The TVA Effect: Clean Energy Goals & Public Power

Abstract

The Biden Administration has challenged the United States to reach 100% carbon-pollution free electricity by 2035, and many investor-owned electric utilities (IOUs) and states have set similar goals. IOU pledges have received the bulk of scholarly and media attention, even as some scholars argue that the public power model is better at achieving the necessary transition to carbon-pollution free electricity. These government-owned entities—including federal power agencies like the Tennessee Valley Authority (TVA), rural electric cooperatives, and municipal utilities—are rarely subject to Federal Energy Regulatory Commission (FERC) or state public utility commission oversight. But scholars have argued that the public ownership of these entities may make them more responsive to customer interests and, in turn, more likely to embrace the clean energy transition.

This paper considers the broader question of public power entities’ ability to drive the clean energy transition through an examination of clean energy goals in the TVA fence line. TVA maintains a monopoly over electricity generation and transmission in its service territory. For the 153 public power companies to which TVA provides wholesale electricity, achieving clean energy goals largely depends on TVA’s decisions about generation and permissible alternative sources of wholesale electricity.

This paper examines TVA’s effect on clean energy goals within the TVA fence and how interpretation of the TVA Act and other federal laws have given TVA control over the energy transition in the region. TVA’s congressionally granted market monopoly has constrained LPCs’ influence over the regional power supply. TVA itself has not set decarbonization goals in line with national ambitions, and LPCs in its service territory have pursued clean energy primarily through one-off projects. Similarly, few cities in the region have set goals for clean energy, despite demonstrated interest in climate change mitigation. The combination of TVA’s slow decarbonization, the potential chilling effect of state regulatory environments, and LPCs’ small influence over generation and transmission may be limiting LPC and local clean energy commitments. Comparisons to similarly situated local governments and utilities outside the TVA region highlight the likely inhibitory effect of TVA’s policies on clean energy ambitions. Policy changes to address the barriers to clean energy uptake that TVA has created and to foster greater LPC control of the energy supply could encourage more robust clean energy goals within the TVA fence line

Keywords: Tennessee Valley Authority, TVA, public power, energy law, climate change, clean energy, renewable energy, local power companies, LPCs, Tennessee, decarbonization, solar power,