”
Of the lawsuit, Brooks said, “it would be inappropriate for us to comment further on the specific allegations in the lawsuit since we have not yet been served with it.”
The SELC said previous contracts were for seven years, offering up periodic opportunities for local utilities, like Memphis Light, Gas & Water (MLGW), to renegotiate contract terms or to find another power source. The new contracts, it says, require a 20-year notice to terminate and renew automatically “so that the length of the contract never ends.”
The complaint alleges that the contracts could negatively affect the environment as it could influence TVA’s decisions to invest in energy resources, increasing greenhouse gases and other pollution, and increasing water usage across the Tennessee Valley.
“TVA’s continued reliance on fossil fuel resources has a lasting impact on Memphis’ primary drinking water source, the Memphis Sand Aquifer,” said Ward Archer, president of Protect Our Aquifer. “TVA has stored coal ash in a way that puts our drinking water aquifer at risk, and its use of billions of gallons of our clean drinking water to operate its gas plant for decades to come threatens the sustainability of our community.
“The public has a right for federal agencies to look at alternatives when making major decisions, and TVA deprived communities of that right before asking local distributors like Memphis Light, Gas & Water to sign these never-ending contracts.”
Southern Environmental Law Center
Aerial shots of TVA's Memphis power plants
MLGW now has such an offer from TVA. However, the utility's board will get a recommendation Wednesday from its president and CEO J.T. Young on whether or not to keep TVA as its power provider or to entertain proposals from other companies. If MLGW does decide to leave TVA, the exit will take five years to fulfill the current contract.
The suit alleges TVA broke the National Environmental Policy Act as it did not analyze or disclose the possible environmental consequences of the long-term contracts. TVA also broke the law as it did not consider alternatives to the contracts or get public input on the matter.
“While TVA keeps the lights on across the Valley, our utility kept the public in the dark around its game-changing decision to essentially trap power distributors’ customers and members in these regressive contracts for the foreseeable future,” said Brianna Knisley, Tennessee campaign coordinator for Appalachian Voices. “Ultimately, TVA blocked an opportunity for the public to participate in a major policy decision that will likely stall our region's critically needed transition to renewable resources.”
Read the full complaint here:
See related PDF