Memphis judge suggests Congress 'take another look' at Tennessee Valley Authority

An attorney for three nonprofits painted a picture Thursday of the Tennessee Valley Authority as a federal agency concerned with losing Memphis, Light, Gas and Water and wary of increased competition from renewable energy resources in a changing world.

That increased competition and the prospect of more renewable energy becoming available caused TVA to draft and sign 147 local power companies to 20-year contracts that don’t end, said Amanda Garcia, Southern Environmental Law Center attorney and counsel for the three nonprofits.

Whether the picture Garcia paints is accurate may not matter. The three nonprofits have challenged the legality of TVA's 20-year long-term power supply agreements and argued they violate two federal laws — The TVA Act of 1933 and National Environmental Policy Act, which mandates federal agencies study the environmental implications of policy decisions.

The plaintiffs faced a skeptical and inquisitive judge Thursday. U.S. District Judge Thomas Parker presided over the nearly four-hour-long hearing over the TVA's motion for summary judgment — a legal maneuver to get the case dismissed before trial. The plaintiffs have asked Parker to declare the contracts invalid.

Parker appeared skeptical about whether the nonprofits had the standing to make their claims and asked detailed questions of both parties during a session that descended deep into electric and legal jargon. Parker did not give a timeline for when he would rule in the case Thursday but said the parties had given him much to think about.

The venue in this case is important. Memphis, Light, Gas and Water is the largest local power company in TVA and represents about 10% of its electric load and revenue. MLGW has not signed the 20-year deal but is considering doing so after a four-year evaluation of other options.

Questions over what is allowed by TVA Act

A central crux of the nonprofits' case is the argument that the 20-year, rolling electricity contract is actually not a 20-year contract but a forever document. The contract renews every year after the first year.

And the termination provision is 20-year one, meaning that once a local power company signs the deal, the soonest they could leave TVA is 20 years hence.

The Southern Environmental Law Center and its clients — Memphis-based Protect Our Aquifer, Appalachian Voices and Energy Alabama — contend the law only allows 20-year deals, not longer. Parker agreed.

“Is this just maximizing what the statute allows?” Parker asked Garcia.

Parker noted that in practical terms the deals are much longer. He said a local power company would have to sign and serve notice that it would cancel the deal after 20 years for it actually to be a 20-year deal.

“That’s the only way we have a 20-year deal,” Parker said.

TVA’s head of litigation, David Ayliffe, contended the contracts maximize what’s allowed under the statute and don't exceed it.

TVA argues it followed federal environmental standards with long-term deals

The nonprofits and SELC have also argued that long-term contracts are illegal because they allege TVA did not do the needed environmental review of its 20-year contract and its environmental implications.

In myriad filings, they have argued the long-term revenue supplied by the contracts pays for further natural gas projects that will impact nonprofits and the environment.

Ayliffe said the environmental harms that the plaintiffs claim are “far-fetched” and their assertion that the long-term power supply contracts violated NEPA “confused the contracted… and the environmental status quo, which didn’t change.”

After four hours of dense arguments in front of him, Parker, a 2018 appointee to the federal bench, noted the age of the federal law he was being asked to interpret.

“After 90 years almost of the TVA Act, maybe Congress could take another look. The world is changing a little bit,” Parker 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: Memphis judge hears TVA contracts lawsuit