TVA to retire 18 coal-fired units as part of settlement agreement with EPA

From the Knox News Sentinel...

TVA will retire 18 coal-fired units at three of its older fossil plants, effectively closing one of the plants, in an unprecedented agreement with the Environmental Protection Agency, four states and three environmental groups to settle complaints that the federal utility violated the Clean Air Act.

TVA's board of directors met in Chattanooga on Wednesday and approved the shutdown of two units at the John Sevier plant near Rogersville, Tenn., six at Widows Creek in North Alabama and all 10 units at the Johnsonville plant in Middle Tennessee.

The permanent shutdowns, called retirements, will take place in phases through 2017 and will affect 300 to 400 workers, said Bill McCollum, TVA chief operating officer.

Through retirement, transfers and other measures, TVA will seek to limit the actual loss of jobs, McCollum said.

"Our goal is to minimize the effect of this on employees and have opportunities for those folks who want to stay with TVA to have employment somewhere in the TVA system," he said.

Tom Kilgore, TVA president and CEO, noted the coal units are being retired and not idled as TVA announced in August it would do with six of eight units at Widows Creek, two units at John Sevier, and one at the Shawnee plant in West Paducah, Ky. Idling a unit means it can be brought back on line. Retiring a unit means TVA is giving up the permit for the unit and would have to reapply to operate it again, Kilgore said.

"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.

The combined idled and retired units will reduce TVA's coal-fired capacity by 2,700 megawatts out of a total 17,000 megawatts generated by the country's largest public utility.

TVA said the lost energy capacity will be replaced with low-emission or zero-emission electricity sources, including renewable energy, natural gas, nuclear power and energy efficiency.

The move to retire coal units is part of the settlement of legal claims against TVA by the EPA; the states of Tennessee, Alabama, Georgia and North Carolina; the Sierra Club; National Parks Conservation Association; and Our Children's Earth Foundation involving emissions from TVA plants. Anda Ray, TVA senior vice president of environment and technology, said the settlement clears all past claims the groups had against TVA and will allow TVA to operate its remaining fossil fleet with more legal certainty.

TVA board member Mike Duncan cast the one dissenting vote against the settlement and shutdown of coal-fired units. He questioned the constitutionality of losing the units as part of the settlement and said the shutdowns will limit TVA's power options.

"I think the settlement is going to be very expensive and will take away flexibility in our resources when we need more flexiblity," Duncan said.

The settlement drew strong criticism from U.S. Rep. John J. Duncan Jr., who blasted the EPA and TVA. The Republican from Knoxville said the agreement will result in higher power rates for TVA customers.

"I think this settlement is ridiculous. I think the EPA has gone power mad. I am disappointed that TVA caved in to these demands. This settlement will drive up utility bills for people in Tennessee and the surrounding states and hurt poor and lower income people the most. I assume this deal came about because the money is not coming out of the pockets of the elitists who reached it," the lawmaker said.

According to the EPA, when fully implemented, the pollution controls and other required actions will address 92 percent of TVA's coal-fired power plant capacity, reducing emissions of nitrogen oxide by 69 percent and sulfur dioxide by 67 percent from the federal utility's 2008 emissions levels.

EPA Administrator Lisa P. Jackson said the settlement will require TVA to spend an estimated $3 billion to $5 billion on new and upgraded pollution controls and also invest $350 million on clean energy projects to reduce pollution, save energy and protect public health and the environment.

"This agreement will save lives and prevent billions of dollars in health costs. Modernizing these plants and encouraging clean energy innovation means better health protections and greater economic opportunities for the people living near TVA facilities," Jackson said in a statement.

"Investments in pollution control equipment will keep hundreds of thousands of tons of harmful pollutants out of the air we breathe, and help create green job opportunities that will reduce pollution and improve energy efficiency."

As part of the settlement, TVA will pay the National Park Service and National Forest Service $1 million to rehabilitate forest and park lands affected by TVA emissions, including the Great Smoky Mountains National Park and Mammoth Cave National Park.

TVA also will pay a civil penalty of $10 million, with Alabama and Kentucky receiving $500,000 each and Tennessee receiving $1 million.

During its meeting, TVA's board also unanimously approved its Integrated Resource Plan, meant to help TVA match its energy resources with potential power demand and economy scenarios over the next 20 years. The plan calls for a shift away from use of coal and more reliance on nuclear energy, natural gas, renewable energy sources, energy efficiency and demand response measures.

In other action, the board heard reports from McCollum on TVA efforts to learn from the nuclear crisis in Fukushima, Japan, and apply lessons to its own nuclear fleet. The board voted to delay a decision on proceeding with construction of a reactor at Bellefonte in Alabama until TVA had a clear understanding of events in Japan and could incorporate lessons learned from that in the construction at Bellefonte.

The board also voted to re-elect Dennis Bottorff as chairman and elect Bill Sansom vice chairman.

Settlement terms

Based on TVA's landmark settlement with the EPA, the federal utility is:

-- Retiring 18 coal-fired units

-- Losing 300 to 400 jobs

-- Investing $3 billion to $5 billion on pollution controls

-- Investing $350 million on clean energy projects

-- Paying $1 million to the National Park Service and the National Forest
Service

-- Paying a civil penalty of $10 million