Federal regulators’ vote continues TVA’s monopoly over transmission lines

In 1959, Congress passed legislation that prohibited the Tennessee Valley Authority from selling or delivering power to customers outside the area for which it was the primary source of power. The decision has allowed TVA to operate without competition for decades in the federally-defined geographic area of transmission lines known as the “fence.”

Earlier this year, three local power companies challenged this notion with a complaint to the Federal Energy Regulatory Commission. Volunteer Energy Corp., Athens Utilities, and Gibson Electric Membership Cooperative alleged that TVA is violating the Federal Power Act, which is supposed to prevent anticompetitive behavior by utilities that seek to stifle competitors’ generation through control over transmission.

Basically, the companies want the option to leave TVA and generate their own electricity or purchase less expensive renewable power elsewhere while using TVA’s transmission lines and avoiding the cost-prohibitive obstacle of building their own transmission lines. (These companies and other TVA customers, most notably Memphis, Light, Gas and Water, have not signed TVA’s 20-year contracts.)

“I believe the time has come for Congress to bring down the TVA fence and enable more competitive energy markets to finally develop in the region,” FERC chairman Richard Glick said during the commission meeting on Thursday.

But Glick denied the complaint. Commissioner Allison Clements was the only dissenting voice.

“I dissent because the Commission has the authority to grant Petitioners’ request for transmission service … and because granting their request would be in the public interest,” Clements wrote in the ruling. “Granting the petition would provide the customers of the relevant not-for-profit cooperative and municipal utilities access to lower-cost power than TVA currently provides them with, supplying a modicum of competition and its associated benefits to the region.”

Clement also noted that TVA did not persuasively show that opening their grid would significantly impact its customers — and it might even help by “providing impetus for TVA to more efficiently serve customers.”

Environmental groups said the ruling will have repercussions for climate action and energy justice.

“FERC just blew an opportunity to set an important precedent and give TVA power companies options for cheaper, renewable power and lower rates for customers, and begin breaking our fossil-fuel addiction,” Gaby Sarri-Tobar, of the Center for Biological Diversity, said in a statement.

Amanda Garcia, director of the Southern Environmental Law Center’s Tennessee office, said she hopes this situation will encourage further action.

“Even though the commission elected not to grant relief in this case, the petition has brought much-needed attention to TVA’s policies that limit options for local utilities and ratepayers who want access to cheaper, cleaner, and renewable power,” Garcia said.

TVA applauded FERC’s decision.

“FERC’s action is consistent with our view that the public power model created by Congress best serves the public interest,” TVA said in a statement. “The public power model works. We look forward to continuing to work with all of the local power companies to advance our unique, shared mission of service.”