News | October 6, 2022

Flawed studies and misleading data shouldn’t decide future of Memphis’ power supply 

The entry to the Tennessee Valley Authority's Allen plant near Memphis. (@SELC)

Memphis’ upcoming power-supply decision will have a long-lasting impact on Memphis families, the climate, and important natural resources – but misinformation and faulty data have muddied the process.  

For the last several years, city and utility leaders in Memphis have been re-evaluating their power needs and deciding if Memphis Gas Light and Water should continue buying power from the Tennessee Valley Authority or purchase power elsewhere.  

MLGW management and its consultant recently recommended the local utility sign one of TVA’s “long term agreements,” which automatically extends every year and requires 20-years notice to terminate. These deals are, in effect, a never-ending contract that makes it practically impossible for local power distributors to push for cleaner or cheaper energy sources.   

However, a new analysis of MLGW’s recommendation paints a picture of a flawed process that overstates the costs of renewable energy sources, ignores the impact of volatile fossil fuel prices, and downplays the risks associated with entering into a perpetual deal with TVA.  

Misrepresented costs, biased assumptions, and “substantial flaws” 

Even though MLGW’s decision comes as TVA is attempting to spend billions on new, dirty gas plants and pipelines, that would commit its customers to paying for expensive fossil fuels for decades, the recommendation ignored the volatility of fossil fuel prices. TVA customers saw the impact of volatile gas prices first-hand this summer when the utility increased its ‘fuel cost adjustment’ to deal with high methane gas prices. This led to significant increases in monthly power bills – including for families already struggling to make ends meet.  

If Memphis signs one of TVA’s never-ending contracts, the federal utility would be able to ignore customers and their growing calls for renewable power, energy efficiency programs, and other policies that can lower monthly power bills and reduce the impacts of climate change in the Tennessee Valley and beyond.

Amanda Garcia, director of SELC’s Tennessee Office

Meanwhile, the study showed the recommendation created a bias toward fossil fuels while creating “unreasonable barriers” for renewable energy. The research also found that the consultants “cherry picked” data to falsely paint a picture of increasing clean energy costs. In reality, long-term forecasts show that renewable energy sources are, in many cases, already cheaper than “natural gas” plants and pipelines, and the costs are projected to continue to fall.  

To be sure, there is a significant amount of risk that would come with MLGW leaving TVA in favor of another utility. However, there is also a significant amount of risk that comes with signing a never-ending contract that would force Memphians to give up the ability to fight for cheaper or cleaner energy sources now and in the future. 

“If Memphis signs one of TVA’s never-ending contracts, the federal utility would be able to ignore customers and their growing calls for renewable power, energy efficiency programs, and other policies that can lower monthly power bills and reduce the impacts of climate change in the Tennessee Valley and beyond,” Southern Environmental Law Center’s Tennessee Office Director Amanda Garcia said.  

Memphis’ unique set of power needs 

A recent analysis showed that 149,000 Memphis families face a high energy burden, which measures the percentage of a household’s income that goes to paying for power. The national average for energy burden is roughly three percent, but in some Memphis communities, families face energy burdens as high as 27 percent.  

Despite these needs, TVA has stripped money from energy efficiency programs that would lower power bills. Over the past several years, TVA’s low-income energy efficiency program has served only 500 families total – a small fraction of the tens of thousands of Memphis families facing high or severe energy burdens. The utility’s planned multi-billion-dollar gas buildout will also commit its customers to paying high and volatile fossil fuel prices for decades, even though studies have shown that investments in renewable energy could save TVA nearly $10 billion over the next 20 years.  

Memphians also face a long legacy of environmental racism, including from TVA’s operations. For nearly 60 years, the federal utility burned coal at its now-retired Allen Fossil Plant in South Memphis. In that time, the plant released thousands of tons of dangerous sulfur dioxide and nitrogen oxides into predominantly Black neighborhoods in South Memphis each year. 

These environmental injustices continue today. TVA replaced the Allen coal plant with a gas plant, which continues to burn methane gas in South Memphis. The federal utility also recently began trucking its coal ash – which is the toxic byproduct of burning coal and contains hazardous chemicals like arsenic – through South Memphis neighborhoods. TVA’s secretive and controversial decision threatens to impose nearly a decade of additional traffic, noise, air pollution, and public safety impacts on predominantly Black communities.  

Because the never-ending contract would bind MLGW to TVA forever, Memphians would be unable to push back on reckless decisions that overburden Black neighborhoods with industrial pollution. 

Community leaders pushing for a more equitable deal 

While TVA continues to push for its never-ending contract, local community groups like Memphis Community Against Pollution and Protect Our Aquifer have been calling for a better deal for Memphis

Last week, SELC submitted comments to the MLGW Board on behalf of these groups, along with the local chapter of the Sierra Club, urging the board members to not sign a never-ending contract and instead continue to stay on its five-year deal with TVA. Continuing with its current deal with TVA would allow the board to negotiate with TVA for Memphis-specific provisions that will address the area’s unique power needs and give Memphians the opportunity to leave TVA if things don’t get better.