TVA CEO Jeff Lyash's mistruths stated recently on TV highlight the need for independent oversight of TVA so that customers are not harmed by the unregulated, federal monopoly treating fantasies as truth.

Tennessee Valley Authority (TVA) CEO Jeff Lyash stated a series of mistruths on the television talk show Inside Tennessee recently, which, when used as the basis for TVA policy, harms Tennessee Valley residents. The incident highlights the need for independent oversight of TVA so that customers are not harmed by the unregulated, federal monopoly treating fantasies as truth.

Fact-Checking Mistruth #1: Is TVA’s monopoly unique?

When interviewer Don Bosch asked Jeff Lyash about how TVA’s unique position of being a “quasi-governmental, not-private, not-public” monopoly, Mr. Lyash responded that “TVA isn’t unique in being a regulated utility. We operate similar to Southern Company, Duke, Dominion. There are other utilities in the Southeast who have a similar business model.”

There is a lot of missing context here. The fact is that TVA’s monopoly is quite different from the other power companies he mentioned in that it has little independent oversight. These other power companies have at least two oversight bodies with enforceable power that TVA does not have: public utilities commissions and shareholders.

In other Southeastern states, utilities are granted monopoly status in exchange for being regulated by a public utilities commission, which has oversight power in order to ensure customers are not abused by monopoly privileges. When a regulated utility proposes a rate increase or to build a large, expensive power plant, the public utilities commission must hold a proceeding, often including public hearings, in which the utilities and people can enter evidence into the record that supports or is contrary to the power company’s request. The commission must then weigh the evidence and come to a conclusion, similar to a judge in court. This process helps ensure that input and evidence from the public are weighed on the same scale as the power companies’ proposals and that power companies must prove their case before taking actions that have large consequences for captive ratepayers.

Case in point: when Dominion Energy recently proposed their long-term plan to the South Carolina Public Service Commission (PSC), the PSC took input from other parties–as is legally required–weighed the evidence, and concluded that Dominion’s plan did not adequately serve the public interest because it did not represent “the most reasonable and prudent means of meeting the electrical utility’s energy and capacity needs.” The PSC rejected the plan and ordered Dominion to re-submit a new plan with more emphasis on energy efficiency and solar.

However, since TVA does not have an independent regulator similar to a state utilities commission, TVA is able to referee its own game in considering energy resource options and call the balls and strikes even as it plays to win.

Investor-owned utilities (IOUs), like those Mr. Lyash mentioned, also have oversight by the companies’ shareholders, which have the authority to influence company policy by shareholder proposals and votes on company leadership. Duke Energy’s leadership faced such votes at its shareholder meeting last week. Historically, the interests of shareholders have not always aligned with those of ratepayers, but we are seeing a trend toward more alignment on clean energy topics.

TVA’s leadership has even insulated themselves from input from the public and customers: the TVA board stopped receiving public comments at their board meetings in 2018.

Mr. Lyash misstating that TVA’s monopoly is comparable to the other major power companies in the Southeast ignores the fact that TVA is an unregulated monopoly without the same oversight structures that help provide accountability for captive ratepayers, as other monopoly power providers have. The lack of any meaningful check to TVA’s ambitions sets up Tennessee Valley residents to shoulder the costs and harms of imprudent decisions resulting from an environment where myth can be put into policy. It is almost incredible to hear Mr. Lyash state that TVA is no different from IOUs because where IOUs are configured specifically to return profit to shareholders, TVA is actually the largest public power company in the nation and intrinsically has public interest service hardwired into its mission. As such, TVA should strive for a higher standard of accountability than what is legally required from other large utilities.

Fact-Checking Mistruth #2:  Did wind power cause the major blackout in Texas and is wind power unreliable?

Contrary to the fact that recent catastrophic blackouts were caused primarily by failures of fossil fuel power in Texas, Lyash incorrectly blamed wind energy. 

Scapegoating wind energy as the leading cause of Texas’ February blackout is a misinformation talking point that has been widely and repeatedly debunked. For example:

• New York Times: “No, Wind Farms Aren’t the Main Cause of the Texas Blackouts,” February 17
• Associated Press: “Texas blackouts fuel false claims about renewable energy,” February 17
• USA Today: “Fact check: Frozen wind turbines don’t deserve all the blame for Texas blackouts,” February 17

It was plainly and immediately obvious to people who were trying to learn from the news during the February Texas storm that wind energy was not the primary culprit of the deadly blackouts, but rather that the catastrophic winter storm knocked out much of the power system–and predominantly the natural gas system–because it was not equipped to handle such cold weather. Early reports from the Texas grid operator said that natural gas failure to generate power was the primary cause of the generation shortfall–not wind. As reported by the Texas Tribune, a grid operator spokesperson said to the media: “It appears that a lot of the generation that has gone offline today has been primarily due to issues on the natural gas system.” Investigations by the grid operator into what went wrong in the months since the storm have confirmed that, while coal, wind, and nuclear also went offline, natural gas (shown in the chart below in blue) was the vast majority of lost power generation, as compared to the generation expectation of the various sources.

It is highly concerning that Mr. Lyash, as the CEO of the largest public power company in the nation, should scapegoat wind energy as the cause for the tragic blackouts in order to justify TVA’s lack of investment in wind energy, when abundant information demonstrating otherwise is so readily available and widely known among power industry professionals and consumers alike.

Mr. Lyash further dismissed the reliability benefits of increased interconnection between utility systems and ignored the risks of fossil fuel supply volatility when he claimed in the interview that long-distance transmission of wind energy from westerly wind-rich regions to TVA territory presents an unacceptable reliability risk. In reality, a key lesson from Texas’ catastrophic blackout was that more transmission interconnection between Texas and other utility systems would have played a significant role in mitigating the power outage.

Mr. Lyash’s argument against wind energy transmission focused narrowly on the risk of tornadoes to the power lines while brushing aside the benefits of broader connectivity and giving a free pass to the supply system for natural gas, which proved to be a major failure in recent Texas blackouts when gas wells and pipelines froze up. Wind energy in wind-rich regions has been cheaper than just the fuel cost for new natural gas power plants, let alone the cost of building, maintaining and financing the plants, for about the last decade, and previous proposals for TVA to import that incredibly cheap wind energy have bid in at below the fuel cost for gas power. At these price points, there is absolutely no risk to TVA customers–only the benefits of cost savings, increased reliability, and less pollution.

Using misinformation about wind energy reliability as a basis for TVA’s policy is also concerning because it is precisely the increased use of renewable energy that is necessary to reduce pollution from fossil fuel power that is exacerbating dangerous extreme weather that jeopardizes the grid in the first place. In fact, solar and wind energy, if integrated into the grid correctly, and particularly when paired with storage, can increase grid reliability and resilience.

Fact-Checking Mistruth #3: Is TVA aligned with Biden’s goal to decarbonize the power sector by 2035?

TVA’s trajectory and targets toward eliminating harmful carbon pollution fall far short of the Biden Administration’s goal of decarbonizing the nation’s electric grid by 2035, even though Mr. Lyash said that TVA is aligned with the Administration. The fact is that the Biden Administration aims to have a zero-carbon electric grid by 2035, while Mr. Lyash expressed that TVA aspires to achieve an 80% reduction in carbon by 2035 and aspires to take until 2050 to get to net-zero. Yet SACE’s recent analysis shows that according to TVA’s latest resource plans and announced projects, and taking into account TVA’s history and projected rate of decarbonization, TVA is not on track to fully decarbonize by 2050. Without announcing formal resource plans that greatly increase the utilization of clean energy like solar, energy efficiency, and battery storage that can be analyzed through an integrated resource planning (IRP) process, there is no guarantee TVA will reach net-zero emissions even by 2050.

Fact-Checking Mistruth #4: Is TVA’s investment in nuclear limited to only existing, operable units? And are all nuclear projects TVA has invested in currently operating?

In the interview, Mr. Lyash was asked if TVA is putting too many eggs in the basket of nuclear energy, considering the spectacular failure of the V.C. Summer nuclear project in South Carolina and the exorbitant cost and constant construction delays at the Vogtle project in Georgia. Mr. Lyash took pride in the completion of Watts Bar Unit 2 and expressed optimism about new nuclear technologies that have yet to be commercialized, like small modular reactors (SMRs). Mr. Lyash incorrectly stated that TVA’s investment in nuclear has been limited to units that are currently in operation, glossing over the fact that TVA historically went into billions of dollars in debt from 10 nuclear projects it began and never completed, and has spent tens of millions of dollars in recent years to advance a potential never-before-tested new nuclear technology at their Clinch River site. While TVA says it hasn’t decided whether or not to actually commence construction on the project, it is a mischaracterization that TVA’s nuclear investment is limited to operable units. 

We agree with Mr. Lyash when he says that getting from 80% clean energy to 100% is going to be difficult and will require investment in new technologies. However, pursuing highly speculative nuclear technology–while failing to adequately invest in today’s proven technology such as energy efficiency, wind, and solar–which could lower Tennesseans’ bills, provide jobs, and improve public health today–is a distraction at best, and likely a dead-end money pit. 

The interviewer, John Becker, correctly noted that the two 21st century nuclear projects to get off the ground, in South Carolina and Georgia, are perfect examples of why TVA shouldn’t be staking customers’ future in nuclear. The South Carolina project cost $9 billion over eight years, and it wasn’t even halfway complete before the utility construction partners pulled the plug on the project because they realized they could walk away and get the power for cheaper elsewhere. The Georgia project is expected to cost $27 billion or more once complete, which is double the initial price tag approved when construction began, and be more than five years behind schedule. TVA’s own Watts Bar Unit 2, which Mr. Lyash touted in the interview, is an example of what can go wrong with TVA’s ambitions. TVA started construction on Watts Barr in the early 1970s, expecting the two units to cost $685 million and be operational by 1978. By the mid-80s, and after spending $1.7 billion, TVA mothballed Unit 2 until 2007, when TVA revived the project with an estimated cost-to-complete price tag of $2.5 billion. Then in 2012, the cost estimate nearly doubled to $4 – $4.5 billion. All told, when Unit 2 finally came online in 2016, the cost of the two Cold War-era reactors had grown to about $12 billion over more than 40 years.

Given TVA’s overly ambitious history with expensive nuclear power, and the fact that TVA essentially has no meaningful independent oversight by either a state public utilities commission or shareholders, TVA’s experimentation with speculative nuclear technology appears to be a great financial risk. If TVA is in favor, as Mr. Lyash says in the interview, of low-carbon power without raising customers’ costs, then staking a future on not-yet-existent nuclear is not the way to go.

Fact-Checking Mistruth #5: Are local power companies asking TVA to transmit power without paying their fair share?

Even though four local power companies (LPCs) that are seeking to leave TVA in favor of cheaper power elsewhere have offered to pay TVA in exchange for the use of TVA’s transmission lines in order to import that cheaper power, Mr. Lyash falsely claimed in the interview that the companies are not willing to shoulder their share of the cost involved.

The truth of the matter is that the four LPCs have been offered less expensive power than what TVA can provide, and have asked TVA to name a fair price so that they can pay to use TVA’s transmission system to bring that cheap power in. This type of power transmission service, called “wheeling,” is standard practice across the country and all major utility systems are required by federal law to provide such transmission access for a fair cost. TVA has argued that it is exempt from federal law and refuses to provide transmission access to the four LPCs for any price. Adding insult to injury, since TVA has paid for those transmission lines largely with funds from its LPC customers, the customers of the four LPCs have already paid for, at least in part, the very transmission lines that TVA is blocking them from using. 

Further, Mr. Lyash’s statement that LPCs that have fulfilled their contracts with TVA are free to leave TVA and purchase power elsewhere is highly misleading because it leaves out the fact that TVA refuses to wheel power over their transmission lines, meaning any LPC that is not located on the edge of TVA’s grid has no reasonable option other than TVA. Furthermore, because TVA blocks LPCs from accessing alternative providers, TVA has locked nearly all of its customers into 20-year evergreen contracts that mean customers need to give a full 20-years notice before moving to a new power provider. That is a far cry from the freedom Mr, Lyash led TV viewers to believe exists for its customers.

Conclusions

Mr. Lyash’s parade of mistruths last week highlights the need for better independent oversight of TVA and a fundamental reorientation for the public power company. It appears that TVA is making policy based on misinformation and there is effectively no real check on TVA’s leadership to help ensure prudent decision making, as other major utilities have. Tennessee Valley residents already pay some of the highest energy bills in the country and could be set up to fall even further behind if TVA continues to prioritize preserving last century’s energy model instead of letting customers benefit from fully taking advantage of low-cost, reliable clean energy and energy efficiency.

It is time for a new direction at TVA. TVA was once an engine for job creation and economic development and was proof of the concept that delivering inexpensive and clean power is possible. TVA should return to its roots and become a cutting-edge 21st Century utility as a renewable energy technology proving ground and a clean energy leader that lowers energy bills and rights environmental injustices.

Learn more about TVA executive management’s pattern of misinformation and misdeeds and why TVA’s values are #NotPublicPower values at NotPublicPower.org.

Watch the four-part Inside Tennessee interview that aired on May 3, 2021: Part 1, Part 2, Part 3, Part 4