Memphis Light, Gas and Water took another step away from the Tennessee Valley Authority last week as staff recommended the utility issue its first ever request for proposals for new energy sources.

MLGW staff made the recommendation to its Board of Commissioners at a Wednesday meeting after conducting a yearlong review of resource alternatives to TVA.

The utility could begin the RFP process in October, with approval from its board and the Memphis City Council. The MLGW board and the city council meet every two weeks. Neither entity has announced an intention to hold a vote on the matter.

MLGW President J.T. Young announced that the utility will hire a consultant to help manage the bidding process. Young was also clear during the meeting that MLGW had not yet decided whether it would depart TVA.

Earlier this year, the city-owned utility said it was eyeing MISO membership or joining another wholesale supplier as a more economic alternative to TVA, its electricity provider for 81 years. (See Memphis Muni Mulls Move to MISO.)

MLGW currently accounts for about 10% of TVA load and pays about $1 billion a year for power. To split with the federally owned corporation, Memphis would likely procure some of its own resources and look to a new wholesaler for the rest. MLGW doesn’t currently generate any of its own electricity.

“This historic decision sets up MLGW to provide more value to customers in Memphis and be a national leader on clean energy,” Southern Alliance for Clean Energy (SACE) Executive Director and MLGW adviser Stephen Smith said in an emailed statement. “By seeking bids on alternative power supplies, the people of Memphis … will lock in lower-cost and cleaner, more efficient energy, giving Memphis more control of its own future. This also serves as a significant ‘shot across the bow’ to TVA that MLGW is setting the stage to break loose from TVA’s dictatorial long-term contract arrangements.”

An MLGW-commissioned Siemens study found that certain combinations of self-supply and MISO wholesale market offerings could save Memphis about $150 million per year from 2025 to 2039, while cutting carbon emissions by as much as 50% by 2030.

TVA said it “respects and supports” the utility’s decision to explore an RFP from alternative suppliers, though it touted itself as the better option over self-supply and the markets across the Mississippi River.

“We are excited about the opportunity to engage in the RFP process — to put the facts on the table — and prove that TVA in partnership with MLGW is the best option for the people of Memphis and Shelby County,” TVA said in a statement. “When it comes to energy costs, Memphis starts from a position of strength. In partnership with TVA, MLGW today provides the third-lowest energy costs in the nation among its peers. TVA’s commitment is to keep energy costs stable over the next decade.”

MLGW said its electricity rates are competitive when compared to other major U.S. cities.

Citizens have said a parting with TVA would bring desperately needed affordable energy to Memphis, where about a third of its residents live at or below the poverty line.

“In the past, and especially now during the COVID-19 pandemic, I see parents being forced to decide between paying to keep the lights on or buying medicine or shoes for their kids. That’s not how it should be in the future, when Memphis buys or produces its own power and takes control of its own power supply,” Pearl Eva Walker, an organizer with grassroots social justice group Memphis has the Power, said in a press release.

SACE has recommended that MLGW issue two RFPs: one for a large-scale energy-efficiency program on a five-year horizon, creating savings as the municipality navigates leaving TVA, and another for clean resources and supporting infrastructure beyond a five-year horizon.