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VOL. 133 | NO. 21 | Monday, January 29, 2018

TVA CEO Talks Water, Economic Development, Solar and Fixed Costs

By Bill Dries

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During his visit to Memphis last week, Tennessee Valley Authority CEO Bill Johnson left the door open to a change in TVA’s plans to use its own water wells when the new TVA natural gas-fired plant in southwest Memphis goes online later this year.

The decision to drill wells into the Memphis aquifer became even more controversial after high levels of arsenic were found in the ash ponds of the Allen Fossil Plant, the coal-fired plant just across Plant and Riverport roads from the new plant that will replace it.

“The finding of arsenic out there changed the game,” Johnson told Memphis City Council members on Tuesday, Jan. 23. “We don’t know how it got there or who put it there. It’s in concentrations never ever seen by a hundred fold in ash. … What matters at the moment is that that doesn’t go anywhere.”

Tennessee Valley Authority CEO Bill Johnson met the Memphis City Council last week and covered a lot of topics during the conversation in the council committee room in City Hall. (Daily News/Bill Dries)

Originally, the $1 billion natural gas plant was going to use “grey water” – wastewater from kitchen appliances like dishwashers, washing machines, baths and sinks. But that plan changed because Johnson said the grey water was “greyer than we knew.”

“The plant that we build out there is the Rolls Royce Lamborghini. That is the most technically advanced plant in the world, that gas plant,” Johnson said. “As a result the water chemistry … of the water you put into the plant is really, really important.”

The decision by TVA to drill its own water wells into the same aquifer that is the city’s water supply drew concerns about the impact that could have on the quality of water in the aquifer. Johnson doesn’t think the TVA wells are a threat to the water quality.

The controversy also highlighted the broader issue of the lack of a comprehensive view of potential breaches in the clay layer that protects the Memphis Sands aquifer, as it is known.

The council has approved raising the MLGW water rate by 1 percent, generating around $1 million in revenue, to be devoted to better mapping of the Memphis Sands and the layers that protect it.

“We are currently using MLGW water to test the plant,” Johnson said. “When the time comes, if that’s what we need to do to run it, that’s what we will do.”

The exchanges between Johnson and the council members were formal and cordial, even when they disagreed.

Council member Martavius Jones questioned TVA’s commitment to economic development in Memphis, citing MLGW’s status as the largest customer of TVA.

“It just doesn’t seem like TVA is doing the best they can to take care of their biggest customer,” he said.

Johnson pointed to the economic impact of the construction of the plant as part of a larger $4 billion in capital investment in Memphis by TVA in the last five years, as well as $1 million in impact fees and $40 million in payments in lieu of taxes – or PILOT – payments. He also said the authority markets Memphis along with the rest of the state.

“We do not take people to specific places,” he told Jones. “There are reasons that companies go where they go. It’s not always clear to us what they are – what the workforce looks like, what’s the infrastructure, what’s the airline situation.”

Council member Berlin Boyd questioned Memphis not making the cut for TVA weatherization assistance in a city with a lot of older homes that need the energy efficiency fixes to cut utility bills.

Johnson said the utility is working with other partners to find ways to help outside of that weatherization program.

He also defended TVA’s decision to effectively adopt a pay-as-you-go philosophy on solar, which is normally big solar arrays on commercial properties where the owners pay the cost of installation. He denied the agency is “hostile to solar” and said it is instead “pro consumer.”

“It remains a fact that if you choose solar over economics, your price is going to go up,” he said of the price of solar power. “I think the real debate is who should pay for solar installations. The truth is today a lot of this carries significant subsidies. … We’re building big solar today for customers who are willing to pay the full price.”

He also said a plan to add a 12 percent charge on TVA’s bill to utilities is still tentative, but would go toward paying the fixed costs of TVA’s transmission system to local utility companies including MLGW. If enacted, it would take effect in October 2019.

And utilities would probably pass much, if not all of it on to ratepayers.

“Our business has a high fixed cost. We need to make sure we are recovering the cost of that from everybody who uses that system,” Johnson said. “Every gas company in the country does this, every water company and most electric utilities.”

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