How one Va. city squeezed through the cracks
Tennessee Valley Authority Chair Craven Crowell told the Tennessee Valley Public Power Association annual meeting in May: "We need to make sure our customers get the best prices and best service available in the electric power industry." But one customer's attempt to get lower prices has been 10 years in the making (em and TVA won't be selling to them for much longer.
Earlier this year, the Bristol, Va., Utility Board voted to end a tradition of 45 years of wholesale power purchases. Bristol is the first of the TVA's 160 wholesale customers ever to leave the system, although others (em including its sister city, Bristol, Tenn. (em have tried.
To save money, the city council and utility board evaluated 19 responses to a request for bids, and in February unanimously approved an all-requirements contract with Cinergy Corp. of Cincinnati. The contract will begin in January. The city's contract with TVA expires Dec. 31.
The municipality expects to save $70 million over the life of the new seven-year contract with Cinergy. That translates into projected rate reductions of 14 percent for residential customers. Savings for commercial and industrial customers will depend on usage volumes. Bristol's largest industrial customers, which already receive "economy surplus power," will see a slight rate reduction, and will benefit by having firm transmission of their total power requirements.
So how was the Virginia muni able to leave the federal system? Ultimately, it took a congressional amendment releasing the city (without mentioning it by name) from TVA's exemption to the Energy Policy Act of 1992. When Bristol first approached TVA about their desire to purchase a block of cheaper power for a new industrial park from a neighboring utility, they got nowhere. Then TVA offered $7 million in benefits, plus lower rates for the new industry. The sticking point? A rolling contract that would require the city to give 10-year notice of cancellation.
According to TVA representative Frank Cason, TVA's distributors all have signed long-term "evergreen contracts." For the past eight years TVA also has had a "growth credit program" that allows for special rates if an industry moves to or expands in a distributor's territory, he said. It is "typical for people to look at their situation and check out other suppliers," Cason added. "We've had that over the years, and they've all come back to us." t
Lori M. Rodgers is an associate editor of PUBLIC UTILITIES FORTNIGHTLY and editor of PUR's Energy Buyers Advisory.
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