What to know about TVA competitor
MISO doesn’t provide power; it transmits it
On Wednesday, days ahead of a consultant’s report about Memphis’ future power supply, a top Memphis, Light Gas and Water executive called the Tennessee Valley Authority’s 20year offer “a bird in the hand.”
The same day, TVA’S competitor for Memphis power’, MISO, the Midcontinent Independent System Operator, took a clear stance on what Memphis should expect from it. MISO is a transmission system and marketplace that operates throughout central North America.
In its first public comments about Memphis, MISO told The Commercial Appeal it would not bid on Memphis’ power supply, which some advocates for leaving TVA have asserted in recent advertisements.
“MISO would not submit a response to a request for power supply proposals as MISO does not own or operate generation. A request like this is better suited for response from MISO members that own generation,” a MISO spokeswoman, told The CA. That does not mean Memphis would not potentially join MISO. It just means MISO isn’t the entity that will bid on Memphis’ power.
In an interview Wednesday, Alonzo Weaver, the city-owned utility’s chief operating officer, praised TVA as a partner and said the utility would have to carefully evaluate the
risks and rewards of leaving the only power provider Memphis has known for 80-plus years.
Weaver’s comments match what other members of MLGW leadership have said over the past year, but they also reflect the deep-seated ties between MLGW and TVA, ties that proponents of leaving TVA have called into question as they’ve sought to delegitimize Memphis’ study of its power. Taken together, the comments from Weaver and MISO show the political and actual complexity of the decision before Memphis.
Siemens, the consultant projecting Memphis’ power needs over the next two decades, is scheduled to release its report — known as an integrated resource plan — Friday.
That report is supposed to include assumptions about what it would cost for transmission lines into MISO and what it would cost to import all of Memphis’ power from that marketplace rather than build any electric generation locally.
The Siemens report will be in draft form and be finalized after a one-month public comment window. According to Weaver, it will not make one recommendation, but give Memphis several paths to choose from.
It could lead to Memphis asking for bids for its future power supply — another lengthy process that could take more than a year. MLGW and Memphis could decide to continue its current contract with TVA, or sign the 20-year deal that’s been on the table.
Whatever way Memphis goes, Friday’s release of the integrated resource plan will not be the resolution of a process that will dictate how billions of dollars are spent.
In interviews with Weaver, MISO and other stakeholders, The CA sought to provide readers clarity on a complicated process.
Despite ads to contrary, MISO doesn’t provide power. It transmits it.
Advertisements run in local media outlets throughout the past several weeks have urged MLGW to seek a bid from MISO — the Midcontinent Independent System Operator — on its power supply.
A sample ad that ran two weeks ago in The Commercial Appeal, which was paid for by $450 M for Memphis, a nonprofit pushing for Memphis to leave TVA, argued for that very step.
“Having a proven supplier such as MISO submit a bid, to be reviewed and considered fairly, is simply the responsible and right thing to do,” it argued. A digital ad the organization ran on The Daily Memphian’s website Wednesday also asked MLGW to get a “competitive proposal directly from MISO Energy.”
But, MISO told The Commercial Appeal that because its doesn’t own any power generation, it wouldn’t respond to an MLGW ask for power supply bids. Instead, its members, which include 31 wholesale electricity providers — companies that generate electricity and then sell it —, would be the companies to bid on the power. They also confirmed that they’ve had representatives at public meetings about Memphis’ power supply.
And Weaver defended MLGW’S interactions with MISO.
“They’ve had to talk to MISO about various scenarios,” Weaver said. “It may not be the exact scenario that somebody else wants... And we are looking at even some of the scenarios that talk about transmission-only or no generation in Shelby County .... Of course when you have transmission locally, your transmission costs are a lot lower.”
Pieces of the integrated resource plan that have already been released have suggested connecting to MISO to buy some, but not all, of Memphis’ power from its power marketplace. The bulk would be generated locally through a combination of natural gas and solar electricity.
Building that local power, which includes some transmission cost, would cost more than $8 billion, but could save Memphis more than $300 million a year compared to what TVA costs local ratepayers now, according to the early pieces of the integrated resource plan.
The need to build new, local electricity generation has been a source of contention among those who support leaving TVA, including $450 M for Memphis.
They have argued there’s more than enough electricity in MISO’S marketplace to serve Memphis and all that is needed to receive it are transmission lines.
Local lobbyists working for Chattanooga businessman Franklin Haney, who owns a company — Nuclear Development — have also argued for connecting to MISO, its vast marketplace and avoiding the building of long-term energy assets.
They have recommended Memphis use ACES Power, a company that works within MISO to connect utilities needing power with wholesale providers and secures long-term contracts for that power.
The groups have similar talking points. Karl Schledwitz, CEO of Monogram Foods and a founder of $450 M for Memphis, has said the group is independent and has taken no money from Haney.
Haney’s Nuclear Development is a MISO member. It is listed among the 31 firms that are listed as wholesale electric providers in the MISO marketplace.
On Wednesday, when asked by the CA if it would bid on Memphis power supply, the company, through a spokesperson, said it would do so if given the chance. At present, it doesn’t own any electricity generation. The company’s purchase of the Bellefonte nuclear plant in Alabama, which it pitched MLGW on in 2018, remains tied up in federal court.
What remains unclear, at least for now, is if there is ample capacity among wholesale electric providers in MISO for Memphis to purchase all of its power without substantial risk.
Haney’s local lobbyists and others have said ACES, or a firm like it, could help Memphis secure long-term power without being exposed to spot marketplace risk.
Siemens dismissed it as an option early in the IRP process, which has caused consternation among some.
One of the local leaders advising MLGW on the IRP process, Memphis chief operating officer Doug Mcgowen, asked in February for Siemens to show its work about why purchasing power from wholesale providers and not having any local eletricity generation wasn’t a viable option.
“There are people coming to City Hall everyday wanting to know what that looks like. I need to be able to have the answer to the question... For whatever reason, people are asking about Misoonly. My feelings about what logic says aside, we need to be able to have an answer for that,” Mcgowen said.
So is there capacity in MISO? It didn’t say.
Dr. Jeff Warren, who has pushed harder than any member of the Memphis City Council to leave TVA, had a dialogue with the transmission operator and power marketplace in recent weeks.
He released the questions and answers to The Commercial Appeal.
He asked MISO if there was enough electric capacity within its system to serve Memphis without any new electric generation. MISO’S Todd Hillman, its chief customer officer, said it hadn’t studied that because it hasn’t been asked to.
“[MLGW] has not requested MISO to perform a study to determine if Memphis’ needs can be met by the existing MISO region without any additional generation in and/or from Memphis,” Hillman wrote to Warren.
Later in the exchange, Warren asked about the claim MLGW leaders have made that Memphis, if it joined MISO without building power capacity, would be the largest city in MISO without its own electricity supply. Weaver, in his interview with the CA, also acknowledged the perceived risk of the marketplace.
“You’ve got to be able to get that power to you .... You’ve got to weigh out the market risk of fluctuating markets,” Weaver. “I know people pull out bits and pieces that work for them, but I’m trying to get the best solution for Memphis and Shelby County and the people we serve for the long-term.”
Hillman answered Warren’s inquiry about large cities with nuance.
“...A good example of MISO’S ability to integrate a large city with no local generation is the City of New Orleans. Through the South Region Integration in 2013, the City of New Orleans joined MISO.,” Hillman wrote. “It is important to note that the majority of the State of Louisiana is also integrated into MISO and Entergy New Orleans has rights to generation within the larger Entergy territory to supply its New Orleans load.”
Entergy New Orleans has a power plant within New Orleans city limits. New Orleans is also about two thirds the size of Memphis in population.
In response to questions from The CA, MISO framed securing power as Memphis’ responsibility if it were to join.
“MISO’S membership is largely made up of utilities that own generation or have long-term contracts with owners of generation to meet their customers’ needs. In MISO, it is up to the load serving entity to either own generation or have contracts in place with generators to ensure their customers’ peak demand can be reliably met,” said the MISO spokeswoman.
The spokeswoman said that further details of MISO’S work with MLGW would be shared with the public Friday.