After more than six years of annual wholesale rate increases of 1.5% under former CEO Bill Johnson, TVA has changed the way it deals with local distributors by encouraging them to sign «always green» electricity contracts in exchange for a 3.1% interest rate cut, in addition to other offers. The majority of VAT distributors have signed the long-term contracts, which never expire and require a 20-year termination. But as our complaint indicates, indeterminate contracts undermine the bargaining power of local electricity companies to negotiate for cleaner, cheaper electricity. Long-term partnership contracts are also at odds with the requirements approved by the VAT Board of Directors. On August 22, 2019, TVA`s Board of Directors authorized management to enter into long-term partnership agreements with the CCP «based on the satisfactory conclusion of the required environmental assessments.» VAT Vice President Buddy Eller said the 20-year contracts TVA offered last year to replace previous five-year power purchase contracts provide more stability for VAT and its distributors for long-distance planning. More than 90% of the $11 billion in VAT electricity sales per year are now part of the 20-year contracts. The appeal was filed ahead of Memphis Light Gas and Water`s recent decision to submit a request for proposals for a new electricity supplier. Memphis is one of 13 remaining VAT distributors that have not yet signed the long-term contracts and account for more than 10% of VAT`s energy needs. TVA said, however, that the new contractual flexibility between 800 megawatts and 2000 megawatts could allow for solar or other generation if the 154 local energy companies used long-term electricity contracts. MEMPHIS, Tenn. – Environmental groups are suing the Tennessee Valley Authority for long-term partnership contracts signed by local power companies that purchase electricity from the country`s largest state-owned companies.
Our legal action also accuses the treaties of violating the Federal Environmental Protection Act (NEPA) because TVA did not conduct any significant environmental analyses and disclosures prior to the conclusion of the interminable agreements. In addition to the absurdly long 20-year termination required to exit a local electricity supplier from the contract, penalties are imposed on any distributor who terminates during these two decades of notice.