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TVA, Utilities Settle Lawsuit

Fortnightly Magazine - October 1 1997

Five utilities suing the Tennessee Valley Authority for allegedly making electric sales to unauthorized third parties for resale outside its service territory have agreed to a joint settlement.

The settlement calls for TVA only to sell or deliver power to authorized exchange power companies. TVA agreed not to knowingly enter any exchange power transactions if the purchaser buys that power intending to resell it at wholesale to an unauthorized entity. TVA will reiterate its contract requirements with its exchange power companies. Finally, TVA agreed to make available information concerning those companies receiving exchange power from TVA.

Duke Power, Entergy Mississippi, and Southern Co. subsidiaries Alabama Power, Georgia Power, and Mississippi Power agreed to the settlement. It is subject to approval by Federal Judge U.W. Clemon.

The lawsuit, filed in U.S. District Court in Birmingham, Ala., had alleged that TVA engaged in sham transactions with East Kentucky Power Co-op., Louisville Gas and Electric Co., and Cinergy Corp., by using them to "launder" power. Seventeen neighboring companies are authorized to purchase TVA power under a 1959 act prohibiting TVA from selling power directly or indirectly outside the Tennessee Valley region. While the three utilities named in the lawsuit are authorized to purchase power from TVA, the lawsuit alleged that the electric merely is passed through them to other buyers.

An 'exchange power' provision in the 1959 Act allows TVA to continue exchange power transactions with utilities based on contracts established in 1957. The exchange provision is intended to maintain the reliability of the power system of the region. t

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