TVA Board Sets Path for Environmental Future

April 14, 2011

Utility advances clean air strategy by retiring coal-fired generating units

CHATTANOOGA, Tenn., April 14, 2011 /PRNewswire-USNewswire/ — The Tennessee Valley Authority announced plans Thursday to retire 18 older coal-fired generation units at three power plants as part of the federal utility’s vision of being one of the nation’s leading providers of low-cost and cleaner energy by 2020.

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The retirements will help TVA reduce emissions of sulfur dioxide, a component of acid rain, by 97 percent from 1977 levels and help reduce emissions of nitrogen oxides, which contribute to smog, by 95 percent from 1995 levels. Previous TVA pollution-control programs already have reduced sulfur dioxide emissions by more than 90 percent and nitrogen oxide emissions by 86 percent.

The retirements, which include about 1,000 megawatts of coal-fired capacity previously slated for idling, mean TVA will have idled or retired about 2,700 megawatts of its 17,000 megawatts of coal-fired capacity by the end of 2017. The capacity will be replaced with low-emission or zero-emission electricity sources, including renewable energy, natural gas, nuclear power and energy efficiency.

President and CEO Tom Kilgore told the TVA board of directors, meeting in Chattanooga, that replacing older and less-economical generation with cleaner sources also is in alignment with recommendations in the utility’s Integrated Resource Plan as well as the utility’s vision for cleaner air.

The Integrated Resource Plan, which was formally presented to the board of directors at Thursday’s meeting, was developed over two years, with extensive business, technical and economic analysis and public input. Kilgore credited a Stakeholder Review Group, consisting of representatives of the political, business, consumer and environmental communities, for providing expertise and viewpoints “that added important perspectives as we formulated our Integrated Resource Plan.”

The plan recommends a strategic direction focusing on a diverse mix of electricity generation sources, including nuclear power, renewable energy, natural gas and energy efficiency, as well as traditional coal and hydroelectric power.

“Diversity proved to be the most prudent course in meeting future energy needs in all the various future scenarios we studied,” Kilgore said. “A variety of electricity sources, rather than heavy reliance on any single source, reduces long-term risks and helps keep costs steady and predictable.”

Because coal constitutes more than half of TVA’s current generation mix, Kilgore said replacing older and less-efficient coal units with cleaner sources of power follows the Integrated Resource Plan’s advice to further diversify the utility’s future power portfolio.

“In the longer term, these actions reinforce our vision to keep bills low, keep our service reliability high and further improve air quality as we modernize the TVA power system,” Kilgore said.

The coal-unit retirements announced Thursday include two at John Sevier Fossil Plant in East Tennessee, six at Widows Creek Fossil Plant in northern Alabama and all 10 units at Johnsonville Fossil Plant in Middle Tennessee. TVA announced in 2010 that it would idle units at John Sevier and Widows Creek, as well as one of 10 units at Shawnee Fossil Plant near Paducah, Ky. Idling units shuts them down in stand-by status, while retirement permanently removes them from service under their current operating permits.

“These units are among the first built by TVA and have served us well over the years. But as times change, TVA must adapt to meet future challenges,” Kilgore said, adding that installing the expensive emission-control equipment that new regulations would require at the smaller, older plants would not be economical. He explained that other coal-fired units without advanced emission controls also are under consideration for idling and possible retirement or for additional emission-control equipment.

Consistent with the coal-unit retirements, and in alignment with the Integrated Resource Plan and vision for cleaner air, the TVA board also authorized Kilgore to enter agreements with the U.S. Environmental Protection Agency; the states of Alabama, Kentucky, Tennessee and North Carolina; and three environmental advocacy groups to settle ongoing legal and regulatory issues related to Clean Air Act compliance.

TVA has invested more than $5.3 billion since 1977 to reduce coal-fired power plant emissions. With the EPA agreements and its own long-range plans, TVA estimates that it will invest an additional $3 billion to $5 billion in the next 10 years on new emission-control equipment and upgrades of existing equipment at its coal plants.

The agreements with EPA also call for TVA to provide $350 million to fund a number of environmental improvement projects over the next five years. Those include efficiency upgrades to the electric grid; support for energy efficiency enhancements in homes and businesses; assistance to the National Park Service and U.S. Forest Service in restoring and improving lands, watersheds and forests; and aiding reduction of greenhouse gas emissions through efforts such as waste-heat recovery, solar and landfill-gas energy installations.

Also under the EPA agreements, TVA has agreed to pay a $10 million civil penalty to end costly legal proceedings and reduce the risks of much higher costs in the future related to past and potential disputes over regulatory compliance.

TVA’s chief operating officer, Bill McCollum, briefed the board on the utility’s nuclear operations and on potential implications of last month’s nuclear-plant problems in Japan. McCollum told directors that safety is TVA’s top priority in designing and operating its plants and that its nuclear program will incorporate lessons learned from Japan into the operations, designs and features of its nuclear plants, including those under construction and projects that are under consideration.

The previously approved construction at Watts Bar Nuclear Plant Unit 2 in East Tennessee and engineering work at the Bellefonte site in northern Alabama are proceeding on schedule. McCollum said TVA staff will ask the board to make a decision on whether to move ahead with construction of a nuclear unit at the Bellefonte site “after TVA has a clear understanding of the Japanese nuclear situation and any potential impact on the project.”

Chief Financial Officer John Thomas told the board that colder weather has increased demand for TVA electricity and fuel expenses since the fiscal year began in October, but uncertainty resulting from the slow U.S. economic recovery and from the Japanese nuclear situation could increase the volatility of TVA’s revenue for the remainder of the year. Thomas added that TVA has managed cash flows well and is on track to achieve its fiscal 2011 financial objectives, which include avoiding increases in the base wholesale rate for electricity during the fiscal year.

The board also voted to re-elect director Dennis Bottorff of Nashville as chairman. Bottorff became chairman last year, succeeding director Mike Duncan of Inez, Ky., who stepped down as chairman but remains on the board. The board also named Director William Sansom to serve as vice chairman.

In other business, the board of directors:

  • Authorized the CEO to approve certain major contracts for electrical transformers;
  • Approved a pilot program for additional customer participation in the Valley Investment Initiative economic development program; and
  • Approved de-watering facilities for bottom ash at the Kingston Fossil Plant and for bottom ash and gypsum at the Bull Run Fossil Plant, part of ongoing efforts to convert coal byproducts to dry storage.

The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia – an area of 80,000 square miles with a population of 9 million. TVA operates 29 hydroelectric dams, 11 coal-fired power plants, three nuclear plants and 11 natural gas-fired power facilities that can produce about 34,000 megawatts of electricity, delivered over 16,000 miles of high-voltage power lines. TVA also provides flood control, navigation, land management and recreation for the Tennessee River system and works with local utilities and state and local governments to promote economic development across the region. TVA, which makes no profits and receives no taxpayer money, is funded by sales of electricity to its customers. Electricity prices in TVA’s service territory are below the national average.

SOURCE Tennessee Valley Authority

Source: newswire

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