Alexander Says Energy Amendment is a Tax on Cities in the TVA Region

Tennessee Electricity Distributors Say Tennesseans Could Lose Billions

Posted on June 14, 2007

U.S. Senator Lamar Alexander and several Tennessee Valley utilities today said a Senate energy proposal amounts to a huge new tax on the citizens of Tennessee’s largest cities. Alexander said a new study shows the amendment now being considered by the Senate could cost Tennesseans $7.1 billion by 2030. “This proposal is nothing more than a new electricity tax on the ratepayers in the Tennessee Valley,” Alexander said. “This tax discriminates against electricity customers from Memphis to Knoxville. We ought to be focusing on energy plans that reduce emissions instead of imposing fines.” The Nashville Electric Service, the Chattanooga Electric Power Board (EPB) and the Knoxville Utilities Board (KUB) submitted letters Wednesday to Senator Alexander saying a proposed renewable energy standard would have an enormous financial impact on Tennessee communities. The Nashville Electric Service said the standard would lead to a two-cent per kilowatt hour tax hike, costing costumers in Davidson County and the Nashville-area $276 million by 2020. “Unlike those states that have the most abundant resources of renewable energy, and who are favored by the Bingaman Amendment, we in Tennessee and the TVA region do not have abundant renewable resources available to us,” the letter states. In the EPB letter, Harold DePriest, EPB’s President and CEO, writes that the proposed amendment would force its customers in parts of five counties to pay an additional $133 million between 210 and 2020. “The frustrating part of the Bingaman Amendment, if enacted into law, will be the injustice imposed upon our community,” the letter states. “In effect, we are penalized and penalized significantly, simply because of geography.” Mintha E. Roach, the President and CEO of KUB, said, under its TVA contract, KUB cannot develop its own renewable resources or buy renewable energy from a non-TVA supplier. “There simply is no way for us to comply with the new standard,” Roach writes. Tennessee is one of 27 states that would not meet the Renewable Portfolio Standard (RPS) proposed today by Senate Energy Committee Chairman Jeff Bingaman (D-NM) as an amendment to the energy bill now before the Senate. Senator Bingaman's amendment would mandate that 15 percent of energy come from renewable sources by 2020, such as wind, or that utilities pay a penalty for failing to meet that goal. Citing that Tennessee does not have abundant sources of such renewable energy as wind, all three utilities said in their letters that they could not achieve the amendment’s requirements. Furthermore, Huntsville Utilities in Huntsville, Alabama estimates that the Bingaman amendment would cost $4.2 million in 2010, $8.8 million in 2013, $14.1 million in 2017, and $19.8 million in 2020. “The total impact of the amendment for Tennessee could reach $7.1 billion, according to a study released Wednesday by the Edison Electric Institute,” Alexander said. “This staggering number makes clear that states like Tennessee can’t handle the financial burden of such a proposal.” # # #