TVA may sue for breach of contract

A recent communication from the Tennessee Valley Authority has indicated the regulatory agency may sue the Holly Springs Utility Department (HSUD) if it does not cooperate with the agency to clear up a list of TVA complaints and unresolved answers to questions about the accuracy of financial reports to the agency as well as unmet audit requirements.

The discussion followed a request again by Mayor Sharon Gipson for the Holly Springs Board of Aldermen to retain Blackmon & Blackmon law firm in Jackson to represent the city before the Public Service Commission or before the Legislature.

The PSC could go to court to seek the reduction of the HSUD service boundaries if it deems service is not satisfactory to its electric power customers.

After Gipson received no motion to retain the Jackson law firm, discussion was initiated by Ward I alderman Bernita Fountain, who asked board attorney John Keith Perry Jr. about a communication from TVA regarding its concerns relative to financial reports and a list of concerns presented over a year ago.

The aldermen did not receive a copy of the letter.

Perry said he believes Blackmon & Blackmon is an excellent firm and he would leave it to the discretion of the board of aldermen as to whether or not to hire them.

Gipson confirmed the city did receive a certified letter from TVA as well as some of the issues it has with the utility. “Is there a motion,” Gipson repeated.

Fountain was first to speak to the issue of the letter.

“Do we know the details?” she asked. “So as the attorney for the city, would you recommend to retain them at this time for services after receiving this letter?”

Perry laid out what he would recommend.

“Now you have hired a general manager to at least look at what’s going on in the affairs of the utility district,” he said. “I think there has been a timeframe that needs where you have to get the information together that they (TVA) are asking or there is going to be litigation of some sort if they don’t have what they are asking for.

“Our position is that it varies. Some people say there is no contract that is valid. If they are going to review that, something like that, I would think it might be a smart engagement limited in scope. Because right now, if you are, in essence, picking litigation or starting litigation while not necessarily in compliance with what we should be providing, then, I don’t know if that’s wise, money wise.

“You’re basically writing a check to do an open check to do certain things in a timeframe. To be clear, if there is going to be litigation that would be the the top firm I would recommend going with.

“But I know TVA knows you recently hired a GM (general manager) and to give him a chance at least to marshal the data together to see if some of the things on that check list could be complied with or whether or not we just need to go forward and say we gotta sue whomever. I don’t have access to the documents inside the building, so that would by my recommendation right now.”

“So, let the GM tell us,” Fountain said.

“Let him give a little time to get... “ Perry said.

Gipson disagreed with Perry on some of his statements.

“I do know they (TVA) have received something,” she said. “So attorney Perry used the word not in compliance, so I want to make sure that it is understood that we are in compliance with the government.

“We have never missed a payment to them; we have provided everything. And their assessment that they did said that the only thing that they can look at and refuse is whether or not they’re being fair to all ratepayers. And that we have complied.

“In addition to that, we still have provided information to them. Maybe not at the point or to the extent that they wanted. We have done several things they have requested including TVPPA which is a part of what they assaulted us with at the PSC.

“So I want to make sure that people do understand that the City of Holly Springs is in compliance.” Gipson referred to a bill that passed in the legislature that could result in the downsizing of the utility department’s service boundary.

“That is part of the reason for the request for hiring Blackmon & Blackmon,” she said.

Alderman-at-large Dexter Shipp confirmed that the letter from TVA to Perry included a statement of taking legal action if the city does not get in compliance with TVA’s request. He said the letter stated that TVA would consider it a breach of contract if the city does not comply with requests for information.

“I think it’s a little early and then we have a new GM in and we can work out a solution,” Shipp said.

Fountain said she thinks TVA wants the financial audits or she does not think TVA would still be pressing for compliance.

Fountain also thought the price for legal representation by Blackmon & Blackmon would be costly.

The firm wants $300 an hour and $250 an hour for paralegal work, she said.

“We don’t want to run up a big big expense prematurely,” Fountain said.