At The Crossroads: Memphis’ Billion Dollar Opportunity

Essential facts and resources regarding Memphis' potential path to affordable, equitable, and clean energy.

Amy Rawe | June 6, 2022 | Reports and Fact Sheets

Memphis is at a historic crossroads as MLGW and City Council will make preliminary decisions in the coming weeks about whether or not to continue considering bids from any of the 27 companies that have submitted proposals on supplying electricity to Memphis.

Memphis residents stand to benefit economically and environmentally from moving to new suppliers of electricity through cost savings, local economic development, energy independence, environmental benefits, and increased funding for energy justice. The following information contains key considerations, facts, and resources pertaining to how Memphis may benefit through the evaluation and determination of future power supply options beyond TVA.

**On June 9 Memphis City Council will join the Memphis Light, Gas, and Water (MLGW) Board of Commissioners for a joint meeting to hear a presentation summarizing the proposals MLGW has received in response to its request for proposals (RFP) for alternative power supply and transmission to connect to the MISO electricity market. The meeting will take place from 9 AM – 12 PM Central Time at the Benjamin L. Hooks Library, 3030 Poplar Ave. in Memphis. The meeting is open to the public and will be live-streamed on MLGW’s YouTube page. Read more leading into the meeting.**

What Memphis Has To Gain

1. Cost savings for Memphians, who bear some of the most unaffordable energy bills of major cities: 

• MLGW pays TVA, its current power provider, about $1 billion per year for power.
  
• Numerous studies have concluded that Memphis could save hundreds of millions of dollars per year by moving to new electricity suppliers. MLGW’s own study showed annual savings of $100-$150 million.
  
• These savings are vital for Memphians, who currently have some of the most unaffordable energy bills of major cities across the country. A quarter of low-income households in the Memphis metro area pay more than 25% of their income on energy, which is an energy burden high above the national average of households spending about 3% of their income on energy.
  
• Saving hundreds of millions of dollars each year that would be passed along as savings to customers is especially critical to help ease the energy burden of the thousands of Memphis households for whom energy is unaffordable.
  

2. Local economic development: 

• MLGW’s intensive study examining the costs and benefits of moving to new energy suppliers found that alternative power supply portfolios could result in nearly $3 billion of additional local capital investment in energy transmission and generation, compared to the status quo of staying with TVA.
  

3. Community self-determination: 

• TVA is pushing MLGW to sign a practically never-ending 20-year rolling contract that renews daily, locking it into TVA’s energy portfolio and decisions for decades to come.
  
• This TVA contract would tie Memphis’ hands for decades and hinder MLGW from offering customer programs such as rooftop solar programs while hitching Memphis’ ability to achieve environmental and climate goals largely to TVA’s willingness.
  
• On the other hand, by switching to new suppliers, MLGW could keep more autonomy and decision-making closer to home, establishing more opportunities for public input and increased transparency and accountability than is currently the case with TVA.
  

4. Environmental benefits: 

• The portfolios of energy resources that MLGW identified as preferred portfolios in their Integrated Resource Plan Report are comprised of 50-75% renewable energy — mostly solar, and much of it local solar in Shelby County. 
  
• MLGW’s analysis of the costs and benefits of moving to new energy suppliers found that alternative power supply portfolios could result in nearly 40% fewer climate warming pollution emissions than TVA is offering.
  

5. Energy justice for Memphians: 

• The financial savings from switching to new energy suppliers would provide MLGW with the funding necessary to offer deeply beneficial energy affordability programs for income-qualified customers at a scale far larger than what is available under TVA.
  
• Increased funding for weatherization and energy efficiency programs would lower residents’ bills and promote energy justice.
  
• These programs would also improve a home’s comfort, and, in some cases, could save lives by making residents less susceptible to extreme hot or cold weather events.
  

6. Increased grid reliability: 

• The financial savings from moving to new electricity suppliers could help generate the funds necessary to increase the resilience of MLGW’s local power distribution network, while Memphians would continue benefiting from the high reliability of the broader power transmission grid that brings power to MLGW’s system.
  
• MLGW’s most recent rate hike is funding a current five-year reliability improvement plan, and ongoing financial savings from new energy suppliers could fund ongoing system maintenance and programs to boost reliability and could reduce the frequency and length of power outages.

Background 

MLGW’s evaluation of the Alternative Power Supply options has been a lengthy and careful process. MLGW writes, “A reliable, cost-effective power supply is critical to the economic viability and the overall quality of life in Memphis and Shelby County. As the utility company that serves this community, MLGW wants to ensure we are providing the most reliable and affordable power available. To meet these goals, Memphis Light, Gas and Water embarked on an extensive evaluation of power supply options. We sought public opinion, input from civic and local business leaders and expert advice from third-party consultants.”

See About / Power Supply Alternatives IRP on MLGW’s website for a timeline of the analysis process, including:

• Notable dates and decisions from 2020 – 2022
  
• Presentations and analysis that led to a request for proposals (RFP)
  
• Studies that show potential financial savings tied to the separation of MLGW and the Tennessee Valley Authority
  

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Memphis Has the Power is a campaign to ensure Memphians have affordable, equitable, and clean energy. The campaign has worked in the Memphis community for several years, backstopped by the Southern Alliance for Clean Energy (SACE). Our work has lifted up Memphians who struggle with unaffordable energy bills and has helped result in large increases in funding to help Memphians with lower incomes reduce their energy bills through the 2017 redesign of MLGW’s Share the Pennies program into an opt-out format. SACE is an appointed member of MLGW’s Power Supply Advisory Team, the community advisory team that helped shape MLGW’s integrated resource plan.