The possibility of a long-term contract among the Tennessee Va

The possibility of a long-term contract among the Tennessee Valley Authority, its Mississippi power distributors and the private-sector Phillips Petroleum Company looks, at first glance, like a great economic boon for the state.

However, underneath the optimism associated with a proposed $500 million lignite-burning power plant in Choctaw County near Ackerman is a layer of caution. Some who lead the 28 power distributors in Mississippi affiliated with TVA believe a proposed 15-year contract is too long measured against two major factors: The potential for finding cheaper and/or better power sources and a possible nationwide change in the way power is bought and sold among the nation’s utilities, including TVA. A 15-year contract means that if a local distributor wanted to cancel its contract with TVA it would be 15 years from the day of notice before the contract expires. The normal length si 10 years.

The potential for Mississippi, especially Choctaw and surrounding counties, of course is definitely attractive. It would provide a huge capital investment, with the probability of Mississippi committing between $30 million and $50 million in bonding authority to underwrite new roads, sewer lines and water systems.

The sticking point seems to hard information on key points. TVA is committed at the level of the board of directors and other top executives, with the caveat that all Mississippi distributors must sign on and share the risk. The authority refuses to release price information, even to distorbutors. It cites competition as the reason.

TVA’s priority commitments also include a perpetual obligation to its consumers to produce or buy power in the most affordable and effective way. It never has bought power from what it calls an Independent Power Producer, which is what Phillips would be.

A highly placed TVA official said Monday he has been assured TVA would not commit to any contract that would harm consumers, but he said no contract price exists and no letters of intent have been sent by TVA and Phillips. The hesitancy of some local power distributors like Tupelo Water and Light Department to accede to TVA’s request for a 15-year contract becomes clearer in light of that information. TVA wants distributors in Mississippi to share the risk before it knows fully the costs. If the risk is worth taking, why not ask all 160 TVA-affiliated power distributors to share the costs since the contract presumably would be to the benefit of the entire TVA system?

The proposed Choctaw County project needs more facts put before the public. The Legislature needs more information before it commits a major bond issue. TVA need to show its customers why and independent power contract with the details fully exposed is in the consumers’ best interests.

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