On Thursday, January 13, 2022, the U.S. House of Representatives Committee on Energy and Commerce addressed a letter to the Tennessee Valley Authority (TVA) outlining areas where the nation’s largest public utility spanning seven states is potentially out of step with federal law and the Biden Administration’s executive orders. TVA has until February 2, 2022, to provide written responses to the Committee’s sixteen questions on topics ranging from energy efficiency and customer-sited solar to funding anti-environment lobbying groups to exacerbating energy burdens or unaffordable energy bills through high fixed fees.

Committee’s impetus for the letter to TVA

Before we dive into the letter’s details, a quick reminder on TVA’s unique governance structure. In 2005, legislation was passed that transformed TVA’s governance from a full-time, three-person structure to being run by a CEO and C-suite with oversight by a nine-person part-time board. This change was designed to have TVA operate similarly to an investor-owned utility, like its neighbors, Southern Company or Duke Energy. In this analogy Southern and Duke are regulated by state-level public service commissions, whereas TVA’s regulation falls to its Board of Directors.

TVA’s Presidential appointed and Senate-confirmed Board has morphed into a rubber stamp for its CEO Jeff Lyash, who is currently the highest-paid federal employee, raking in nearly $10 million a year and growing increasingly more powerful after each quarterly Board meeting. As the TVA Board has steadily digressed from its purpose to oversee TVA’s activities in favor of being a rung on the political ladder, the House Committee on Energy Commerce–one of the Committees that oversees TVA–has been forced to step in to ensure residents and customers in the Tennessee Valley are being served in accordance with the TVA Act, upon which TVA was founded, and President Biden’s Executive Orders.

The Committee letter outlines federal laws that require TVA to:

• “Give preference to States, counties, municipalities, and cooperative organizations of citizens or farmers, not organized or doing business for profit”
• Maintain “national leader[ship] in technological innovation, low-cost power, and environmental stewardship”
• Engage in “least-cost planning” that accounts for “the full range of existing and incremental resources” including energy conservation and efficiency and renewable energy resources

The letter states, “the Committee is concerned that TVA’s business practices are inconsistent with these statutory requirements to the disadvantage of TVA’s ratepayers and the environment.” The specific concerns are that TVA customers are paying too much for electricity, that TVA is interfering with the adoption of renewable energy, and that it is not making progress on decarbonization at a pace that aligns with the administration’s stated policy.

What does the letter cover?

After the background, the bulk of the letter outlines sixteen questions TVA must respond to by February 2.

Energy efficiency, fixed fees, and renewables

Despite having high energy bills across its service territory, TVA has rolled back energy efficiency over the past decade or so. The letter asks TVA to provide data on:

• TVA’s energy efficiency programs back to 2014,
• How many of TVA’s local utility customers offer energy efficiency,
• Details on how energy efficiency impacted the results of TVA’s 2019 integrated resource plan (IRP), and
• How TVA plans to use energy efficiency in its next IRP.

In 2018, TVA instituted a Grid Access Charge that serves as a fixed fee on its local utility customers. TVA’s utilities then tend to pass these along to customers through higher fixed fees on monthly bills, distorting the cost-effectiveness of customer investments like energy efficiency and rooftop solar. SACE, through open records requests, found backroom presentations TVA gave on why it was instituting the GAC: to quell customer-sited solar. The Committee letter asks for TVA’s purpose in instituting the GAC, data on how local utilities are passing those costs on to their customers, and data on the impact on distributed solar installations.

The letter also asks TVA to defend the fact that wind and solar only provide 3% of generation, according to the utility’s own data, and to describe what kind of contracts TVA has available to small renewable power projects through the federal program under the Public Utility Regulatory Policies Act of 1978.

Carbon reduction timeline

In January of 2021, President Biden issued Executive Order 14008 that initiated a “government-wide” effort to achieve “a carbon pollution-free electricity sector no later than 2035.” TVA’s carbon-reduction “aspirations” fall short of that at only 80% reduction by 2035, net-zero by 2050. The letter asks TVA to explain how it is revising its “aspirations” based on the EO. The letter also asks what TVA is doing to minimize its use of fossil gas, given the potency of methane as a greenhouse gas, and to source its gas from companies that focus on minimizing methane emissions.

Coal retirements

The letter asks for the status of the environmental impact statements on the retirement and replacement of the Cumberland and Kingston coal plants, as well as a broader question asking for TVA’s plan to retire its entire coal fleet. Citing cost concerns and reliability risks, TVA announced in April 2021 it is planning to retire the remainder of its coal-fired power fleet, one of the oldest in the country, by 2035. One of the options it’s considering to replace aging coal plants with is fossil gas.

Funds for anti-environment lobbying

The letter’s last two questions involve TVA’s membership in an organization called the Utility Air Resources Group (UARG), which served as a lobbying and litigating front for many utilities to attempt to roll back clean air and clean water regulations. TVA’s own inspector general looked at TVA’s participation in the group and was not able to conclude whether money funneled from TVA to UARG’s lobbying or litigation efforts. The letter asks TVA to outline safeguards TVA has adopted “to ensure that ratepayer funds are not spent on lobbying or litigation opposing public health and welfare regulations.” Further, the letter asks for information about TVA funding actions similar to those conducted under UARG under another name.

What next?

For now, we wait and see what TVA says in its response, which must be made public, on February 2. We will report back on that response and any additional actions that may come out of that. If TVA’s response is highly insufficient or raises additional issues, the Committee can issue another oversight letter or initiate an oversight hearing.