MGLW Staff Recommends Issuing RFP to Explore Alternative Power Supply Besides TVA

Historic Decision Paves Way for Clean Energy Powered Revitalization

August 19, 2020
Contact: Amy Rawe, SACE, 865-235-1448, [email protected]

Memphis, TN – Today, Memphis Light, Gas & Water (MLGW) staff made a recommendation to its Board of Commissioners to issue a Request for Proposal (RFP) to explore new sources of energy supply as an alternative to their current supplier of 80 years, the Tennessee Valley Authority (TVA).

The recommendation comes after the utility conducted a year-long review of its energy alternatives, some of which are estimated to save billions of dollars over the next twenty years, while also creating clean energy jobs and gaining billions of dollars in local investment.

For example, switching to one of MLGW’s preferred portfolios of energy resources that was analyzed in their study would mean MLGW would save perhaps 12-15% on costs — a portion or all of which is expected to be passed back to customers — gain nearly $3 billion in local capital investment, and cut harmful carbon emissions by nearly 40% compared to TVA’s energy supply. 

“This historic decision sets up MLGW to provide more value to customers in Memphis and be a national leader on clean energy,” said Dr. Stephen A. Smith, Executive Director of the Southern Alliance for Clean Energy. “By seeking bids on alternative power supplies, the people of Memphis and Shelby County will lock in lower cost and cleaner more efficient energy-giving Memphis more control of its own future. This also serves as a significant “shot across the bow” to TVA that MLGW is setting the stage to break loose from TVA’s dictatorial long term contract arrangements.” 

Specifically, J.T. Young, president of MLGW, urged the utility’s board to issue an RFP to solicit bids from potential suppliers of energy. Receiving bids from multiple energy suppliers will allow Memphis to ground truth to the findings that multiple expert studies have unanimously found: Memphians would save at least $120 million dollars, and up to several hundred million dollars, every year if MLGW were to break free from its current energy supplier, TVA.

These significant savings are critically important in Memphis, where the cost of customers’ utility bills, driven by high cost power from the TVA, takes up a larger percentage of their income than in any other large metropolitan area in the US. In fact, a quarter of low-income households in Memphis spend more than 25% of their income on their energy bills. By realizing hundreds of millions of dollars of savings, MLGW can and should invest no less than 10% of those savings to make energy more affordable for Memphians through energy efficiency programs, with a particular focus on customers with lower incomes, and other demand management programs to reduce energy use at the times of day when it is most expensive. 

MLGW’s study shows that further economic benefits of switching energy supplies would be provided to Memphians through nearly $3 billion in capital investments; building the local economy and providing much-needed, local employment.

Speaking to the need for more affordable energy in Memphis, Pearl Eva Walker, Memphis Has the Power Organizer said, “In the past, and especially now during the COVID-19 pandemic, I see parents being forced to decide between paying to keep the lights on or buying medicine or shoes for their kids. That’s not how it should be in the future when Memphis buys or produces its own power and takes control of its own power supply.”

President Young announced that MLGW staff will be spending the next one to two months hiring a consultant to manage the RFP process and then will need to gain approval from the MLGW Board and City Council this fall before the RFP process is officially kicked off in October.

SACE is calling on MLGW and the City Council to issue two RFPs as part of this process: one, for an ambitious energy efficiency program that could be implemented expeditiously and would run for the five-year period during which Memphis would prepare to leave the TVA. Through an immediate, large-scale energy efficiency program, Memphis could drive down peoples’ bills and reduce the amount of energy the city would have to buy in the future. 

SACE is also calling for MLGW and the City Council to expediently issue an unrestricted RFP for bids to provide alternative power supply well beyond the next five-year period. This RFP would cover the efficiency, distributed energy, energy storage, power generation, and transmission components needed for Memphis to assume control of its own power supply. SACE has provided additional recommendations in its comment letter to MLGW about how to ensure the RFP is done according to industry best practices.