NASHVILLE, Tenn. -- A federal judge has dismissed a lawsuit by environmental groups that challenged how the nation's largest public utility signs up local power providers for two-decade contracts.
On Wednesday, a ruling by U.S. District Judge Thomas L. Parker in Memphis sided with the Tennessee Valley Authority, agreeing that the environmental groups don't have legal standing. The judge also found that TVA “acted reasonably” under a law requiring it as a federal agency to assess environmental effects of major projects before making decisions.
The lawsuit filed in August 2020 argued that 20-year deals signed by most of TVA’s customers lock the power distributors into exclusive contracts with the TVA and “will forever deprive distributors and ratepayers the opportunity to renegotiate with TVA to obtain cheaper, cleaner electricity,” according to the Southern Environmental Law Center, which filed the suit for three plaintiff groups.
The judge, however, agreed with TVA that the groups — Protect Our Aquifer, Energy Alabama and Appalachian Voices — have no standing to sue for a variety of reasons, saying in part that they “have not shown a particularized, imminent environmental injury.”
Additionally, Parker wrote that TVA did not violate the National Environmental Policy Act, either. The law “does not require review of every major federal action,” but only those closely related to causing environmental changes, the judge said.
The judge wrote that the environmental groups' arguments are resolvable by congressional lawmakers, not the court system.
TVA commended the decision, saying 147 of 153 local power companies have signed long-term agreements, while arguing they help keep TVA's power affordable, reliable and resilient.
"We are pleased with the court’s decision which affirms that TVA followed the law in offering the long-term agreement to local power company customers," TVA spokesperson Scott Brooks said in a statement.
The Southern Environmental Law Center, meanwhile, said it is evaluating its legal options after the ruling.
“We are disappointed the court ruled against this challenge to TVA’s never-ending contracts," Amanda Garcia, the Southern Environmental Law Center's Tennessee office director, said in a statement. “These highly restrictive contracts make it essentially impossible for TVA customers to have meaningful negotiations with the federal utility.”
The issue has sprung up prominently in Memphis, Tennessee. The utility company there announced in December that it rejected a 20-year contract with TVA, but will remain the power provider’s largest customer for the “foreseeable future.” It stuck with its five-year rolling contract.
The environmental groups argued that the deals hurt the ability of local power companies to seek out and use renewable power such as solar energy from sources outside the TVA. The deals replaced existing agreements of varying lengths, or followed expiring ones. Contracts require a 20-year notice to terminate, and they renew each year.
Garcia has argued that the notice-to-terminate provision made the contracts “never-ending,” and violate TVA’s own rules that its contracts with power companies should not last longer than 20 years. The deals carry a 3.1% monthly rebate on wholesale power rates that local companies could pass on to their customers, or use to invest in infrastructure, TVA has said.
The deals also allow local power companies to seek up to 5% in acquired renewable energy, which TVA says could help them meet their energy needs. But the groups say that percentage is too limiting.
TVA provides power to millions of people in parts of Tennessee, Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.