Dive Brief:

Five Alabama environmental groups filed a suit against Tennessee Valley Authority (TVA) on Thursday over the utility's new rate structure. The groups allege the charges discourage renewable energy adoption and energy efficiency measures.

The groups claim the utility's new rate designs dissuade distributed energy resource (DER) investments by reducing electricity rates for large commercial customers, imposing a grid access charge and reducing electricity costs for consumers who use more electricity. The moves "obstruct DER adoption" and "maximize the amount of electricity customers continue to obtain from TVA," the groups said.

Plaintiffs also allege that TVA bypassed the National Environmental Policy Act (NEPA). While the utility claims to have found no significant environmental impact brought on by the rates, the groups say the considerable adoption of carbon emitting resources, rather than customer-sited renewables, will cause "significant environmental impacts."

Dive Insight:

TVA joins a swath of utilities "fighting back against energy efficiency and renewable energy," seen as a "threat to their traditional business model," Daniel Tait, technical director of Energy Alabama, one of the plaintiffs in the suit, told Utility Dive.

The complaint centers around both the nature of grid access fee itself and the "substantial environmental harm" the fees will cause.

The environmental groups claim the rates remove the economic advantage of DER investment by lowering rates for large commercial customers. TVA's new structure also dictates a grid access charge requiring local power companies to charge a fixed fee regardless of usage and discount rates for higher levels of usage. Environmental advocates claim both would lower the advantages otherwise available through DER adoption.

However, TVA maintains they "don't play favorites" when it comes to charges. They want to ensure everyone "pays their fair share" of the electricity necessary to power the grid, even if that person is choosing to invest in DER, Jim Hopson, public information officer at TVA, told Utility Dive.

"We want to ensure that those who are using 24 hours of power aren’t essentially incentivizing or supporting those who are only using the power a certain amount of times," said Hopson.

TVA is a federal agency whose board of directors are chosen by the President and confirmed by the Senate, meaning they are not beholden to a Public Utilities Commission, as other utilities are. Tait says the groups took their complaints to the board, but the lawsuit is "really the only avenue" to protest the charges, and they've noticed more regulators are becoming "skeptical" of these charges.

"In a large swath of the cases we've seen in utilities across the country, where utilities ask for, in some cases, just patently absurd raises to their fixed fees, regulators are starting to not reward those, or only reward a small portion of them," said Tait.

He adds that he hopes this suit will set an example for the industry and discourage utilities from adopting similar rate charges which "will have substantial environmental harm."

The Center for Biological Diversity, Energy Alabama, Friends of the Earth, Gasp and the Southern Alliance for Clean Energy are all plaintiffs in the suit. The case is filed in the U.S. District Court for the Northern District of Alabama.