TVA to pay $338 million to states, $630 million for cleaner coal

KNOXVILLE, Tenn. - Nov 30 (The Associated Press)

The Tennessee Valley Authority on Tuesday approved a record $338 million in tax equivalent payments for state and local governments, and $630 million in contracts to supply low-sulfur coal to power plants nearest the Great Smoky Mountains.

Meeting in Cullman, Ala., the three-member TVA board endorsed the final 2004 installment of in-lieu-of-taxes payments to eight states where the nation's largest public utility sells electricity or has holdings.

The board also approved contracts to supply nearly 26 million tons of cleaner, low-sulfur coal from Wyoming and Appalachia through 2010 to three coal-fired power plants closest to the smog-plagued Great Smokies on the Tennessee-North Carolina border.

"It is new volume," TVA Director Bill Baxter said in a telephone interview of the low-sulfur coal purchases. "And it is part of our clean air strategy. One of the ways we can reduce sulfur dioxide emissions is to burn low-sulfur coal."

The three plants _ John Sevier, Kingston and Bull Run _ lack scrubbers to reduce emission but have been modified to burn the low-sulfur fuel.

Getting the coal from Wyoming to Kingston by rail will cost another $39.2 million under another contract approved Tuesday.

TVA, a self-supporting government corporation with $7 billion in annual revenues, has been distributing tax equivalent payments every year since it was created in 1933. The payments are based on electricity sales and the value of TVA-owned property within a locality.

The payments for 2004 showed an $8 million increase, or 2.5 percent, over the previous year. TVA anticipates a jump to $362 million in fiscal 2005.

"We send it to the states and they disperse it to the counties," Baxter said. "It goes into the general fund and is used to improve schools, roads, health care programs. Anything those governments want to do."

Tennessee received $203 million of the $338 million. Shelby County and Memphis, TVA's largest customer, received the most _ $8.7 million.

Elsewhere in Tennessee: Nashville-Davidson County, $5 million; Knoxville-Knox County, $3.4 million; and Chattanooga-Hamilton County, $2.9 million.

Alabama received $81 million, with Huntsville-Madison County, TVA's fifth-largest customer and site of TVA's unfinished Bellefonte nuclear station, receiving the most, $13.5 million.

Other states in TVA's service area receiving payments are Kentucky, $27.2 million; Mississippi, $18.7 million; Georgia, $5.4 million; North Carolina, $1.6 million; and Virginia, $109,754.

Illinois, where TVA owns coal reserves, received $326,898.

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On the Net:

TVA: http://www.tva.gov