MLGW votes against signing 20-year-deal with Tennessee Valley Authority

In one fell swoop, the Memphis, Light Gas and Water Board of Commissioners put much of the electricity stuff to bed for a bit.

On Wednesday, the board rejected signing a 20-year, rolling contract with the Tennessee Valley Authority that could’ve locked MLGW into a generations-long electricity deal. It also rejected a private company’s appeal of awarding the 20-year contract to TVA.

The vote is a defeat for TVA, though it disputes not signing Memphis to a 20-year deal is a loss if it is keeping the city-owned utility on its current evergreen contract.

MLGW is TVA's largest electricity customer. Passage of the 20-year deal, which still required Memphis City Council approval, would’ve meant it was keeping 10% of its revenue on a generational contract. The vote means the electric status quo in Shelby County remains the same for the foreseeable future.

However, Wednesday's vote is unlikely to end Memphis' evaluation of its electric options. It will just turn down the burner from boil to simmer.

The MLGW board voted unanimously to reject the 20-year contract. The commissioners, all resident volunteers appointed by the Memphis mayor, noted the difficulty of the decision and acknowledged how the frequent and fervent public comment from the community had helped impact the decision.

The contract would’ve lowered TVA base rates by 3.1% and allowed MLGW to produce up to 5% of electricity independent of TVA. However, the length of the contract was the reason the board, opted against it.

Board Chairman Mitch Graves said as much during an interview with reporters after the vote.

“I'm not gonna speak on behalf of all the commissioners, but I think if it had been a 10-year term, we'd have looked at this a lot different,” Graves, who is also CEO of West Cancer Center, said.

TVA in a statement, said, "MLGW’s decision is a reinforcement of the longstanding relationship with TVA in delivering affordable, reliable, and clean energy to the people and communities across Memphis and Shelby County...We look forward to working with incoming President and CEO Doug McGowen and building upon our 80+ year partnership as MLGW further considers the long-term option."

Board reveals it rejected Haney appeal

The board also announced that a board subcommittee had voted down an appeal of its decision to award its electricity business to TVA Wednesday.

The board subcommittee voted against the appeal of Franklin L. Haney Company, which appealed MLGW’s rejection of its bid. The firm, run by businessman Franklin Haney and his son Frank Haney, had put together a bid of natural gas plants, solar energy and battery storage to supply Memphis and Shelby County with electricity.

Haney’s appeal had a hearing before a small committee of MLGW board members and staffers on Nov 17. MLGW did not allow the public to attend the hearing despite a Commercial Appeal reporter’s effort.

In one form or another, Haney has sought MLGW’s electricity business for the better part of four years. He first tried to sell Memphis power from the unfinished Bellefonte Nuclear Plant in Alabama, which TVA refused to sell him.

The two sides fought a yearslong court battle over the deal, which ended in TVA keeping the plant and returning Haney his money plus interest.

Before Haney's appeal hearing, the firm put out a news release that put its answers MLGW's issues with its bid. In that release, it also described what it believed to be a pattern of bias against the company, which has pressured MLGW executives for years.

"MLGW’s position against the Haney bid to supply Memphis with its future electricity needs is patently unfair and demonstrates a continued bias against the Haney group bid," the company said.

On Wednesday, Dedrick Brittenum, an attorney working for Haney, said during public comment that the appeals committee had elected to delay its decision until incoming CEO Doug McGowen took the helm of the utility.

His comment was interrupted by Graves, who asked MLGW general counsel Cheryl Patterson about the appeal. Patterson told him the appeal would be discussed ahead of any vote on the MLGW power supply contract award.Brittenum said the firm had received no notice of the decision and called the disclosure “highly unusual.” Brittenum was once a member of the Memphis City Council and the MLGW Board of Commissioners.

Mike Pohlman, the board member on the committee, disputed Brittenum’s account. He said, “Mr. Brittenum said he recalls something that not all of us recall.”

Brittenum supplied reporters with a copy of the letter he wrote and read to board but declined to answer questions beyond that. He left shortly after the MLGW board voted on the power supply contract.

More:What does a new MLGW CEO mean for TVA decision? It's not clear

What happens next

It is unlikely that Wednesday's vote means the end of the power supply process. Multiple MLGW commissioners pushed for TVA to invest further in Memphis and fulfill some of the promises it made when it offered MLGW the 20-year long-term partnership.

Those offers included building out a Memphis regional headquarters and millions in investment to reduce the high energy burden throughout the city's urban core.

MLGW Commissioner Carl Person, a business consultant, said before he voted that he encouraged TVA to continue to engage with Memphis and for MLGW to continue engaging with TVA.

"I think we need to talk to TVA in the coming weeks and months to come up with something that is best suitable for ratepayers," Person said.

Graves said something similar.

"I encourage TVA to really sit down and continue to help us as a community. We are the largest. We're 10% of their business. And I encourage them and their CEO to continue to do the extra things for their largest utility," Graves said.

McGowen, the utility's incoming CEO, starts next week. Wednesday's vote gives him the opportunity to start work without a looming decision about energy supply in his early days in office.

"[It] allows him to really focus on the business of MLGW and making improvements," Graves 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: MLGW Board votes against 20-year contract with Tennessee Valley Authority