MLGW re-evaluating TVA as supplier after request for rate hike

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MEMPHIS, Tenn. — As MLGW looks for ways to cut costs, the future of its relationship with the Tennessee Valley Authority (TVA) is now in question.

MLGW is the oldest customer for TVA after an 80-year-old relationship between the two. But that longstanding partnership could be in jeopardy.

"Our relationships with MLGW are strong," TVA President Jeff Lyash said. "We hope that Memphis is a customer of ours for another 80 years, and we’re working with MLGW as they do their assessment of whether that relationship will continue, or if they want an alternative supplier.”

Faced with financial and structural issues, MLGW is taking another look at the arrangement.

“We are considering other options as we go through this process of what makes sense, what’s optimal and what’s most reliable for our customers," MLGW President J.T. Young said.

The company recently presented a plan for a three-year utility rate hike to Memphis City Council. It also included a five-year, $1 billion infrastructure improvement plan.

City council has previously rejected two rate hike requests from MLGW, so the company is now using a consultant to assist with long-term solutions.

“We’re obviously going to look for savings and long term, and more importantly we want to make sure the structure is one that’s tried and true and will actually be reliable for our customer so that they don’t have to worry about what’s reliable," Young said.

“TVA has the highest reliability of any transmission system in the U.S.," Lyash said. "Our reliability in delivering power to MLGW is 99.99% reliable. We’re working with Memphis as they try to prove the reliability of their distribution center here in town.”

MLGW expects to have a final report with recommendations by March 2020. It will determine next steps based on the findings.

“We want to look back on this and say we’ve considered every option," Young said.

TVA’s Board of Directors will host a public listening session Wednesday from 3:30 to 5:30 p.m. in the Reception Hall of the Halloran Centre. The Board’s quarterly business meeting is also open to the public and will begin at 9:30 a.m. Thursday at the theater in the Halloran Centre.

WREG General Manager Ron Walter serves on the TVA Board of Directors.

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