Taking on TVA

Since its creation at the height of the Great Depression, the Tennessee Valley Authority has fundamentally shaped the Volunteer State and the parts of the six surrounding states it serves, changing the landscape itself and providing power to millions. The federally owned monopoly utility also provides flood control and navigation assistance along the Tennessee River system with its vast network of hydroelectric dams.

Eighty-six years later, however, environmental and consumer advocates including Appalachian Voices, the publisher of this newspaper, fear the experiment in public power has become a behemoth that offers little transparency, raises electricity costs unnecessarily and is too reliant on fossil fuels. Now, everyday people, environmental and social justice groups and even some of the local power companies TVA supplies are pushing for change.

The utility generates 47 percent of its power with coal and natural gas, 39 percent from nuclear and 13 percent from renewables, with less than 1 percent attributed to energy efficiency measures. TVA’s recently released 20-year plan shows its intention to remain entrenched in fossil fuels, slowly trading out coal for natural gas while keeping clean energy at arm’s length.

Read about TVA’s coal ash troubles here.

In August, a coalition of environmental groups, community organizations and more including Appalachian Voices are visiting locales around TVA’s service area to raise awareness about problems with the monopoly utility and how they can be addressed.

Cost Increases

For the sixth time in as many years, TVA applied a 1.5 percent wholesale electricity cost increase in fall 2018 to local power companies including Volunteer Energy Cooperative, which serves nearly 116,000 member-owners in East Tennessee. These local utilities purchase electricity generated by TVA and then sell it to their customers.

David Murphy, the co-op’s vice president of marketing and economic development, states that Volunteer Energy has not raised their rates once in those six years outside of what TVA has mandated.

“Every dollar that we collect, we send 80 cents back to TVA,” says Murphy. “If we wanted to have some sort of a program for low-income communities, it’s going to be hard for the cooperative to offer that because we just simply don’t have the excess money in hand to offer.”

“And that’s not necessarily TVA’s fault,” he continues. “We do have the option of increasing our rates and that would give us additional funding, but that would fall back onto the consumers who are buying VEC electricity, and our goal is to keep that rate as low as possible.”

According to Murphy, TVA has stated that they don’t plan to raise the rates again this year. He explains that TVA keeps raising rates to buy down debt.

“We believe that buying down debt is a responsible business practice,” says Murphy. “However, TVA is doing it at such an expedited rate that the burden falls on the back of the consumers. It’s not practical to be trying to pay down $1 billion in debt annually.”

Murphy adds that it took several years for him and other local power companies to discover that this was the reason behind the frequent rate increases.

“Whenever the local power companies discovered there was this long-range financial plan that included paying down all the debt, one of the comments I heard a TVA employee make was, ‘Well, if you guys didn’t like this, then you should have said something about it as we were developing the plan,’” says Murphy. “The problem was, TVA didn’t tell us they were developing the plan. We didn’t find out about it until we were in the middle of the plan.”

“While we are involved in the process, TVA ultimately has the final say because they are the regulators,” he continues. “If we give them input that they don’t like, they can choose to ignore it, and that does happen frequently.”

Other local utilities are also struggling with TVA’s frequent rate increases. Memphis Light, Gas and Water, TVA’s largest customer, is looking into the feasibility of cutting ties with the monopoly utility and creating its own power generation facilities. Multiple independent studies show that the Memphis municipal utility could save up to $333 million a year if it broke from TVA.

A Memphis Light, Gas and Water spokesperson stated that the utility’s long-term plan is expected to be completed by early 2020, after which utility staff will make a recommendation to their board. The utility is holding monthly community meetings until then to gather public input on the matter. If the Memphis utility splits from TVA, it is contractually obligated to give a five-year notice before cutting ties completely. Costs would likely increase for other local power companies if Memphis left.

David Murphy states that Volunteer Energy will sit back and watch the situation with Memphis to see how it turns out.
“VEC is member-owned and operated, so we owe it to our members to provide electricity at the least-cost option,” says Murphy. “Based on the desire of our membership, we would do whatever they thought best.”

Transparency

In November 2018, TVA stopped allowing the general public to attend the utility’s quarterly board meetings — instead holding a separate public listening session the day before the meeting. While TVA has stated that this change was intended to help the utility “to more fully consider the comments of the public,” consumer rights advocates remain unconvinced.

“It seems to be more a matter of crowd control than actual listening,” says Pat Hurley, who has consulted for utility companies for more than 30 years all over the globe. Hurley is a member-owner of Powell Valley Electric Cooperative in Northeast Tennessee, which receives its power from TVA.

“The listening session becomes kind of a public hearing and a data-gathering exercise; it’s not at all clear that anything said actually influences TVA’s decisions,” he continues. “Additionally, there are a number of TVA board committees who meet the week prior to the board meeting and forward their decisions to the TVA board well in advance of these listening sessions.”

“By having the listening session in advance of the board meetings, you put in another procedural step that separates the consumers from the TVA board — and that’s really a step in the wrong direction,” Hurley adds.

In January, U.S. Rep. Tim Burchett (R-TN) introduced the TVA Transparency Act, H.R. 881, which would require the monopoly utility to open board subcommittee meetings to the general public and post meeting minutes online. The bill awaits decision in a House subcommittee. In April, Tennessee Gov. Bill Lee signed a resolution in support of the bill.

“It is vitally important to the citizens of Tennessee that TVA, as an entity created and protected by Congress, should conduct their business in the open and be as transparent as possible,” reads the state resolution.

Hurley states that the general public that owns TVA does not have a meaningful voice in how the utility is run.

“TVA has become, in a sense, its own regulator — and that’s never good,” says Hurley. “They not only provide power to the local distribution companies who are the co-ops and municipal utilities, but they also regulate them and how much they charge for electricity. It’s a very bad model.”

He adds that there is no independent organization the general public can reach out to with concerns other than their congressional representative.

Looking Back

Today, TVA operates 29 hydroelectric dams. Creating these massive structures required the monopoly utility to use eminent domain to relocate thousands of families in the early- to mid-20th century.

In a 1998 article in the journal Agricultural History, Converse College Professor of History Emerita Melissa Walker writes that TVA’s programs “were structured to favor prosperous landowning families over poorer owners and tenants.” While this affected both black and white families, Walker states that TVA’s relocation policies discriminated against African-American families and often moved them to less fertile land, as was the case with Edna Spencer’s family who owned land in rural Anderson County.

“Instead of paying the family cash they could have used to buy their own property, the agency traded the Spencers’ productive farm for a poor clay farm the TVA owned elsewhere in East Tennessee,” wrote Walker, noting that the Spencers eventually sold the unproductive farm and moved to Massachusetts.

White families, on the other hand, were typically referred to other agencies to assist them with locating new homes, according to Walker.

Many people who grew up and lived in the 1930s and 1940s had a more positive opinion of the monopoly utility than later generations, according to Knoxville resident Bill Troy, who was at the helm of a movement that aimed to move TVA away from nuclear power in the late ‘70s and early ‘80s.

“[My father] was part of a generation that thought that TVA really sort of saved the Tennessee Valley in a lot of ways,” says Troy. “He remembered all the erosion that went on in the mountains, the flooding and everything; it was just terrible. In terms of employment as well, they really thought the world of TVA.”

Troy states that after TVA couldn’t build any more dams, they moved on to coal and nuclear.

“When I got here in the ‘70s, suddenly they’d become this monster utility that almost single-handedly created strip mining and had the largest nuclear program in the world,” he continues. “They created the biggest market for strip-mined coal, the essential market that made strip mining viable in Appalachia. A heavy burden to bear.”

Troy describes TVA in the early to late-20th century as flipping back and forth from progressive ideals to serving corporate interests depending on who was president. He points to the appointees under President Jimmy Carter’s administration in the late ‘70s and early ‘80s.

“When they left, suddenly it was back to business,” says Troy. “And I’ve not seen them do very much at all that’s terribly progressive since then.”

Troy says that TVA should be thought of historically as the “government’s laboratory for utilities.”

“The power behind its creation and its maintenance was always sort of a place where the federal government and all its corporate tentacles could experiment with what they wanted to do,” says Troy. “And that included coal-fired plants, the nuclear industry, etc.”

In the present day, Troy states that TVA could experiment with renewable sources instead of doubling down on fossil fuels.

Planning for the Future

In June 2019, TVA announced a nearly 300-page document called an integrated resource plan outlining how the monopoly utility plans to generate and transmit power through 2038. TVA has released these long-range plans to the public three times; in 1995, 2011 and 2015.

TVA’s basic scenario projects a moderate decrease in coal over that time period, while ramping up natural gas usage to take its place. The utility predicts a near-zero increase in energy efficiency measures with a sluggish gain in renewable sources over the 20-year period.

Stephen Smith, executive director of the Southern Alliance for Clean Energy, an environmental and consumer rights advocacy organization, says that he was “underwhelmed and disappointed” by TVA’s latest plan. Smith and other critics state that TVA did not give near enough attention to renewables or energy efficiency measures.

“This is by far the worst as far as transparency and meaningful public debate,” says Smith. “They pretty much ignored public comment from us and others.”

Smith points out TVA’s claim that there were comments both for and against coal plant retirements — but only three of the 1,200 comments TVA received called for continued operation of coal and gas power plants.

“TVA is not really interested in meaningful public comment, what they want to do is just create the cover to say, ‘We went out and talked to our customers, and they didn’t agree on stuff so we’re going to do whatever we want,’” says Smith.

Additionally, Smith criticizes the utility for laying out a large, misleading range of new potential renewable projects that might never get developed.

But Smith’s main criticism centers around TVA’s statements on energy efficiency, which the utility claims will be “up to 1,800 megawatts by 2028 and 2,200 megawatts by 2038.” Smith explains that since the plan does not establish a minimum amount of energy efficiency measures, TVA could easily implement none. He notes that the monopoly utility has dramatically cut their budget for energy efficiency in recent years.

“By ignoring energy efficiency, what TVA’s doing is they’re locking their customers in to a future of higher bills,” he continues. “This is particularly bad for low- and moderate-income folks who may not have the resources to buy a modern refrigerator or modern air conditioning system.”

Smith argues that TVA’s plan should include much more renewable power generation and should treat energy efficiency as another resource just as they do with coal and natural gas. Beyond that, he sees a need for major systemic changes at TVA, especially the board. To accomplish this, Smith says that it is critically important for the general public to become more involved in their electric utility.

“It is especially the responsibility of citizens in the Tennessee Valley to be engaged in this because the lack of engagement leads to policies like what we’re seeing, where a select few industries get preferred rates and get the benefits of lower-priced fuel,” he says.

Energy Democracy Tour

Throughout August, several community organizations including Appalachian Voices will be traveling throughout TVA’s service area to provoke discussion about the history and impacts of the monopoly utility’s energy system, governance and decision making. Organizers of the tour aim to compile ideas from communities about how to address problems with TVA.

“In the Tennessee Valley, our ‘public’ power often feels no different than if we received an electric bill from a private utility,” says Appalachian Voices’ Tennessee Field Coordinator Brianna Knisley. “When big decisions are made about our energy, community voices get sidelined by outside decision makers.”

To learn more about the Energy Democracy Tour, visit EnergyDemocracyYall.org.

For updates on how TVA is handling coal ash and the closure of the Bull Run coal-fired power plant, click here.