MLGW should ex­plore nuke deal and oth­ers

The Commercial Appeal - - Viewpoint -

Mem­phis has been buy­ing its elec­tric­ity from the Ten­nessee Val­ley Author­ity since Nov. 6, 1934. It was the first big city to join TVA. It has re­mained TVA’s big­gest cus­tomer ever since, now ac­count­ing for 11 per­cent of TVA’s to­tal load.

But Mem­phis and its city-owned util­ity, Mem­phis Light, Gas and Wa­ter, is not for­ever bound to buy elec­tric­ity from TVA. MLGW can opt out of that ar­range­ment with five years no­tice.

As TVA’s rates con­tinue to rise, that gives MLGW lever­age. That’s why Mem­phis and MLGW of­fi­cials should ex­plore the pro­posed pur­chase of elec­tri­cal power to be gen­er­ated at an aban­doned Alabama nu­clear power plant that may be com­ing back to life.

TVA be­gan con­struc­tion of the Belle­fonte Nu­clear Plant in Hol­ly­wood, Ala., in 1975 but halted work on the pro­ject in 1988. The plant, 260 miles south­east of down­town Mem­phis, was sold at auc­tion in 2016 to Chat­tanooga de­vel­oper Franklin Haney’s Nu­clear De­vel­op­ment, LLC.

Haney, whose com­pany has a loan ap­pli­ca­tion to help fi­nance the pro­ject pend­ing at the En­ergy De­part­ment, gen­er­ated head­lines in Au­gust when the Wall Street Jour­nal re­ported that he had agreed to pay Michael Co­hen, Pres­i­dent Trump’s so-called “fixer,” for help ob­tain­ing fed­eral fund­ing for the pro­ject. Haney, who ran for Ten­nessee gov­er­nor as a Demo­crat in 1974, de­nies it.

Haney’s bid for busi­ness with MLGW is be­ing pro­moted by former TVA of­fi­cial Bill McCol­lum, who told City Coun­cil this week that MLGW could save an eye-pop­ping $487 mil­lion a year for 30 years with an agree­ment to be­gin pur­chas­ing power at the rate of $39 per megawatt hour when the plant starts in 2022. That’s com­pared to the util­ity’s cur­rent cost of about $75.

A pos­si­ble deal with Haney be­gan tak­ing shape in Jan­uary when former MLGW chief Jerry Collins signed a non­bind­ing let­ter of in­ter­est with the com­pany. McCol­lum is seek­ing an up­dated let­ter of in­tent. That would help sat­isfy the En­ergy De­part­ment’s re­quire­ments for the loan needed to com­plete con­struc­tion of a plant.

In a Catch 22-style co­nun­drum, how­ever, the dead­line for the com­pany to sub­mit re­quired loan doc­u­ments ex­pires next month, be­fore a wide-rang­ing MLGW study on fu­ture power source op­tions is com­pleted.

For MLGW to com­mit to the pro­ject is not with­out sig­nif­i­cant risks, main­tains MLGW Pres­i­dent J.T. Young. Where, for ex­am­ple, would MLGW be if it opts out of TVA and the Belle­fonte plant isn’t fin­ished on time? “That is a very, very big risk and con­cern for us,” Young said.

Mean­while, TVA’s rates will con­tinue to rise. The board ap­proved a 1.5 per­cent rate hike in Au­gust, one in a se­ries of past and planned an­nual in­creases it needs to pay down its mas­sive $8 bil­lion debt -- in­curred in part to build Belle­fonte.

Last spring, TVA im­posed a new “grid ac­cess fee” on MLGW and other lo­cal util­i­ties. Rep­re­sen­ta­tives of the South­ern Al­liance for Clean En­ergy and NAACP say TVA is shift­ing costs from its big in­dus­trial cus­tomers to low-in­come res­i­dents.

With TVA’s gas and elec­tric­ity rates steadily ris­ing, the po­ten­tial sav­ings from a Belle­fonte deal -- to MLGW and its cus­tomers -- are too po­tent to dis­miss this pro­ject as un­work­able or too risky for fur­ther study. In fact, MLGW should be ex­plor­ing all al­ter­na­tives to TVA.

View­point Ed­i­tor David Wa­ters and former ed­i­to­rial writer Michael Kel­ley wrote this ed­i­to­rial on be­half of The Com­mer­cial Ap­peal Ed­i­to­rial Board, which also in­cludes Pres­i­dent Mike Jung, Ex­ec­u­tive Ed­i­tor Mark Rus­sell, Colum­nists Tonyaa Weathers­bee and Ted Evanoff, and Dig­i­tal Strate­gist Dann Miller.

TVA be­gan con­struc­tion of the Belle­fonte Nu­clear Plant in Hol­ly­wood, Ala., in 1975 but halted work on the pro­ject in 1988. The plant, 260 miles south­east of down­town Mem­phis, was sold at auc­tion in 2016 to Chat­tanooga de­vel­oper Franklin Haney’s Nu­clear De­vel­op­ment, LLC. FILE / AS­SO­CI­ATED PRESS

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