Bellefonte buyers seek to sell power to Memphis
Former Tennessee Valley Authority Chief Operating Officer Bill McCollum estimates TVA’s biggest customer could save hundreds of millions of dollars annually, drop its power rates and finance necessary infrastructure upgrades by purchasing electricity from the Bellefonte Nuclear Plant in Alabama.
In a pitch this week to the Memphis City Council, McCollum estimates that Memphis Light, Gas & Water could save an estimated $487 million a year for 30 years if the local power utility buys power produced by the Bellefonte plant once it is completed and operational.
But making a move to buy power from the nuclear plant in Alabama rather than the Tennessee Valley Authority does require MLGW, the city-owned utility, to assume a significant amount of risk if the Bellefonte plant isn’t completed, MLGW President J.T. Young said.
“That is a very, very big risk and concern for us,” Young said.
“We will be the ones that will have to make sure our customers’ needs are served going forward,” Young said. “As we evaluate any option, we need to keep that at the forefront of our mind.”
MLGW is among 154 local power companies that buy all of their electricity from TVA, which requires the municipalities and power co-ops to purchase all of their power from TVA is they are in the TVA system.
“We think we have a strong partnership with MLGW and all of our local power companies which goes beyond just the price of power, but we also have among the lowest cost power rates in the country,” TVA spokesman Jim Hopson said Thursday.
But local power companies, if they give notice to TVA, can leave the TVA system. Paducah Power System in Kentucky decided to leave, concerned about rising TVA rates. It voted about 10 years ago to break that partnership and invest in what they projected would be cheaper power from Prairie State Energy. But now Paducah has the highest power rates in Kentucky.
Memphis now has similar concerns about higher costs by TVA. The Memphis City Council earlier this year approved gas and electric rate increases for MLGW that took effect July 1, adding $3 to the average household residential monthly utility bill.
TVA built the twinreactor Bellefonte plant in Hollywood, Alabama, decades ago, later mothballed it and sold it at auction in 2016. Former Chattanooga developer Franklin Haney’s company, Nuclear Development LLC, which McCollum is now working with as its chief operating officer, won the bidding for the mothballed plant with a $111 million proposal that Haney is trying to finish by next month. Haney estimates he could complete the two reactors at Bellefonte within the next five or six years and deliver power at rates below those of TVA.
Haney is still seeking federal loan guarantees for the project from the U.S. Department of Energy and he has not yet specified any buyers for the power Bellefonte would produce.
The twin-reactor plant, which TVA began building in 1974 and stopped building in 1988, is located about 50 miles southwest of Chattanooga.
In January, former MLGW chief Jerry Collins signed a non-binding letter of interest with the company to purchase power from the Bellefonte plant for $39 per megawatt hour when the Bellefonte units are completed in 2022, down from the current roughly $75 per megawatt hour.
McCollum was seeking an updated letter of intent, noting that a Department of Energy loan deadline looms next month. But a wideranging MLGW study on power source options is slated to be finished after that deadline, in December, and Young has been hesitant to sign such a letter without further studying the risks and other options, he said.
“I would much rather have a comprehensive report and have this be one of the options,” Councilman Martavius Jones said.
Councilman Kemp Conrad said he was frustrated to just recently learn of the Bellefonte option, when talks have been ongoing between MLGW and the company since early 2018.
“It does seem too good to be true, in a way,” Conrad said, “but also something to be taken seriously.”