Second expert study confirms TVA is bad for Memphis

Second expert study confirms TVA as bad investment for Memphis

Departing from the TVA contract represents the most prudent and cost-effective choice for Memphis

MEMPHIS – In official comments filed by Friends of the Earth with the Memphis Power Supply Advisory Team’s Integrated Resource Plan report, another expert study confirmed the advantages for Memphis if the city ends its contract with the Tennessee Valley Authority. The study, done by Synapse Energy Economics, concluded that “departing from the TVA contract represents the most prudent and cost-effective choice for Memphis.”

The IRP report found massive savings for Memphis and its ratepayers if the relationship with TVA is ended. However, Synapse found that the IRP report significantly underestimated the future cost of TVA power, which will likely increase over the next decades due to several factors, including:

  • TVA’s aged and antiquated fleet of coal and nuclear generation which, in addition to having an ever-increasing maintenance cost, creates coal ash and spent nuclear fuel that are very costly to dispose of and harmful to the environment
  • TVA’s debt load: TVA has reached its borrowing capacity and the costs of that debt load is likely to continue for decades
  • Employee costs for TVA, which will continue to grow and increase over the next twenty years; TVA has over 10,000 employees
  • TVA’s relatively high reliance on fossil fuels, which exposes it to risks of fuel price increases, and more stringent greenhouse gas regulations

Under the TVA Act, TVA has no choice but to increase rates to its customers when faced with increasing costs. Additionally, TVA has reserved the right to pass on any “fuel costs” in a fuel adjustment clause in the current proposed contract.

“This study confirms what we already knew to be true: that leaving TVA can save the city of Memphis and ratepayers hundreds of millions of dollars, and now we know that they stand to save hundreds of millions more,” said Michelle Chan, Vice President of Programs at Friends of the Earth. “There is no excuse now: Memphis should join with other utilities in leaving TVA in favor of greener, cheaper power.”

Volunteer Electric Cooperative and North Georgia Electric Membership Corporation have also explored breaking away from TVA, and earlier this year solicited bids for alternative power suppliers.

A full copy of the Synapse report, filed with the PSAT as a public comment on the IRP report by Siemens, can be found here. The 2020 Synapse report was based on an earlier, more comprehensive analysis which can be found here.

Communications contact: Aisha Dukule, [email protected], 202-893-3502
Expert contact: Michelle Chan, [email protected]

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