TVA, neighboring utilities agree to cooperation, settlement of lawsuit

The Tennessee Valley Authority and three Southern Company subsidiaries — Alabama Power, Georgia Power, and Mississippi Power — along with Duke Power and Entergy Mississippi today jointly announced a new commitment to increased cooperation in the operation of their power systems, including settlement of a lawsuit pending between TVA and the plaintiffs.

The joint settlement is subject to approval by Federal Judge U. W. Clemon.

The lawsuit, filed last April in U.S. District Court in Birmingham, Ala., alleged that TVA was in violation of the TVA Act that prohibits it from selling power outside the area designated by Congress in 1959. When Congress gave TVA the authority to self-finance through the issuance of bonds in 1959, it prohibited TVA from making any contract to supply power directly or indirectly outside the Tennessee Valley region. An “exchange power” provision in the 1959 Act allows TVA to continue exchange power transactions with utilities with which it had arrangements as of July 1, 1957. The provision allows TVA and these utilities to maintain the reliability, integrity and efficiency of the region’s power system.

Under the settlement, TVA reaffirmed its policy of limiting its exchange power transactions to these utilities and has taken steps to ensure that the policy will be carried out.

As part of the joint settlement, TVA, the Southern Company subsidiaries, Duke Power and Entergy Mississippi agreed to begin discussions on ways to increase cooperation and communication and identify legislative and other issues that are of mutual concern as the industry prepares for deregulation.

The companies indicated that these steps are the first toward building a more cooperative relationship to benefit all in the region.