The battle over city’s power supply
How pending decision on TVA led to subpoenas
In a court ruling Monday, advocates for Memphis Light, Gas and Water leaving the Tennessee Valley Authority got a clear victory and, on the same day, the launch of a website began to ratchet up the public pressure for Memphis to end its nearly centurylong relationship with the power provider.
A federal judge decided Monday to halt proceedings over whether a trio of Memphis notables would have to answer subpoenas related to their efforts to influence Memphis leaders and shape the public conversation about MLGW leaving TVA and buying power elsewhere.
With the ruling in Memphis and another in Alabama in April, three people well-known in Memphis politics got crucial legal protection. Shelby County Commissioner Van Turner, Susan Thorp, a former journalist turned political operative, and Steven Reid, a po
litical consultant who helped run Memphis Mayor Jim Strickland’s campaign, were subpoenaed in February by TVA. The power provider wanted to depose them and to review documentation of their efforts in Memphis.
Disclosure would’ve revealed the road map of the trio’s work for Franklin Haney, a Chattanooga businessman who has sought to lure Memphis away from TVA so he can sell it power himself.
The subpoenas and the effort to quash them shed light on the battle for Memphis’ power supply and the lengths TVA is going to keep Memphis — a threat not just to its revenue, but, perhaps, its existence. Court documents, previous reporting and campaign finance disclosures show how Haney’s efforts have helped push Memphis towards a decision.
And, also on Monday, a handful of the city’s business elite revealed a nonprofit that will advocate for just such a switch and attempt to cajole local leaders into telling the federal power company that its time supplying Memphis is up. The nonprofit — $450 M for Memphis — adds another group of powerful interests to those jostling for influence over what could be one of the most important decisions Memphis will make this decade.
Fight over subpoenas the latest salvo of court battle
Haney owns Nuclear Development LLC, a company that pitched MLGW on leaving TVA and buying power from an unfinished nuclear plant in Hollywood, Alabama, known as Bellefonte.
That pitch, thus far, has failed, and has devolved into a protracted legal dispute between TVA and Haney. Here’s the rub: The businessman doesn’t own the plant he wanted to use to sell Memphis power — TVA does. Haney’s attempt to buy an old power plant, refurbish it and then sell the power to TVA’S largest customer led the federal power provider to refuse to sell it.
Nuclear Development, and Haney, sued TVA in late November 2018 in U.S.
District Court in Northern Alabama. The two parties have been in court ever since. The February subpoenas to Thorp, Reid and Turner — and their respective communications, political consulting/advertising and law firms — were in that case. Throughout the past several months, even in the midst of the COVID-19 pandemic, the parties fought a legal battle over whether the work of those influential Memphians is privileged, or fair game.
On March 9, attorneys for Nuclear Development filed a motion to quash the subpoenas in the local federal court, the Western District of Tennessee. That motion was stayed on Monday, after a federal judge ruled in Alabama that Thorp, Turner and Reid won’t be deposed or forced to turn over documents. They will have to provide TVA with statements about their work for Haney.
And in that March filing, Nuclear Development made clear it’s seeking to protect information from TVA because it regards the power provider as a future competitor and that’s why the work of three consultants should be protected
“... The subpoenas should be quashed because they seek production of protected commercial information of Nuclear Development,” the March motion said. “Nuclear Development and each of the non-party subpoena targets considered the work of that non-party subpoena target to be confidential, politically sensitive, and proprietary.”
“If and when Nuclear Development succeeds in this litigation, Nuclear Development and TVA will be competitors in the energy generation and distribution market,” Nuclear Development argued in its filing. “Accordingly, disclosure to TVA of Nuclear Development’s confidential business development and strategy information would provide TVA with a road-map of Nuclear Development’s confidential commercial strategy relating to the Bellefonte project.”
Reid and Turner had similar tones when reached by The CA on March 10.
“There are a lot of good people working to pave the way for Memphis to save hundreds of millions of dollars in the cost of power and TVA is doing everything they can to stop us,” Reid said in a statement. “They are trying to saddle small business owners, like myself, with overly burdensome work and costly legal fees in an effort to slow us down. It won’t work and we are fighting back because the only way to stop a bully is to stand up to them.”
Turner, the attorney, said something similar, noting that Haney was employing a small African American-owned business and that TVA was trying to harm his firm and business by tying him up in a monthslong court battle.
Thorp did not comment.
In a statement about the Monday ruling, TVA said, “TVA believes we are entitled by the motion sought by the subpoenas.”
Turner, Thorp and Reid part of larger influence campaign
Turner, Thorp and Reid have been actively working on behalf of Haney and Nuclear Development since at least early 2018, Commercial Appeal and Memphis Business Journal reporting shows.
They helped set up meetings with MLGW leadership in early 2018, including just after MLGW CEO J.T. Young took over the city-owned utility. They also supplied materials and follow-up information about Nuclear Development’s pitch to Memphis, one that promised $400 million in annual savings.
After dialogue between MLGW and Nuclear Development grew contentious, the private company, with the help of Reid and Thorp, went public. They sent Bill Mccollum, the chief operating officer, to pitch the Memphis City Council on the purported savings.
That public disclosure led to thentva CEO Bill Johnson warning Memphis that it would be foolish to leave. It was also the starting gun that sent Memphis on the long, winding path towards a potential decision about whether to leave TVA.
Haney hasn’t just spent money using those three to influence Memphis’ decision. He also spent money trying to make Department of Energy financing for the Bellefonte project easier to obtain.
In late 2018, he told the Institute for Public Service Reporting at the University of Memphis that he paid Michael Cohen, President Donald Trump’s longtime personal lawyer and fixer, to help with the project. He told the Institute that Cohen deceived him and he received little for his money.
Even as the potential purchase of Bellefonte has stalled for months that are blending into years, Turner, Reid and Thorp have continued to lobby for Haney. And the Chattanooga businessman was active throughout Memphis’ municipal election season last summer and fall.
A review of campaign finance filings by The CA shows Haney, his employees and his family donated at least $56,000, either directly or through a PAC. The money defrayed the candidate’s cost of advertisements and mailers, according to campaign finance filings.
Representatives of Nuclear Development have met with at least one member of Memphis City Council.
However, Haney and Nuclear Development and those working for him
aren’t the only people working to influence Memphis’ decision. TVA seeking to subpoena those working for Haney is just one piece of the power provider’s efforts to make Memphis, and its leaders, happy, or at least sway their thinking.
TVA has employed at least two local political consulting firms to advise leadership on how the power company should pitch itself to Memphis. It has also run billboard advertisements with the logos of MLGW and TVA under the slogan “Brighter Together,” for more than a year.
Several clean energy groups — the Southern Alliance for Clean Energy and Friends of the Earth — have also taken an interest in Memphis’ decision. For environmental reasons, they have expressed opposition to Memphis remaining with TVA.
Even during pandemic, TVA decision still looms
In Memphis, like elsewhere, fighting COVID-19 has grabbed much of the political oxygen. But it did not change the fact that a decision over Memphis’ power supply is looming.
Memphis, Light Gas and Water is expecting a draft of the integrated resource plan by late May and to complete the planning process by late summer, Gale Jones Carson of MLGW said in an email.
That process has shown that Memphis could save hundreds of millions annually by leaving TVA, but would have to issue billions in debt to build the infrastructure necessary to do it.
In a statement Monday, TVA estimated the cost to Memphis for leaving would be $8.3 billion.
That is based on figures shared by Siemens, the consultant doing the integrated resource plan.
Advocates for leaving TVA, including those who work for Haney, have disputed whether it would have to actually build those billions worth of infrastructure, claiming Memphis would only need to connect to the Midcontinent Independent System Operator (MISO), a marketplace that borders Memphis and covers much of the central U.S.
The planning process is just one piece of what will eventually be a Memphis
City Council decision about what to do regarding the power supply. On Monday, the political maneuvering over that vote got a little more complicated.
Karl Schledwitz, CEO of Monogram Foods, announced the launch $450 (Million) for Memphis, a nonprofit that seeks to advocate for a TVA switch. It has a website — abetterwaythantva.org.
The group’s goal: Get the Memphis City Council to give TVA notice that the utility is leaving.
On the site, it advocates for Memphis to leave TVA and uses the purported $400 million in savings to help augment the Memphis municipal budget. There is belief among advocates for leaving TVA that any savings MLGW, a cityowned utility, receives can be passed on to the city of Memphis. City legal staff has not issued an opinion on that claim, at least publicly.
The site also casts the integrated resource plan process as illegitimate. TVA said the same about the group launching the nonprofit.
“The information on this site is categorically false. It’s unfortunate that a small number of people with specific financial interests continue to attempt to mislead the people of Memphis.this information conveniently ignores the value of TVA to MLGW and the people of Memphis,” Scott Brooks, TVA spokesman, said.
In an interview, Schledwitz said the group is not affiliated with Haney or either of the clean energy groups advocating for Memphis to leave TVA. However, he said he had spoken with Reid, representing Haney, on Monday about the groups’ plans.
He also said he plans to speak with the Sierra Club, Southern Alliance for Clean Energy and Friends of the Earth.
The funding for the nonprofit comes from Schledwitz, Terry Lynch of the Southland Companies and Jim Gilliland Jr., Schledwitz said.
He said Haney had not funded any of the operation.
In the interview, Schledwitz noted the impact any savings could have on the Memphis budget and the fact that millions of dollars could be passed on to Memphis electricity consumers in the form of savings.
“That’s why we think it’s transformative.”
Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@ commercialappeal.com.