TVA, TVPPA report to Public Service Commission

A Wednesday, Jan. 31 public meeting [work session] held in Jackson by the Public Service Commission combed through reports by the Tennessee Valley Authority and Tennessee Public Power Association on the condition of the Holly Springs Utility Department’s electric system.

The reports have been published previously in The South Reporter. See dates of these issues at the end of this article.

During the public hearing, TVA reported HSUD’s shortcomings on the financial reporting by the company and other concerns of TVA, including management. TVPPA reported its findings of safety and management of the utility’s infrastructure - vegetation, lines, substations, and lack of professional staffing to maintain the upkeep and safety of the transmission system overall.

Those present and participating in the hearing included:

• Commissioners De´Keither A. Stamps, of the Central District; Chris Brown, Northern District; and Wayne Carr, Southern District.

• Melanie Farrell, TVA vice president, external strategy and regulatory oversight.

• Doug Peters, president and CEO of TVPPA.

• District 5 Rep. John Faulkner.

• Tom Suggs, engineer with 25 years at Middle Tennessee Electric and 13 years in Mississippi, and a Mississippi State graduate.

• Scott Hendrix, CEO, Tombigbee Electric.

• District 3 Sen. Kathy Chism.

Brown said the hearing was just to point out the facts.

“We are all partners…united to try to provide the best service we can to our communities,” he said.

Farrell said TVA, in its regulatory capacity, works with local power companies to ensure the financial health, service practice and management of electric systems operations, leaving local power companies (LPC’s) to make decisions for its customers.

TVA sets wholesale power rates, monitors LPC’s financial and accounting, and ensures ratepayers are provided safe, reliable and resilient power.

The City of Holly Springs owns HSUD and the mayor and board of aldermen oversee the company’s system, finances and operations.

In reviewing prior years of performance at HSUD, Farrell said the utility was in and out of TVA’s regulatory compliance for years 2012- 2019, resolved compliance issues in 2020, then was cited for delinquent reporting beginning in 2021 failing to turn in the external audit report for fiscal year 2021.

A weather event in April 2022 caused significant damage to HSUD’s system and TVA initiated a review of HSUD’s storm response due to a record number of customer complaints about outages.

In 2023, HSUD experienced a weather event causing significant damage to HSUD and the Mississippi Emergency Management Authority stepped in. TVA issued a storm review report to the City of Holly Springs in March 2023 and initiated a full financial compliance assessment of HSUD.

In August 2023, TVA shared a completed compliance assessment with City leadership. TVPPA completed a system assessment in September and October. In 2023, TVA hired an accountant to assist HSUD with delinquent reporting.

Widespread outages following a series of storms in 2022 prompted TVA to provide a Storm Recovery Report to the City, which included a list of 11 factors contributing to prolonged outages and 14 recommendations for improvement.

TVA urged the City to hire a professional general manager with electric system knowledge, create a storm recovery policy, and address long-standing issues with advanced metering infrastructure (AMI).

Farrell said TVA is very concerned the general manager’s position has been vacant for more than a year.

“Our efforts with HSUD have been largely unaccepted,” she said.

The Storm Recovery Report identified the need for a system assessment and TVPPA completed the assessment covered in this hearing.

TVA’s regulatory compliance assessment of the Wholesale Power Contract with the City identified areas of HSUD’s non-compliance with the contract, including concerns of the reliability of financial information provided to TVA, classification of residential/commercial accounts, retail credits, failure to disconnect accounts for nonpayment and noncompliance with an interdivisional loan agreement.

“A big concern of TVA is the lack of accurate financial information required by TVA,” Farrell said, including no submission of audits for years 2021, 2022, and 2023, and failure to submit an annual report to TVA due August 2023. “The goal is to be a partner with HSUD so they safely provide power in a financial and self-sustaining manner.”

Farrell said TVA is concerned HSUD may not be able to cover its expenses.

TVA received $500,000 from the State of Mississippi to pay for and assessment of HSUD’s operational system and for right-of-way maintenance.

Farrell said disbursement instructions were provided to HSUD on Dec. 5 and again on Dec. 12, 2023, but received no requests from HSUD to disperse the funds as of Jan. 23, 2024.

Commissioner Stamps said the hearing was called “not to beat up on the utility system, but to ensure the ratepayers get the power they deserve - to be an advocate for the ratepayers.”

Rep. Faulkner said HSUD employees have been met with quite a few challenges.

“TVA pointed out what is happening in Holly Springs had never happened before,” he said. “What we’re seeing in Holly Springs is something quite different. I hope we don’t make a hasty decision right now. Let’s not throw the baby out with the bathwater.”

Brown asked if TVA regulates the daily decisions at a local power company.

“It does not,” Farrell said.

Brown asked, out of 153 local power companies in seven states, has any other LPCs had this many issues.

“None,” Farrell said.

She said the situation at HSUD is in unchartered territory, specifically on the operational side.

She said for a system this size to have only four or five linemen has never been seen before by TVA.

“This has really come to a boiling point over the years,” Brown said. “We don’t have a clear path forward.”

TVPPA assessment report

TVPPA president and CEO Doug Peters said the association became engaged with the situation in March 2023.

TVA cannot lobby Congress and has had a lot of challenges, he said.

“We were pretty involved with the whole idea of restoration and the public power model,” he said, of the traditional trade association he leads.

TVPPA is a voice for its 153 members and HSUD is the only LPC in TVA’s system in this condition, he said. The assessment followed the criteria used by the American Public Power Association, which establishes what good operational practices are, he said.

Suggs, who spent seven days gathering data for the assessment, said the assessment is not concerned with what may have happened five or 10 years ago. He said the assessment is used to learn where to go from now and forward to address the concerns found in the study.

He said the system was not given a comprehensive review of operations and maintenance, which would be in the thousands, but simply picked examples it found to report.

He said the issues at HSUD are “an anomaly. The first of this kind.”

“We don’t know operations, either,” Brown said. “We (the PSC) don’t want to run it. Show us what is going on.

Commissioner Carr said the PSC is just looking at this one area.

“We have a microscope on it,” he said.

“We looked at it with a rifle, not a shotgun,” Peters said.

“We don’t want to play gotcha,” Stamps said. “It is just disheartening. I do want to make a decision so we can move forward.”

Peters said HSUD has well intentioned employees.

“They are lacking the right resources, the right leadership, the right expertise,” Peters said. “Our ultimate goal is the ratepayer.”

Suggs said the assessment is not directed at personalities but to identify problems “concerning me, as an engineer. Reliability and the safety component are at a critical level,” he said.

A summary of Sugg’s comments/findings include:

• photographic evidence was available immediately as he entered the HSUD service area. Problems of vegetation covering utility poles and transmission lines were seen immediately from the highway.

• linemen are swamped with so many outages to fix that they patch up the system just to restore power, without correcting the problem at its source.

• often the source of the outage is caused by vegetation. The first visit to the Holly Springs substation saw a fourhour outage on a clear day. HSUD did not have power at its office. The repair was to replace a jumper, and the vegetation was not removed.

• a crew used a bucket truck to cut a hole in vegetation to make a repair.

• there were outages every day of the assessment. Kudzu is covering many poles “so there are many opportunities for bad things to happen.”

• a 46-kilovolt line is seen disappearing into the trees.

Suggs said the North Holly Springs substation has no major vegetation issues. But a transformer damaged, over five years ago, is still not in service. The damaged transformer would have to be rebuilt and leaves only one operable transformer in the substation. Old damaged equipment lies where it was left, one fuse being used as a doorstop. No measures to suppress growth of vegetation is being used. Vegetation attracts rodents, which can cause a situation. One substation has four transformers that are about 60 years old.

The Maintenance log for the voltage regulator in one substation in the city has not been kept, “which pretty well tells you about substation maintenance problems,” he said.

Low nitrogen in transformers can cause accumulation of moisture, but when checked was found empty.

The equipment stored at the warehouse is not kept in order. Kudzu is growing over transformers in the pole yard.

“I don’t know how they get work done. They don’t have the manpower to go in there,” Suggs said, adding that personal protection safety equipment is non existent and supplies are not kept sorted and separated causing potential damage to things like line hoses that can become abraded when stacked with other material.

Suggs said everything looked at during the assessment is not the problem.

“Leadership, that’s where the problem lies,” he said. “There is not a qualified person in HSUD to hold this manager’s position. The mayor has a glaring lack of knowledge of just how rates work, Nobody is there to do that well.”

Suggs said system losses are not known.

“Nobody could provide a system loss, just basic stuff,” he said. “They are operating day-to-day — no long-term planning.”

Suggs said HSUD employees are honest, embarrassed, and frustrated over the level of service HSUD provides its customers.

“I believe an experienced utility system manager is a must,” he said.

There has been quite a lot of employee turnover

“The consultant with the city has no experience in this either,” Suggs said.

“There is no in-house person with technical expertise. The real-world experience is just a must.”

Commissioner Carr agreed with Suggs.

“A true leader knows when to lead and when to follow,” he said. “It seems to me the leader does not know how to step out of the way. That’s a concern.”

Suggs said a system this size needs 18 to 20 linemen.

“No manager and three or four linemen,” he said. “Only three or four to work hot (energized lines).”

He said a qualified right-ofway maintenance contractor was on board for two or three years. The current right-of-way crew of three or four people are not qualified to work.

“Obviously, you need a professional line cleaning contractor,” he said. “You have to prioritize that work. They capture none of this.”

He said growth regulators and herbicides should be a part of ROW maintenance.

“It takes a while to develop those programs,” he said. “There are people and firms that can help with that.”

He said linemen go into the substations to get the lights back on, then leave because of pressure to just to restore power.

New service requests are far behind. A system map has not been updated since 2009, and workers have nothing to rely on as to where lines are fed and which direction feeds are routed in real-time.

The metering and billing issues are huge. Only about 75 percent of the AMI meters are reporting back to the system. Customers don’t get bills for months.

“Customers need to have confidence they get billed accurately and timely,” Suggs said. “A consulting engineer is needed.”

Safety briefings before a crew goes out “is a “huge concern,” Suggs said.

“It comes back to leadership,” he said. “That’s got to be addressed. You need four or five years to address it. It can be fixed but it is going to take some effort.”

Brown asked what would happen if a catastrophic failure occurred.

“How many customers would be out?” he asked.

Suggs said 4,000 outages could take place.

Brown said the response is just reactionary and asked where the biggest issues are.

“Everywhere,” Suggs said. “I don’t know what it looks like when you get off the main roads.”

Stamps said a lot of decisions need to be made immediately and the situation needs to be presented to the governor “to get us through winter, at least.”

Brown said the situation cannot be solved overnight. He said the purpose of the hearing is “to make sure the community knows what’s going on.”

“This can has to stop getting kicked down the road,” Carr said.

To view the hearing online visit www.psc.ms.gov/webcasts.

To find prior reports by TVA and TVPPA published in The South Reporter see the following issues:

• March 16, 2023 issue - “TVA meets with the board seeking improvements”

• March 23, 2023 issue - “TVPPA offers free assessment on HSUD”

• March 30, 2023 issue - “Tennessee Valley Authority releases report on HSUD”

• Nov. 16, 2023 issue - “TVPPA Assessment Report Part I”

• Nov. 22, 2023 issue - “TVPPA Assessment Report Part II”

• Nov. 30, 2023 issue - “TVPPA Assessment Report Part III”

• Dec. 6, 2023 issue - “TVPPA Assessment Report Part IV”

• Dec. 13, 2023 issue - “TVPPA Assessment Report Part V”

• Dec. 20, 2023 issue - “TVPPA Assessment Report Part VI”

• Dec. 20, 2023 issue - “TVPPA Assessment Report Part VII”

Some of these reports can be found on The South Reporter’s website - www.southreporter.com.