Client is considering relocating a chemical processing plant to Tennessee Valley Authority territory. TVA is offering their Economic Development Rate (EDR) with a 50% discount on energy charges for the first 5 years. Looks almost too good to be true. Anyone familiar with TVA's EDR program? What are the typical strings attached?
Economic Development Rate Question
Michelle - EDR rates usually come with job creation requirements and minimum investment thresholds. TVA's pretty strict about monitoring compliance. Had a client lose their EDR status in year 3 because they didn't hit the employment targets. Make sure your client can actually deliver on whatever they're promising. What kind of investment and job numbers are they committing to?
Juan, they're committing to 150 new jobs and $25M capital investment over 5 years. Plant would be around 1.2 MW demand. The savings look substantial - about $180K annually in the discount years. But you're right about the compliance risk. What happens if they fall short on the job targets?
Depends on how far short, but TVA can retroactively bill back to standard rates if there's material non-compliance. Had one case where they demanded repayment of 2 years worth of discounts - nearly bankrupted the company. Make sure the job targets are realistic and build in some buffer if possible.