What does a new MLGW CEO mean for TVA decision? It's not clear
Memphis Mayor Jim Strickland surprised few this past week when he nominated Doug McGowen, his longtime chief operating officer, to lead Memphis, Light, Gas and Water.
But what he did do is inject some uncertainty into how MLGW, the Tennessee Valley Authority's largest local power company, will proceed with its decision to stay with TVA. Outgoing MLGW CEO J.T. Young recommended last month MLGW stay with TVA and sign a long-term, rolling agreement that would last more than 20 years.
The decision is largely supported by the rank-and-file executives at MLGW. It has drawn criticism from environmental groups and renewable energy advocates, who argue it removes any leverage Memphis has over TVA and offers local power companies across the TVA little ability to impact the federal power provider's decisions about renewable energy. .
McGowen, the incoming CEO if he clears the Memphis City Council, was circumspect this week when asked twice about how he would proceed with the TVA decision.
"It'd be inappropriate for me to comment on that until such time as I've had time to talk with the staff and the board of directors," he said Tuesday. He repeated those comments during a news conference Wednesday.
The rolling, long-term contract must be approved by the MLGW Board of Commissioners and then the Memphis City Council. No vote is scheduled at this time, giving a new CEO the opportunity to pursue other directions. McGowen is quite familiar with MLGW's examination of whether it should purchase outside TVA. He was among the members of the Power Supply Advisory Team, the citizen board that oversaw the long-term analysis of Memphis' power needs in 2019 and 2020.
He and Strickland have also met with myriad companies interested in selling Memphis power long-term, including TVA. To wade through all the competing claims, the city hired Enervision, a consulting firm, to advise it on power issues. The company is in the midst of its own analysis of MLGW's power supply bidding.
There's considerable skepticism among environmental groups and renewable energy advocates that TVA's long-term rolling, 20-year partnership agreement is a good deal, or the best deal for MLGW. Many have argued that MLGW wait out the current inflationary environment, which has pushed interest rates and the cost of borrowing higher, and stick with its current rolling agreement that allows MLGW to give five-year notice to TVA then leave.
Nuclear saga over
A long-drawn out court battle intrinsic to the MLGW power supply process ended last week.
The Memphis power supply analysis began with businessman Franklin Haney's offer of nuclear power. Haney planned to purchase the Bellefonte Nuclear Plant in Hollywood, Alabama from TVA. He pitched cities throughout the South on electricity from the unfinished, inactive Bellefonte and wheeling it through TVA transmission lines.
As his pitch to Memphis gained traction in the fall of 2018, TVA grew worried it could lose 10% of its electricity load and its largest customer. It began paying attention to MLGW and the city, which had long felt neglected.
The deal for the nuclear plant never closed in November 2018 and TVA and Haney fought in court over the plant. Last year, a federal judge ruled that TVA did not have sell Haney the plant but it must refund him his purchase price and interest.
Haney appealed the decision, but withdrew that appeal. The 11th Circuit Court of Appeals signed off on Haney's withdrawal this week, bringing the years-long court battle to a close.
TVA offered a statement about the end of the suit.
"We are pleased that the Bellefonte litigation is over, which will allow TVA and the local community to focus on the future for the property," TVA said. "TVA’s goal remains the same – returning Bellefonte to productive use to benefit the people of northeast Alabama. We continue to work with community leaders to explore the best path forward for the Bellefonte site."
Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman.
This article originally appeared on Memphis Commercial Appeal: What does a new MLGW CEO mean for TVA decision? It's not clear
