Mark Yates

Getting the Facts on the TVA Proposal - Mark Yates

For the past three years, the community has been engaged in a discussion about the future of its electricity supplier. Now that a decision appears to be getting closer, I want to make sure you have all the facts about TVA’s participation in this important process. Most importantly, what it’s costing people like you and me who pay our power bills.

First, let’s set the stage: This is not a discussion about cost savings. MLGW already has the second lowest electricity costs in the nation among its peers. You may have heard, seen or read about “studies” that estimate hypothetical cost savings if MLGW leaves to join another provider. Those are estimates based on situations that don’t even exist. Any potential savings from MLGW leaving would take 20 or 30 years to be a reality for you -- the end user.

You may ask – why is that? The energy system is complex. It requires generation to produce the electricity, large-scale transmission infrastructure to transport the electricity to smaller-scale distribution systems that carry the power to your homes and businesses.

There would be millions of dollars required – from you -- to build the first two parts of that complex system to make sure the lights still come on each and every day. The irony is we already have a system in place today that provides low-cost, reliable electricity. TVA submitted a proposal as part of MLGW’s RFP process – and we incorporated feedback we received from the community as we focus on how to better serve the Memphis community moving forward.

Throughout this process, we have been respectful of the RFP process. The choice is up to MLGW and the people of Memphis. We think the choice is clear – and here’s why:

TVA is not just an energy provider. We’re a community partner, a trusted energy advisor and a job creator.

Our RFP submission is substantially similar to our public proposal from July 2020 with an estimated value of $2.4 billion over the next 20 years.

Here’s just some of what it includes:

  • Transmission System Purchase – An offer for $400 million to purchase MLGW’s larger transmission system that TVA currently leases to bring power into the city and county. That would also result in another $150 million in savings for maintenance over 20 years.
    • MLGW currently receives $37 million in transmission credits from TVA that would also go away if MLGW chooses to leave. This is TVA paying MLGW to use their transmission system.
  • Community Revitalization Programs - $100+ million over 10 years toward projects and programs to help you -- the people we serve. We recognize investing in our community is a must! Will another utility offer that?
  • Economic Development – TVA is eager to work with local agencies to continue economic development efforts, including Ford’s Blue Oval City and the Port of Memphis.

But our proposal goes beyond these areas. It also includes pandemic credits (3.1 percent or $21 million annually) that help keep MLGW from having to raise your energy costs. Those credits have been approved annually by our Board for all the local power companies during the pandemic. But those credits would go away if MLGW leaves – no longer providing Memphians – you and your neighbors – with those benefits.

This package also doesn’t include the $20 million annually that MLGW is leaving on the table – a long term partnership credit – that 146 of 153 other local power companies are already realizing. That’s $60 million and counting since this process began. Think about what Memphis could do with $60 million. But remember, a 20-year agreement is not required. It just makes business sense.

And our offer was on the table even before the winter storms that wreaked havoc on the MLGW transmission system earlier this year and last February. TVA’s proposal would create additional funding that MLGW could use to address the core issues that affect reliability and begin critical upgrades to better serve you.

We believe the people of Memphis deserve an energy and economic development partner that cares about serving their needs and addressing real issues like energy burden and revitalization of the city’s core communities. TVA’s partnership with MLGW is the best option for making this happen.

For more details on our partnership and proposal, visit tva.com/memphis.

Sincerely,

Mark Yates
TVA Regional VP, West Region

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