The giant federal government-owned Tennessee Valley Authority faces its greatest threat in decades, as its largest electric distribution system, the city of Memphis, is looking an outsider, possibly the Midcontinent Independent System Operator, based in Carmel, Ind., to take over and oust TVA. Memphis Light Gas and Water (MLGW) has long chafed at TVA’s iron control of the distribution public power systems in its six-state territory.
TVA is, of course, a monopoly, albeit publicly owned, and often behaves like the investor-owned utilities it replaced some 90 years ago. TVA sedulously maintains a “fence” around its territory to keep competitors at bay. MLGW some 30 years ago first tried to jump the fence but failed.
Two years ago, MLGW began looking seriously at a new energy supplier. The city represents some 11 percent of TVA’s load, with about 430,000 retail customers out of TVA’s total of some 10 million captive customers. TVA sells generation and wholesale transmission services and 153 retail public power systems sell the power to their customers, along with 57 industrial and federal customers who buy directly from TVA.
MLGW’s staff, when recommending that the city look outside TVA, said such a move could save the city’s customers around $3 billion over 20 years and reduce greenhouse gas emissions by up to 40 percent, compared to TVA’s heavily coal and gas generating fleet. MISO quickly jumped in to explore a deal, a mounting a full-court press to sign up Memphis. MISO describes itself as “an independent, not-for-profit, member-based organization responsible for operating the power grid across 15 U.S. states and the Canadian province of Manitoba.
“42 million people depend on MISO to generate and transmit the right amount of electricity every minute of every day. MISO is committed to delivering electricity reliably, dependably, and cost-effectively.
“In addition to managing the power grid within our region, MISO administers the buying and selling of electricity, and partners with members and stakeholders to plan the grid of the future.”
Last March, the Memphis Commercial Appeal reported, MISO’s board came to Memphis, holding a meeting in a local hotel and courting local citizens, city and utility officials, and the media on the advantages of its bid for TVA’s honey pot. The headline was: “Memphis’ exploration into new utility providers nearing a close.”
In an article last week (June 5), reporter Samuel Hardiman wrote, “More than 20 private sector firms have bid on Memphis’ electricity supply and MLGW is poised to update the public on that bidding this Thursday.”
Hardiman then outlined the basics about MISO and how it might fit with MLGW’s needs. “MISO is different from TVA and other companies that want to sell Memphis power in a key way — it is not going to capture much money from MLGW. Instead, Memphis will pay a membership fee to MISO and then would pay any company it purchases power from separately,” he wrote.
Hardiman interviewed MISO CEO John Bear, who said, “When you come into MISO, you’re going to get something that is six times larger than TVA with multiple parties in it. So rather than have just one option for electric service, you’re gonna have many options for electric service. And I think their RFP [bidding] is gonna prove that out.”
Hardiman concluded, “If MLGW leaves TVA, it gets into the power generation business, something it does not do today.
“TVA supplies MLGW with all of its electricity and MLGW is just tasked with overseeing a local distribution and transmission network. If it leaves TVA, that would change. It would be responsible for generating enough power or purchasing enough power to keep the lights on.”
–Kennedy Maize
Twitter (kennedymaize)