Showdown over TVA electricity contracts set for Memphis this week

The showdown over the legal ties that bind the Tennessee Valley Authority to 150-plus local power companies is coming to a Memphis courtroom this week.

Attorneys for TVA and three environmental nonprofits will argue before U.S. District Judge Thomas Parker on Thursday about whether a lawsuit questioning the legality of TVA's 20-year, rolling electricity contracts should proceed to trial or be dismissed.

The court hearing is part of a two-year-old legal effort by attorneys from the Southern Environmental Law Center, which represents the three nonprofits, to challenge TVA's effort to secure its customer base — the 150-plus local power companies throughout its seven-state footprint — over the long-term.

The venue for the case — Memphis — is not an accident. Memphis, Light, Gas and Water is the largest local power company in TVA. It represents about 10% of TVA's electricity load and a corresponding amount of revenue. It is among a handful that has not signed the 20-year, rolling electricity contract.

For the past four years, MLGW considered leaving TVA. It asked private companies to bid on its electricity supply throughout 2021 and 2022. In September, then-CEO J.T. Young and a consultant, GDS, recommended MLGW sign the 20-year deal with TVA.

The MLGW board delayed a vote on the 20-year deal this month because one company that bid on its electricity protested the decision to award TVA the contract.

Any affirmative vote on the TVA contract by the MLGW board would also need to be voted up or down by the Memphis City Council. Several council members have signaled they would not approve the contract.

There are also the unknown wishes of incoming MLGW CEO Doug McGowen, who starts in mid-December. McGowen, who is the city of Memphis chief operating officer, leaves his current post on Dec. 2. He has not yet weighed in on what he thinks the utility should do about its power supply.

The outcome of the case could render the 20-year contract moot or it could leave Memphis with the same choice it has now — sign a long-term deal with TVA or maintain its flexibility. The decision, the environmental groups suing TVA argue, has real consequences for the environment.

Environmental groups cite climate danger, TVA argues future harm can't be proven

The three nonprofits — Memphis-based Protect Our Aquifer, Energy Alabama and Appalachian Voices — have sought to prove TVA's 20-year contracts violate two different sets of federal laws.

The Southern Environmental Law Center has argued the contracts violate the Tennessee Valley Authority Act of 1933, the law that governs TVA, and the National Environmental Policy Act, which requires environmental review of federal agency policy decisions.

They argue the contracts fund a utility that is reluctant to combat climate change and is putting continued strain on the natural resources throughout its footprint, including drinking water supplies in Memphis.

"TVA’s operations in Shelby County do not exclusively serve MLGW, so increased load elsewhere in the Valley prolongs or increases [the] operation of TVA facilities within Shelby County, including the Allen gasplant. TVA’s operations deplete and threaten to contaminate the Memphis Sand Aquifer that Protect Our Aquifer supporters rely on, and the Contracts heighten that imminent threat to Protect Our Aquifer supporters’ drinking water...," the plaintiffs said in a filing this month.

TVA has argued the plaintiffs don't have standing to sue and haven't demonstrated harm. In filings last week, the federal power provider's attorneys argued a recent 6th U.S. Circuit Court of Appeals ruling that struck down a challenge to a Tennessee law forbidding mask mandates is a precedent that should nip the nonprofits' case in the bud.

"Their threatened injuries are not concrete because they are speculative and the risk of harm is attenuated because the amendment of TVA’s wholesale power contract with local power companies (“LPCs”) through the long-term agreement (“LTA”) is directed at LPCs—not at Plaintiffs or their members," TVA attorneys said in a filing Nov. 22.

Parker, the federal judge presiding over the case, will be tasked with determining whether the plaintiffs are being harmed or if TVA is right in its application of the law.

Whatever the outcome the plaintiffs, in their various filings, have asked questions about Memphis, and the Tennessee Valley's, environmental future. The filings also highlight the ongoing conversation about Memphis and Shelby County's electricity supply is among the area's best chances to directly combat climate change.

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: Nonprofits fight Tennessee Valley Authority contracts in Memphis