Dive Brief:

A U.S. district court judge has denied Tennessee Valley Authority's (TVA) motion to dismiss a lawsuit challenging its new rate structure and grid access charge, rejecting the utility's arguments that the plaintiffs lacked standing to bring the suit.

TVA in 2018 made changes to its rate structure, lowering energy costs and adding a grid access charge the utility said helps ensure customers with distributed generation pay their fair share to support the grid. TVA said the new rates were financially neutral for its bottom line.

Five Alabama environmental groups alleged the charges discourage renewable energy adoption and energy efficiency measures. According to the lawsuit, the groups said TVA's new rates will have an environmental impact, and the utility had not completed a full Environmental Impact Study.

Dive Insight:

TVA had argued the group didn't have standing to challenge the federal utility's rates, but Monday's decision by U.S. District Court Judge Liles Burke means the case can go forward.

"While it is certainly true that the plaintiffs' claims require speculation, that is not necessarily fatal at the motion-to-dismiss stage," Burke wrote in his ruling.

"We believed plaintiffs in this case did not have legal standing to challenge, but obviously the court felt different," TVA spokesman Jim Hopson told Utility Dive. "It is important to note the court decision is not a ruling on the plaintiffs' case itself. We look forward to prevailing."

The lawsuit was brought by the Center for Biological Diversity, Energy Alabama, Friends of the Earth, Gasp and the Southern Alliance for Clean Energy.

In their suit, the groups say TVA's new rates are "designed to discourage the development" of distributed energy resources in three ways: Reducing rates for large commercial customers, imposing a grid access charge and discounting the price of electricity for greater electricity usage which they claim discriminates "against consumers who consume less energy or who implement energy efficiency measures."

The grid access charge also maximizes "the amount of electricity customers continue to obtain from TVA," much of which comes from coal-fired plants, according to the groups.

Hopson said the changes are appropriate "in an era where more customers are deciding the generate at least some of their power, and be backed-up by the grid." The grid access charge means "everyone that benefits from 24-7 power pays their fair share of maintaining the system," he said.

The court's decision means the lawsuit will now proceed in the U.S. District Court for the Northern District of Alabama. "The case moves onto the merits now and will eventually lead to motions for summary judgment," Jean Su, an attorney for the Center for Biological Diversity, told Utility Dive in an email.

The judge noted that the plaintiffs alleged the "impending environmental damage are fairly traceable to TVA’s new rate structure."

"Of course, the plaintiffs will ultimately have to offer evidence to prove each link in their alleged chain of causation. However, at this early stage, the Court must accept their allegations as true," Burke wrote. "In doing so, the Court finds that the complaint alleges sufficient facts that, if true, would demonstrate the requisite causation."