Memphis Light, Gas and Water Division breaks from the Tennessee Valley Authority and builds its own electric power-generating plant in southwest Memphis, supplying some of the city’s electric power while still relying on TVA for the remainder.

MLGW-TVA: Crump’s political power brought electrical power to Memphis

MLGW-TVA: A Timeline of the relationship

That is more than one of several possible scenarios being discussed currently as the city-owned utility considers a break with the federal agency.

It happened in the late 1950s when the utility left TVA for 71/2 years.

The construction of the Allen Fossil Plant – also known as the Allen Steam Plant– was at the center of that decision and is one example in an 80-year relationship between the city and TVA that has, at several points, been turbulent and constantly complex.

Elsewhere on the timeline are other entries that are familiar issues in the current deliberations, including rivals for TVA’s largest customer arguing against a single supplier of electric power and buying assets instead of building new ones.

The common thread over the 80-year arc of the city’s ties to TVA has been the political push and pull between publicly owned power and private power companies.

Bill Crawford, who would later become president and CEO of MLGW, was involved in every aspect of the startup of the $163 million plant named for Thomas Allen, the board chairman of what became Memphis Light, Gas and Water Division.

Crawford was an engineering student as the pilings for the plant were being driven into the ground.

“I was the plant site rat killer, tour guide, you name it,” Crawford told The Daily Memphian recently. “I did just about everything.”

New study lays out path to MLGW cutting historic ties to TVA

One of his titles was statistician for the plant. He kept a pair of overalls in a locker at the plant in case he was called on to crawl under the high-pressure chambers to find the couplings for wells that were notoriously difficult to find.

He also collected samples from the stacks of the coal-burning plant that define the decommissioned plant even today on the western skyline. He lost a few work shirts in the process when sulfuric acid from stray coal ash particles ate through the fabric.

And he completed the detailed, technical reports to federal energy regulators.

The broad job description gave Crawford a front-row seat for the most recent substantive attempt to decouple MLGW from TVA.

The view from the late 1950s and early 1960s to now has some similarities.

The current consideration of leaving TVA began outside Memphis.

Former MLGW President and CEO Jerry Collins agreed in 2017 to a very general and nonbinding letter of intent with Nuclear Development LLC, the company backed by Chattanooga developer Franklin Haney.

The intent was for there to be talks between Nuclear Development and MLGW about the company supplying electric power to the utility from the Bellefonte Nuclear Plant in Hollywood, Alabama, if and when Haney’s company bought it from TVA and got it up and running.

POWER BROKER

For Haney, the letter of intent was key to getting financing for the undertaking.

As Nuclear Development and TVA neared terms on a deal, Haney came to Memphis with a pitch for the utility to leave TVA.

The deal between Haney and TVA got as far as closing when TVA stopped the process, saying Haney had not gotten approval from the Nuclear Regulatory Commission. Haney’s lawsuit against TVA on the issue is still pending in federal court.

Soon after suing TVA, Nuclear Development pivoted and got behind the idea of MISO – Midcontinent Independent System Operator, a power consortium or coalition of utilities – being the rival to TVA for its largest customer.

With Entergy Arkansas part of MISO, Haney began pushing for MLGW to look west, across the river to connect with that part of the MISO system.

Power Players: Faces and Terms in the MLGW-TVA Debate

In the early 1950s, President Dwight Eisenhower offered the same western horizon as he balked at TVA’s plan to get government financing to build a power generation plant to supply electric power not only to a growing Memphis but also to TVA’s planned set of nuclear power plants.

Eisenhower instead was drawn to a plan for a non-TVA power plant to be built in West Memphis, Arkansas, by a coalition of private power suppliers to supply power to TVA and thus to Memphis with other TVA-generated power from a string of steam-powered plants proposed to be built elsewhere supplying the nuclear plants.

Otherwise, there wasn’t enough TVA-supplied electric power for both just 15 years after Memphis began using TVA electricity.

Then-Memphis Mayor Frank Tobey, along with former City Commissioner Thomas Allen, the board chairman of what would become MLGW, pushed instead to build a $163 million Memphis plant and transmission system and got it done while the Dixon-Yates plant in West Memphis withered from Congressional opposition and critical government audits.

“The thinking was there’s no way that Memphis wouldn’t buy power from a plant just across the river,” Wayne Dowdy, archivist at Memphis Public Libraries and its Memphis-Shelby County Room, said.

“They thought they could undercut TVA,” he said of the Eisenhower administration. “And Memphis absolutely refused. That’s why we built the Allen Steam Plant.”

Construction began in the summer of 1956 and Memphis formally left the TVA June 1, 1958.

The Memphis 200

The first unit at Allen began operation about a year later, providing about half of the city’s electrical power needs with the rest being bought from TVA.

But there were more complications.

As the other two units of the three units at what would become a 750-megawatt plant came online, the city had more plant than it needed at the time, despite the city’s late 1950s-early 1960s prosperity and growth that strained TVA’s resources.

MLGW’s night-time load, especially in the winter, would drop to 50 megawatts in a city where air conditioning in movie theaters was advertised and air conditioning in homes was still not common. Many businesses closed earlier than they do today and today’s suburban areas were still rural areas. Whitehaven was one of those areas outside the city limits and Frayser had just been annexed by the city.

Much of what is Memphis International Airport and the world’s second-busiest cargo airport was still farmland on the south side of Winchester Road.

“They would keep some power on the boilers and shut the turbines down and run just one turbine at 50 megawatts,” Crawford said of the city’s nighttime electrical grid. “That low-pressure turbine was the condenser unit that condensed the steam back to water, which was fed back to the boiler. At 50 megawatts, that steam would start condensing out before it got in the low-pressure turbine. It really wasn’t designed to run like that. It would just eat the turbine blades up.”

The Memphis 200: The final 20 entries

It was an expensive maintenance problem for MLGW that brought a Westinghouse engineer to the plant to talk with Crawford for two hours straight on one occasion.

By 1961, MLGW and TVA were talking about getting back together and negotiating the terms. MLGW rejoined in 1965, with the city leasing the Allen Steam Plant to TVA in what became a lease-to-buy arrangement with TVA using the power generated there not only for Memphis but for other parts of its system.

“They saved Light, Gas and Water. I don’t know how long we could have operated like that,” Crawford said of TVA’s decision.

He also thinks the utility’s long-term plan was probably to come back to TVA.

“Major Allen did not want to leave TVA,” Crawford said, referring to Thomas Allen. “I’ve always thought that Major Allen knew that one day TVA would take that plant over and buy it from us. Realistically, Light, Gas and Water couldn’t operate a plant like that. We didn’t have any other generation for a fallback except TVA.”

However, MLGW’s official history says the Allen plant was “the first step in a plan to wean MLGW from TVA power.”

Dowdy agrees with Crawford on the motivation.

“We were leaving TVA to save TVA,” he said. “I think the intention all along was to go back to TVA. But the way things were set up, TVA didn’t have a system in place to go through the plant if it wasn’t a TVA plant.”

Fast forward to 1999 and then-MLGW President and CEO Herman Morris was looking for a way to leave TVA and found the shoe was on the other foot 40 years later. That was after an MLGW study estimated the utility could save $120 million by dropping TVA.

“The problem that we had at that time was that while we could do a study that would tell us there were some benefits to leaving TVA, contractually and legally we weren’t able to do that,” Morris said last month at a public hearing on the current review process.

Morris is senior adviser to the environmental group “Friends of the Earth,” which is pushing for a change in electric power suppliers and toward the use of more renewable energy sources. The organization is not taking a position on a specific power wholesaler to replace TVA.

Morris said he and others at the utility at the end of the 1990s began lobbying for changes to the TVA board’s structure and began negotiating the re-signing of another long-term agreement with TVA that allowed the city to give TVA a five-year notice if it wanted to cut ties instead of the normal 10-year notice. That 20-year pact ran out in 2018.

Tough past negotiations position city well as TVA question reaches critical point

“Twenty years ago, we examined these questions and a lot of the same issues still resonate today,” he said. “We changed the contract terms so that we could get out without stranded costs.”

Stranded costs are TVA’s cost from investments it has made in infrastructure before a change in market conditions or regulations, including the $1 billion gas-fired combined cycle plant TVA built and opened two years ago to replace the nearby Allen Plant.

“And we changed the law so we could get access to alternative power sources,” Morris said. “Then we couldn’t but we made the changes necessary. Now we can and we should for the benefit of Memphis.”

Morris represents a change in civic attitudes about TVA in particular and public power in general, and TVA remains the standard bearer of public power.

The sentiment around public power that financed and got the Allen Steam Plant built has endured and lingered decades after the death of E.H. Crump in 1954 left his political organization with no designated heir.

“By that time, Memphis’ identity to some extent was tied up in TVA and the notion of public power,” Dowdy said of the city in the late 1950s. “It was as much, I think, of cultural importance as it was economic and power importance.”

Crawford is against leaving TVA, citing the new Allen combined cycle plant that retains the name of the Memphis Power and Light board chairman and the value of an 80-year relationship.

“It looks like a slap in their face to me to invest all of that right here on our doorstep, which guarantees us an adequate supply of power, and then we are going to have to leave them,” he said.

But that doesn’t mean Crawford is opposed to examining the options and even trying to bargain with TVA.

“One thing that could come out of this, you may pick up some perks with them thinking you might leave that you hadn’t seen before,” he said.

More than 60 years after the 1958 exit from TVA, a dependence on electric power suppliers who are part of MISO charging market rates — long-term or short-term — gives pause to some involved in the upcoming decision.

It is the reason the Integrated Resource Plan setting parameters for the proposals from rival suppliers to TVA recommends that MLGW generate some of its own power by renewable sources or gas-fired plants or some combination of both.

The utility made a more general bid to effectively hedge its reliance on TVA in the late 1970s by buying a natural gas field in Monroe, Louisiana, in an ambitious $700 million coal gasification plant project.

The price tag alone made it a controversial foray and even more controversial when MLGW formed a division to oversee it and other energy production projects.

The division was shut down and the gas field sold in 1984 in a move by the utility to get back to the basics of the business, which didn’t include power generation. That was the same year that TVA made the last payment in its lease-to-purchase arrangement with MLGW for the original Allen Plant.