The leader of the Tennessee Valley Authority says the idea of Memphis Light, Gas and Water Division breaking with TVA isn’t about a cheaper wholesale price to the utility for electric power.

“This decision is about risk,” TVA President and CEO Jeff Lyash said on the WKNO Channel 10 program “Behind The Headlines.”

“It’s about whether the ratepayers for MLGW are going to take on that kind of capital investment, dependence on natural gas, entrance into a volatile market and take the risk that there may be savings out there for them – when what TVA is already promising to deliver is already here,” he said.

MLGW CEO: First look at TVA alternatives due in May or June

TVA decided to submit its long-term contract proposal as part of the request-for-proposal – or RFP – process in which MLGW now involved. 

The process, overseen by the consulting firm GDS Associates, has fielded more than two dozen price quotes and bids for different parts of MLGW possibly hooking up to a different electric power provider -- from transmission to local power generation to the wholesale cost of electric power.

Initially, TVA had said it wouldn’t be part of the process, which is now at the point where GDS is sorting through the proposals and verifying information before a preliminary presentation to the MLGW board and Memphis City Council in late May or early June.

A final decision on leaving or staying with TVA by the MLGW board and with ratification by the council is expected around the end of the year.

Lyash said TVA’s proposal hasn’t changed from two years ago with a 20-year long term agreement that includes a five-year ongoing agreement MLGW and TVA have had since the existing 20-year agreement ran out.

Strickland says city through ‘first quarter’ of MLGW-TVA decision

If MLGW leaves TVA, it is required to give five years notice under terms of that prior long-term agreement.

The new long-term agreement would include a 3.1% reduction in the rates that TVA charges MLGW for electricity and a commitment to assist MLGW in some form of local power generation.

A week ago on Behind The Headlines, MLGW President and CEO J.T. Young said some local power generation by the utility will likely be a key part of any scenario for leaving TVA as well as multiple options for buying electric power wholesale.

Young also said it is an “open question” about whether generating its own power locally for MLGW would mean MLGW getting directly into that business or contracting with a third party to build and operate a plant that would serve MLGW.

Lyash’s definition of local power generation for MLGW with TVA assistance is completely solar and a very different consideration for MLGW.

“They would have the ability and we would assist them in building up to 5% of their generation in solar in the region,” he said.

TVA’s solar generation programs have run the power generated that way through the TVA grid, which critics have argued limits the amount of solar energy that can be used.

TVA has an agreement to purchase power generated by WR Graceland Solar LLC somewhere in the Millington area on 1,482 acres of land, according to a late April notice by TVA.

The site would generate 150 megawatts of electricity that would be sold to TVA for use across its grid — “to help meet the energy needs of the TVA region” — by the wording of the April 26 notice.

Young has talked of local power generation in Memphis as being a means for MLGW to be less reliant on a single power consortium to buy its power from wholesale at a market rate.

Lyash also touted TVA’s involvement in economic development in Memphis and the region and attributed a dollar figure in the billions to that involvement.

That figure is disputed by critics, who argue TVA should be doing more for the Memphis market, which is its largest customer.

Watch: The fight over terms for a TVA exit

Lyash also defended TVA’s decision to truck coal ash waste from TVA’s decommissioned Allen Fossil Fuel plant in southwest Memphis to a Republic landfill site near Memphis International Airport.

He said the local site for the waste was the safest decision for disposing of the coal ash despite opposition and criticism of the decision from the Memphis City Council, which wanted it taken out of the city.