TVA Clean Up $975 Million

As reported in today's Commercial Appeal...

Coal cleanup cost at $975M
TVA awaiting final data; unsure on rates

Cleaning up a massive spill of coal ash at the Kingston Fossil Plant in East Tennessee could cost as much as $975 million, a higher amount than previously announced, a Tennessee Valley Authority representative told Memphis Light, Gas and Water Division commissioners at a meeting Thursday.

But the TVA representative, Gary H. Harris, couldn't answer the most pressing question commissioners had: will TVA pass the costs along to MLGW and its customers?

"We're still in the process of cleaning up, and we haven't gotten the final report," said Harris, general manager for customer service for TVA's West Tennessee District, who gave an update on the spill at an MLGW meeting Thursday. "We don't know how it's going to affect rates."

Earlier this year, TVA had said the cleanup would likely cost between $525 million and $825 million, not including expenses such as lawsuits and fines. Harris said he believes the estimate has gone up because TVA discovered there's more waste to remove than it had thought.

Coal ash is a waste product from burning coal to make electricity.

A wall that helped hold in the waste ash failed in December, spilling 5.4 million cubic yards over 300 acres. Crews are working around the clock to truck the waste off the land and dredge it out of a nearby river, Harris said.

If TVA raises its rates to pay for the cleanup, it would directly affect its largest customer, MLGW.

Commissioners asked how TVA is paying for the cleanup. Harris said the $77 million spent so far is coming out of the utility's cash reserves.

TVA doesn't have enough money in its reserves to pay for the entire cleanup: It had $211 million of cash on hand as of March 31, according to a recent Securities and Exchange Commission filing.

Options for finding more cash include borrowing money or increasing rates, Harris said. "We want to do it in a way that has the most minimal impact on ratepayers," he said.

MLGW Commissioner Steven Wishnia noted that it costs money to borrow money. "I just hope what they do is not going to cause a big rate increase," he said.

For now, TVA leaders have ruled out asking the federal government for financial help, and MLGW Commissioner Dedrick Brittenum said he hopes they'll change their minds. "My concern would be if you spend down the reserve, how would you build the reserve back up?"