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TACIR approves report on TVA payments in lieu of taxes, recommends distributor list for state revenue monitoring
Summary
The Tennessee Advisory Commission on Intergovernmental Relations approved its annual report on Tennessee Valley Authority (TVA) payments in lieu of taxes and asked TVA to provide the Tennessee Department of Revenue a list of distributors buying power from non‑TVA sources to improve monitoring under Public Chapter 1035 (2010).
The Tennessee Advisory Commission on Intergovernmental Relations approved its annual report on Tennessee Valley Authority payments in lieu of taxes and its distribution to the state and local governments.
The report, presented by Senior Research Associate Jennifer Arzate, covered federal fiscal year (FFY) 2023–24 actual TVA pilot payments and estimates for FFY 2024–25. Arzate told commissioners that TVA’s pilot totaled $588,000,000 in FFY 2023–24, of which about $394,000,000 was allocated to Tennessee governments, including roughly $3,400,000 in direct payments to counties. Estimated payments for FFY 2024–25 were presented as $600,000,000 — an increase driven by TVA base rate increases, the end of pandemic-era credits and higher sales volume, partially offset by lower fuel costs.
The report explains Tennessee’s share rose to 67.5% of TVA’s overall payments because of increases in the state’s share of TVA power revenue and the value of TVA power property. For Tennessee’s state fiscal year 2024–25 allocations the staff noted mixed changes: state agency allocations increase while some county and city allocations (excluding impact payments) decrease because more counties now host TVA construction and therefore receive impact payments. Arzate summarized: “For a quick overview of the pilot distribution, please see table 1 on page 4,” and she directed commissioners to appendices for calculation detail.
While staff offered no formal policy recommendations, the commission added a monitoring suggestion: ask TVA to provide the Tennessee Department of Revenue a list of distributors that purchased power from non‑TVA sources. The report notes that many wholesale contracts allow distributors flexibility to obtain renewables from non‑TVA suppliers; under Public Chapter 1035 (Acts of 2010) power purchased from non‑TVA entities is subject to equivalent payments, but credits for other taxes can reduce or eliminate those payments.
The chair moved approval and, after a voice vote, the report was carried.
The approved report and supporting appendices provide county‑level allocations and further explanation of methodology; commissioners directed staff to continue monitoring factors that affect TVA’s pilot revenues and distributions.
