Rebates offered to local power companies in exchange for signed long term TVA contract

Cheaper power is being offered to municipalities and power co-ops across TVA’s jurisdiction, so long as they agree to sign 20-year contracts with the federal energy company.

Last year TVA approved a budget plan suspending further wholesale rate increases while also offering a 3.1% monthly rebate to any of the 154 TVA distributors that sign these contracts.

Since October 2019 more than 80% of TVA customers have signed the 20 year agreements to receive electricity from this company. This period of service is greater than the previous agreements period. Under TVA’s latest $10.6 billion spending plan, the federal utility ends the six-year-long pattern of base rate increases.

Local power companies who do choose to sign these contracts are also granted the flexibility to either develop or purchase up to 5% of their electricity from other sources, including renewables.

However, some of the largest power companies in TVA’s jurisdiction have not yet signed these contracts, and they include Memphis, Knoxville, Chattanooga, and Huntsville, Alabama. These account for nearly half of TVA’s operating revenue.

Memphis Light, Gas & Water (MLGW) is studying what would be the benefits and risks of leaving TVA and whether it can save money doing so. This study won’t be completed until May 2020, and a MLGW spokeswoman has cited no decisions will be reached until that comprehensive outlook is done.

It should be noted, Nashville Electric Service so far is the only one of TVA’s largest customers that has signed TVA’s 20 year contract. Nashville leaders are looking for its own deal with TVA regarding this matter, as Music City’s mayor John Cooper announced in early December that he will be negotiating with the federal utility for more advanced energy options for Nashville’s municipal buildings.

TVA released its latest IRP last year, detailing plans on how best to meet future electricity demands over the next 20 years.