FERC denies utilities’ request to leave TVA

The Federal Energy Regulatory Commission (FERC)  declined a complaint made against the Tennessee Valley Authority (TVA) by a number of member power companies seeking transmission service and freedom from their supply deals.

The local power companies included Athens Utilities Board, Gibson Electric Membership Corp., Joe Wheeler Electric Membership Corp., and Volunteer Energy Cooperative, and all wanted to break their supply deals with TVA. They cited what they said was TVA’s slow adoption of renewable energy resources and its unwillingness to provide them transmission service if they did not source all of their power from TVA.

The companies alleged that the federal entity violated Section 211 A(b) of the Federal Power Act.

Section 211 allows any electric utility, federal power marketing agency, or any other person generating electric energy for sale for resale to apply to FERC for an order requiring a utility to provide transmission services. The section also allows FERC to redress discriminatory practices being made by transmitting utilities.

The companies alleged that their supply deal with TVA is discriminatory so long as TVA has a generation portfolio skewed toward fossil fuels and relatively lacking in renewables. They asked to be freed from their supply deals so they could pursue electricity agreements from renewable resources, while retaining their ability to use TVA’s transmission infrastructure.

Since the initial complaint was filed, Joe Wheeler Electric Membership Corp. has since withdrawn.

According to FERC Chairman Richard Glick, the denial was not due to disagreement with the petitioners, but rather that the power to approve the petition is not held by FERC. Glick cited TVA’s “fence” provision.

The TVA Act provides that, subject to certain minor exceptions, neither TVA nor its distributor customers may be a source of power supply outside of TVA’s defined service area. This provision is often called the “fence” since it limits TVA’s sales activities to a specified service area. Additionally, the Federal Power Act prevents FERC from ordering TVA to provide access to its transmission lines for the purpose of delivering power to customers within TVA’s defined service area. This provision is often called the “anti-cherrypicking provision” since it prevents competitors from “cherrypicking” TVA’s customers.

Glick did, however, express some disapproval towards the fence provision. He referred to it as an “anachronism” which prohibited a competitive market. He also outlined the limits of FERC’s power, saying it would take an act of Congress to amend the TVA Act, adding that the time had come for such an act.

‘Slap in the face’

The petition’s denial by FERC was criticized by renewable energy advocates. Gaby Sarri-Tobar, a campaigner at the Center for Biological Diversity, called it “a deeply disappointing decision and a slap in the face” to TVA customers.

“FERC just blew an opportunity to set an important precedent and give TVA power companies options for cheaper, renewable power and lower rates for customers, and begin breaking our fossil-fuel addiction,” continued Sarri-Tobar.

The Center for Biological Diversity previously filed a brief on the preceding.

An official with TVA told pv magazine that the entity believes that FERC’s action is consistent with the company’s view that the public power model created by Congress best serves the public interest.

“The public power model works,” the statement said. “We look forward to continuing to work with all of the local power companies to advance our unique, shared mission of service.”

This sentiment was echoed by Tennessee Valley Public Power Association (TVPPA), which represents the power distributors of the Tennessee Valley.

In a statement, TVPPA President and CEO, Doug Peters, described the relationship between TVA and its distributor customers as “unlike any other in the nation,” adding that TVPPA believes in the TVA public power model and it supports maintaining it.

“We support our members’ local decisions, as each is governed by leaders from the communities in which they serve. We encourage TVA and the petitioners to begin anew in their effort to reach a point of consensus that would enable those local leaders to commit to a long-term contract with TVA,” the statement reads.

Allegations of retaliation

While the petition itself was denied, FERC Chair Richard Glick said that he has asked the commission’s enforcement staff to look into allegations that TVA is retaliating against the complainants, as first reported by lawyer Jeff Denis.

On October 15, the complainants in the case filed four affidavits that indicate retaliatory actions from TVA against an LPC in the case, based on statements TVA’s CEO Jeffrey Lyash made at a late summer TVA meeting. While the recounts of Lyash’s statements were redacted from public view, one of the affidavits has section that starts , “Mr. Lyash has made similar statements elsewhere,” which the Southern Alliance for Clean Energy (SACE) used as a basis for their summary of events.

As Maggie Shober, director of utility reform with SACE outlined, Athens Utilities Board, which serves Athens, Tennessee, a city of about 14,000 between Knoxville and Chattanooga, was the subject of some of the comments.

The unredacted portion of an affidavit from the Athens utility’s General Manager, Eric Newberry Jr., alleged that Lyash and TVA Board Chair, Bill Kilbride, both met with Athens local officials.

Newberry went on to say that in that same conversation, Lyash noted TVA’s system is unreliable in the area of Volunteer Electric Cooperative (VEC), but that Lyash was reluctant to fix the situation because VEC brought the Petition to FERC and might leave TVA after the five year termination period in its contract.

SACE then said that Newberry stated in his affidavit that he was “taken aback by this statement” from Lyash, and that both Athens Utilities Board and VEC pay “millions of dollars each month in wholesale power charges to TVA” in exchange for a reliable supply of power.

According to Shober, Newberry suspects Lyash’s statements were an attempt to influence the Athens mayor to pressure the utilities board to withdraw from the FERC petition.