TVA CEO Jeff Lyash: Any savings Memphis could find outside of TVA are 'illusory'
As Memphis Light, Gas and Water and the city of Memphis approach the seminal decision of whether to leave the Tennessee Valley Authority and buy electricity elsewhere, the federal power provider is shifting its messaging.
TVA CEO Jeff Lyash said any potential savings MLGW could find outside of TVA are potentially "illusory" and entails a lot of risks.
The messaging Lyash delivered in the interview matches what TVA recently published on the Memphis portion of its website — it is arguing that MLGW's evaluation of its power supply is not about cost, but about reliability.
Whether TVA's messaging succeeds depends on what the early analysis of the 20-plus bids Memphis received on its power supply shows. The utility told The Commercial Appeal last week that it plans to release some early analysis in late May.
The CA conducted a brief interview with Lyash on Thursday in a question-and-answer format. The questions and responses are edited for length and clarity.
The CA: TVA has adopted the stance of this is not about costs. This is about risk. Why?
Lyash: Well, MLGW has the second-lowest cost of any peer city in the country. So their costs are clearly already lower than almost everyone else. And anytime, and a big part of that comes from being part of one of the most diverse, largest, most reliable and lowest-cost power systems in the nation. And so if you're going to step out from that high level of assurance on your own, and invest billions of capital and expose yourself to the market by definition ... that's about risk.
The CA: You seem to want to refute that there are no savings outside of [TVA]. TVA, correct me if I'm wrong, is giving Memphis about $67 per megawatt. On the spot market today in MISO, depending on the timing, megawatts can be available for much lower than that, sometimes even half that over a period of time.
Lyash: Let me point out you just compared an apple and an orange. Now, let me take that back because an apple and an orange are both fruits. These aren't even the same species.
The spot market is the spot market, it's energy only. It's not long-term. It's volatile. It's not delivered to the homes in Memphis. It doesn't have voltage frequency, all the things it takes to run the system so that comparison you just made is part of the problem. That's not a valid comparison.
The CA: What happens to the Allen Combined Cycle Plant if Memphis decides to leave TVA?
Lyash: TVA owns it and operates it for the benefit of 10 million customers in the valley as part of an integrated system. And that's what we're going to continue to do. The notion of Memphis is served by Allen is not true. As a matter of fact, if Memphis was served by Allen alone, when the natural gas price doubled, your price would have doubled. When Allen goes out of service you would have a reliability issue. You're part of a much larger system than that. You won't be if you leave TVA, so Allen is part of that system. And we're going to maintain it and run it just like we always have.
There's power companies right across the Mississippi that are part of MISO. And their retail rates are higher than TVA, even though they're in MISO. If that power was available for you, even with all your investments at a lower price than that, why isn't it available to them right now?
The CA: What probability would you put Memphis Light, Gas and Water remaining a TVA customer? For the intermediate to long-term future?
Lyash: Yeah, that's not something I could do or I should do. MLGW is entitled to make their decision. And we have been very supportive of them doing all the right analysis. And we're going to continue to be that way. And, when they make their decision, we hope it's to stay with TVA. We put a proposal on the table, which I think adds a lot of value, with no incremental risk to the citizens. And if they elect to leave, we'll help the process and make it as smooth as possible. But I won't handicap that. That's entirely up to them.
The CA: Part of TVA's mandate is stewardship of the environment. How has TVA done in that regard, given the environmental risks that the Allen coal ash poses?
Lyash: We've lowered our (nitrous oxide) and (sulphur oxide) emissions by well over 90% We're an industry leader there, we've lowered our carbon emissions by over 60%. We're an industry leader. There are river management or biodiversity programs. Our clean water programs are state of the art. So in a big picture, the first part of your question. TVA is a model for the industry environmentally and recognized that way.
On coal ash, on the Allen site in particular, let me remind you that that plant was built by MLGW and operated by or for them all the way through the 1980s when TVA picked the ownership up, so those coal ash facilities long predate TVA's involvement. Nonetheless, we have accepted responsibility for all of that. We're in the process of decommissioning and dismantling the coal plant.
We followed a rigorous and analytical process under the National Environmental Policy Act and the watchful eye of TDEC and decided to remove or dispose of by removal all the ash in those basins that's underway. And we committed to do groundwater mitigation. So even on the island plant, I think our environmental performance in addressing that issue is strong.
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: TVA CEO Jeff Lyash on Memphis, Light Gas and Water savings
