Advocates in Memphis, Tennessee want more time to decide who will replace TVA as their energy provider. Memphis, Light, Gas and Water is TVA’s biggest customer and has partnered with TVA for the last 80 years. Despite ranking second to Entergy, in total investments and utility job additions, renewal with TVA is not a sure thing and instead of 30 days to pick a vendor, SACE wants the public to have 60 days. Concerns were also raised about the long-term contract proposed and whether or not a 20-year contract would limit renewable options for the area. “MLGW’s decision on its future power supply is one of the most consequential single decisions that any community has made in the history of SACE’s (Southern Alliance for Clean Energy) work throughout the Southeast region over the past three decades. Billions of dollars, millions of tons of pollution, and most importantly hundreds of thousands of individuals’ quality of life are on the line with this decision,” said Stephen Smith, SACE executive director. A change this big could have a real impact on the success of the Southeast region.
In a ‘dumpster-fire market,’ it is still considered a safe bet to invest in utilities. This sector-at-large has returned 4 percent, including dividends, year-to-date (YTD). Utility success stories include Warren Buffett’s Berkshire Hathaway Energy (BHE). As of 2019, BHE serves 4.9 million retail customers and generates 29 gigawatts of power. The company’s earnings have risen 30-fold since Buffett bought the operation in 2000. A patient approach is credited for the company’s growth. If the business was publicly traded, it would be the second-largest in the U.S. in terms of market value. Jim Shanahan, an analyst at Edward Jones wrote in an email to Barron’s, “Most pure utilities target a (dividend) payout ratio of 60-70 percent of earnings. There is no such payout target for BHE, which enables the company to focus on utilizing available cash for investments in property, plant and equipment and for acquisitions.”
Is your utility making decisions to better ‘utilize available cash for investments?’ Are customers satisfied with the energy provider options they have?