An inside look at MISO, the Tennessee Valley Authority competitor vying for Memphis

Memphis' electricity future could be tucked away inside a nondescript office building in Little Rock. The building, save for a sign and a massive generator, could be mistaken for a doctor's office or an insurance group.

Instead, it's the southern hub for the Midcontinent Independent System Operator, the nonprofit that oversees the electric grid and an energy marketplace that stretches across central North America. The sign on the said building doesn't even say the full name, just the acronym MISO.

MISO represents one path Memphis, Light, Gas, and Water could take if decides to leave the Tennessee Valley Authority, which supplies Shelby County with all of its electricity. More than 20 private sector firms have bid on Memphis' electricity supply and MLGW is poised to update the public on that bidding this Thursday.

MISO is different from TVA and other companies that want to sell Memphis power in a key way — it is not going to capture much money from MLGW. Instead, Memphis will pay a membership fee to MISO and then would pay any company it purchases power from separately.

From earlier this year: The 901: Memphis’ exploration into new utility providers nearing a close

TVA CEO Jeff Lyash: Any savings Memphis could find outside of TVA are 'illusory'

In an interview, MISO's leadership team expressed confidence last week that Memphis — through a combination of local natural gas plants, local solar farms and electric power purchased from suppliers on MISO's marketplace — would find savings if it left TVA.

"When you come into MISO, you're going to get something that is six times larger than TVA with multiple parties in it. So rather than have just one option for electric service, you're gonna have many options for electric service. And I think their RFP [bidding] is gonna prove that out," MISO CEO John Bear said in an interview.

Bear and Todd Hillman, the company's chief customer officer, said previous estimates of $100 to $150 million annually could be "conservative," and pledged to be a transparent partner for Memphis, which represents a giant potential customer for the grid operator.

Whenever they could during a half-hour-long interview, MISO leadership drew sharp contrasts with TVA.

"I think, access to this fleet is one of the biggest differences between us and TVA, just [MLGW's] ability to make different choices for what they want their energy mix to be going forward. And we know it'll be a significant change for MLGW because they'll do things that they didn't do before," Melissa Seymour, MISO's vice president for external affairs, said.

That last bit, the part about doing MLGW doing things it has not before is crucial. If MLGW leaves TVA, it gets into the power generation business, something it does not do today.

TVA supplies MLGW with all of its electricity and MLGW is just tasked with overseeing a local distribution and transmission network. If it leaves TVA, that would change. It would be responsible for generating enough power or purchasing enough power to keep the lights on.

MISO says TVA 'mischaracterized' it

Bear also took issue with TVA CEO Jeff Lyash's comments about MISO last month, which were made in an interview with The Commercial Appeal. Lyash said MISO's marketplace was volatile and any savings Memphis would have outside of TVA were "illusory."

"I think they were a mischaracterization and maybe a misunderstanding of how MISO works, " Bear said. "For example, pointing out a volatile spot market. I mean, we do have a volatile spot market, but 96% of our members aren't in it, right. It's just a residual market that trues up small things, and characterizing it as if Memphis is going to be in the spot market all day long is just completely wrong."

Bear noted that Memphis has no substantial plans to purchase power through MISO's spot market except when needed.

MLGW has firms bidding on building natural gas plants and solar farms near or within Shelby County. It is also bidding out the cost of transmission lines into MISO. If the bids show that savings are possible, it would give notice to TVA that it was leaving, starting a five-year clock.

Having transmission lines ready at the end of five years will be crucial, Hillman said.

"Transmission is probably going to be the most important piece of that, right? Because the interconnection is going to be key. And certainly, we'll have to work with Memphis very, very closely as they go into that five-year period," Hillman said.

MISO's system could struggle this summer

At the Little Rock hub, there's a control room with a wall of monitors. Those monitors have, at first glance, something that resembles the Windows pipe screen saver, but, upon closer inspection, are a map of transmission lines that snake throughout central North America.

Read this: This week, a TVA competitor comes to Memphis. It's the start of the city's electricity endgame

Previously: Memphis got more bids than expected on its electricity supply. Here's what that means

That's the electric grid MISO monitors. It's the nonprofit's job to make sure the grid operates with minimal disruptions and there's enough electricity for that to happen. And this summer, MISO's grid could face challenges, according to an analysis from North American Electric Reliability Corporation:

Bear and Hillman said members of MISO are working on the capacity issues and the tight conditions could be a signal to the marketplace that more supply is needed.

"We're seeing the smoke, we don't want to get to the fire part. And so we're actually now seeing action by our utilities, where they're going back to their commissions and saying, 'maybe we can't retire that coal plant,' or, 'hey, maybe this renewables plan we had is a little bit too aggressive'," Hillman said.

Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman. 

This article originally appeared on Memphis Commercial Appeal: An inside look at MISO, Tennessee Valley Authority competitor