The billion-dollar question: Will MLGW split with TVA?

Published: Jun. 9, 2022 at 6:17 PM CDT
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MEMPHIS, Tenn. (WMC) - Could an 80-year partnership between Memphis Light Gas and Water (MLGW) and the Tennessee Valley Authority (TVA) come to an end?

That’s what the powers at be at MLGW have been looking into over the last several years and drew one step closer on Thursday.

“This is really a checkpoint in the process,” said MLGW President & CEO J.T. Young.

At the meeting, the company GDS Associates, Inc. Engineers and Consultants walked MLGW Executives, Memphis City Councilors, and members of the public through the process of a break-off.

GDS was hired by MLGW to evaluate proposals made to the utility company after an request for proposal (RFP) was made last year.

The process, in its current state, would have MLGW merge with the Midcontinent Independent System Operator (MISO) Network, which facilitates the power flow to Entergy in East Arkansas and North Mississippi.

Almost everyone in the room was fresh to the information, including Young, who had only seen GDS’s findings once before earlier in the week.

We asked him how this would impact MLGW customers’ monthly utility bill.

“It’s difficult to say what the magnitude would be of savings at the retail level,” Young said. “Certainly, savings even today we might save on fuel or what have you is passed onto our customers. The real question is going to be, and I think it’s going to be really interesting, is going to be around the risk assessment associated with this particular decision.”

“This is not a ‘start down the road and pivot back.’ This is ‘once you’re in the river, you’re in the river and there’s no coming back from this,’” said Memphis City Councilor Chase Carlisle.

Carlisle was echoing what GDS informed the room during their presentation, that a break-off from TVA is not something that can be undone.

It would be final, and Carlisle wants to make sure the decision is what’s in the best interest of MLGW customers.

If the decision is to break away, MLGW would have to give TVA a notice of termination, which would take 5 years.

During that time, MLGW would have to construct the infrastructure necessary to accommodate the power flow to it’s near-450,000 customers, and Carlisle doesn’t think that’s realistic.

“We are going to have to build industrial transmission lines across the Mississippi River. That involves the Federal government, the Corps of Engineers. And so, the idea that we would have savings or start this process and be hooked in by 2028 is just not realistic.”

“There’s risk associated with construction, labor,” Young said. “We’ve got to make sure that this thing can actually get done.”

What we were shown is the cost of transferring to an alternative service provider like MISO.

To build the necessary transmission capabilities to connect to the Entergy network, as well as updating MLGW’s current infrastructure, the cost comes out to $1.2 billion.

“I can tell you today the rate will not stay the same,” Carlisle said, talking about MLGW customers’ rates. “It absolutely would go up in order to increase the revenue necessary to levy and pay for those bonds.”

“There is still a lot of research that needs to be done,” said Glenda Hicks.

Hicks and Rey Bauer attended Thursday’s meeting.

The two are members of the group 21st Century Memphis or Bust, a group of MLGW customers that formed after the February ice storm.

They try to inform the public about the innerworkings of MLGW in the name of transparency.

They were disappointed in how the presentation from GDS was given and how no outlook was given on how this would impact customers.

“I think everybody, the majority of Memphians out there, that’s their main, number one concern, cost,” Bauer said.

“It certainly would’ve been to the benefit of the citizenry if thing had been presented in more layman’s terms,” Hicks said. “There are a lot of internal issues that could be resolved that would make (MLGW) better.”

Still, all three: Carlisle, Hicks, and Bauer say they’re keeping an open mind about the concept.

All they ask is for more information to help them feel more comfortable about a decision as big as this.

“We may come back to the table and say ‘Hey! This is absolutely worth it. We need to do this,’” Carlisle said. “But the most important thing now is that everyone, including the rate payers of Memphis, as best as they can, understand what we’re going to have to take on in order to achieve those savings and when those savings would come along.”

There will be additional opportunities for the public to ask questions and give public comment on this potential switch.

There will be meetings on June 15, July 6, and July 20 for the public to attend.

The goal, according to Young, is to have all the information available and have a recommendation to present to the MLGW board on August 17.

Currently, the RFP information from Thursday’s meeting is not yet available on MLGW’s website, but Young says it will come soon.

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