TACIR approves report on TVA payments-in-lieu-of-taxes; staff seeks distributor disclosure

The Tennessee Advisory Commission on Intergovernmental Relations on a voice vote approved a commission staff report on Tennessee Valley Authority payments in lieu of taxes (the TVA “pilot”), covering federal fiscal year 2023–24 and estimates for federal fiscal year 2024–25.

Senior research associate Jennifer Arzate presented the report and said it was prepared in response to Public Chapter 1035, Acts of 2010, directing the commission to monitor changes in TVA’s wholesale power distribution that could affect the pilot. "For federal fiscal year 23, 24, TVA's actual pilot totaled $588,000,000 of which $394,000,000 were paid to Tennessee's governments, including $3,400,000 in direct payments to counties," Arzate said. She said FY 2024–25 payments to TVA are estimated to total $600,000,000, with Tennessee’s share estimated at about $405,000,000.

The report identifies three factors affecting the pilot: contract provisions that let distributors buy renewable energy from non‑TVA sources (148 of 153 distributors have such provisions), a 4.5% wholesale base rate increase effective Oct. 1, 2023 combined with the end of pandemic‑era credits, and a TVA board‑approved 5.25% base rate increase effective Oct. 1, 2024. Arzate told commissioners that credits claimed by distributors purchasing non‑TVA power had, as of December 2024, exceeded the otherwise owed payments in Tennessee and resulted in no payments being required from those purchases in the most recent reporting period.

Commission staff offered no formal policy recommendation but said, "for purposes of monitoring compliance with Public Chapter 1035, the commission finds it would be beneficial for TVA to provide the Tennessee Department of Revenue a list of distributors purchasing power from non‑TVA sources." The commission approved the report by voice vote; the chair recorded the motion and the measure "carries."