Bowling Green Municipal Utilities’ board approved a 20-year evergreen contract Monday with the Tennessee Valley Authority.
TVA’s board recently decided to temporarily suspend further wholesale rate increases and offer a 3.1 percent partnership credit to any customer that agrees to sign the automatically-renewing contract. BGMU will be bound to TVA for 20 years beyond the day it announces it wants to end the contract.
Though the contract was unexpected and created “anxiety,” BGMU General Manager Mark Iverson said the contract was likely the best long-term solution for the utility.
“They’re making billion-dollar decisions every year ... and it takes 20 years essentially to pay those off,” Iverson said. “Seventy percent of their load have five-year termination notices.”
The BGMU board voted 4-1 in favor of the contract.
Board member Todd Davis offered the only dissenting vote.
While Davis said he supports TVA’s public power model “100 percent,” he posited that five presidential elections could change the energy landscape.
“I think the status quo is the best long-term solution,” Davis said, referring to BGMU’s current five-year termination contract. “The five-year program … makes more sense to me.”
Board member Sarah Glenn Grise asked about the potential for alternative energy sources.
With this new contract, in the next two years, TVA basically said 3 to 5 percent of its utility customers’ loads could come from distributed energy resources, such as a community solar project. But since the language is vague, Iverson isn’t sure about BGMU’s possibilities for such an effort.
Iverson said there will need to be clarification on certain aspects of the contract, but the overall financials seem sound.
When discussing the contract with another utility manager, Iverson concluded that whether they remain with a five-year contract or select the 20-year contract, their “only real leverage is politics,” he said, suggesting that BGMU will be making the best of the situation it’s dealt.
During the meeting, BGMU also approved measures to increase its data storage capacity, update its continuing contract with T-Mobile to use the downtown water tower as a cell tower site and replace about $22,000 worth of cast iron pipes under Main Street that will be affected by the downtown renovation project with PVC pipes.
And, due to the approval of the TVA contract and the impending credit, BGMU will be rescinding the rate increase it planned to implement in October.