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    City got multiple bids on electricity supply


    January 26, 2022 - Samuel Hardiman

     

      Twenty-plus companies submitted bids on Memphis' electricity supply, Memphis, Light, Gas and Water executives said last week. The myriad bids signal there's strong private sector interest in selling electricity to Memphis and Shelby County.

      Alonzo Weaver, MLGW's chief operating officer, said in an interview last week that the city-of-Memphis-owned utility received more bids than expected.

      The companies bidding were either giving prices on building Memphis natural gas plants, solar farms or some other form of electricity.

      Weaver declined to provide a breakdown of the bidders – how many offered natural gas bids and how many offered proposals for renewable energy. He said the identities of companies involved in the bidding process would remain closely guarded until MLGW makes a decision about finalists.

      "Once we look those over, and we'll say hey, look, either 1: 'It looks like we may have some opportunities there. And we need to go forward.' Or we'll say, 'hey, look, this is not working out money-wise.' And we could stop the process," Weaver said.

      The process Weaver speaks of is a long and complicated one. Since 2018, MLGW has examined whether it should leave the Tennessee Valley Authority, which supplies the utility with all of its electricity.

      Numerous studies, including several paid for by MLGW, have shown significant potential savings if MLGW left TVA and received most of its power from local solar electricity and local natural gas plants.

      The most substantive study – known as an integrated resource plan – estimated savings between $100 and $120 million per year for MLGW. The utility pays TVA about $1 billion annually for electricity.

      The bidding process that is now underway is designed to confirm whether those projections stand up in the marketplace.

      The 20-or-so companies that submitted bids on Memphis' electricity are sending bids on how much it would cost to build the natural gas plants, local solar farms and whatever else the private sector has to offer.

      The bids will be evaluated over the next several weeks. Weaver said MLGW would receive answers on questions it sent to bidders in early February, getting clarity from some potential finalists.

      "And we'll try to see if what we received either confirms or is close to what the IRP suggested we might get. And there's a lot into that. There's some modeling that has to take place. There's ...various analysis that has to take place. We need to make sure that these entities have the capabilities to do what they say they can do – that the cost is in line; the risk profile is in line. And that the reliability is in line," Weaver said.

      Weaver said the utility received more bids than expected because it opened the process to more than just natural gas and renewable electricity. He declined to say what type of electricity companies submitted bids for that weren't natural gas or solar.

      The utility is still waiting on bidders to submit bids on building transmission lines that would connect Memphis with Mississippi and Arkansas transmission lines. Those are due Feb. 4.

      Transmission lines and electricity sources are the key pieces of infrastructure needed for Memphis to leave the Tennessee Valley Authority. It is not the only step, however. As part of leaving TVA, MLGW would join what is known as the Midcontinent Independent System Operator otherwise known as MISO, which covers most of central North America.

      MISO is an electric grid transmission network that also has an energy marketplace – connecting power providers with entities that need electricity. MLGW, and Memphis, would generate most of its power locally and it would buy power from MISO's marketplace as needed. The power would come in over the newly constructed transmission lines.

      Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal.

      He can be reached by email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman.

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