Federal regulators criticize TVA’s outdated, anti-competitive transmission framework

Federal Energy Regulatory Commission (FERC) members condemned the Tennessee Valley Authority’s anti-competitive policies on Thursday, saying they are unfair, harm ratepayers and are a “vestige of a bygone era.”

The comments came as FERC ruled three local power companies cannot have access to TVA’s power grid. The companies had filed a complaint over TVA’s ongoing refusal to sell access to its transmission lines – something that most other utilities are required to do under federal law. By blocking access to transmission lines, TVA can minimize competition in the region and, therefore, ignore calls from ratepayers for cleaner and more efficient energy options.

Currently, communities in the TVA footprint face some of the highest energy burdens in the nation. Allowing open access to TVA’s grid in appropriate cases can give ratepayers and local power companies greater ability to decide where and how they get their power, and can create more opportunities for cheaper and renewable energy. 

“Regardless of the ruling, this petition has brought much-needed attention to TVA’s policies that limit options for local utilities and ratepayers who want access to cheaper, cleaner, and renewable power,” SELC Tennessee Office Director Amanda Garcia said. “More needs to be done to end TVA’s anti-competitive and anti-democratic practices, and ratepayers should see this decision as the beginning, not the end, of a movement to reform TVA for the twenty-first century.” 

Although they disagreed about the source of the problem, three of four commissioners criticized limits on competition within TVA’s vast, seven-state footprint.

FERC Chairman Richard Glick appeared to point the finger at Congress, observing in his opening remarks of Thursday’s meeting that, in his view, the framework that Congress put in place “prevents TVA distribution customers from making their own power purchase decisions based on a price or based on whether they want a cleaner energy resource mix.”

In a dissent to the commission’s decision, FERC commissioner Allison Clements wrote that allowing open access to TVA’s power grid “would provide the customers of the relevant not-for-profit cooperative and municipal utilities access to lower cost power than TVA currently provides them with, supplying a modicum of competition and its associated benefits to the region.”

Refusing to sell access to its power grid is just one example of a TVA policy that stifles competition and blocks local public and member-owned utilities from being responsive to ratepayer demands for cheaper, cleaner electricity. In 2019, TVA began pressuring its local power distributors into “long-term agreements,” which aim to effectively lock the federal-utility’s distributors into never-ending contracts. These contracts require 20-years’ notice to terminate and automatically renew each year, meaning any distributor wanting to leave TVA wouldn’t be able to do so, as a practical matter.

These illegal contracts eliminate viable competition, so TVA is able to ignore requests for cheaper and cleaner energy options, and slow-walk its renewable energy transition – as evidenced in the agency’s recent moves to replace its remaining coal plants with new gas capacity.

SELC is currently suing TVA over these never-ending contracts on behalf of three conservation groups: Appalachian Voices, Energy Alabama, and Protect Our Aquifer. The federal lawsuit alleges the contracts violate the TVA Act, which established the federal utility in 1933, and the National Environmental Protection Act (NEPA). SELC represents the same three conservation groups as intervenors in the transmission proceeding before FERC.