TVA to shut 18 coal-fired units under EPA deal

Birmingham, Alabama (Platts)--14Apr2011/459 pm EDT/2059 GMT

The Tennessee Valley Authority Thursday said it will shut 18 of its aging coal-fired power plant units, which have a combined capacity of 2,700 MW, by 2018 as part of an agreement it reached with the US Environmental Protection Agency to resolve alleged violations of the Clean Air Act.

Under the deal, the federal utility also will be required to achieve additional emissions cuts either by installing additional controls on coal-fired capacity that will remain in operation or converting some coal-fired plants to burn biomass, EPA said.

The agreement, which was approved by TVA's board on Thursday, represents the largest commitment to retiring aged coal-fired capacity under EPA's coal-fired power plant initiative, the agency said.

TVA President and CEO told the board that the utility will decide in the near future whether to retire additional units or add pollution controls based on regulatory, environmental and economic considerations.

EPA said the agreement will cut TVA emissions of nitrogen oxides by 115,977 tons/year, or 69% below current levels, and cut sulfur dioxide emissions by at least 225,757 tons/year, 67% below current levels.

The agency also said the emission reductions would provide annual "monetized health benefits" of $11 billion to $27 billion in 2010 dollars, avoid as many as 3,000 premature deaths and 2,000 non-fatal heart attacks.

The agreement also commits TVA to spend $350 million over the next five years on "clean energy projects" to cut emissions and improve efficiency in Alabama, Kentucky, Tennessee and North Carolina. TVA also will invest another $40 million to reduce greenhouse gas emissions through projects such as hybrid electric charging stations and spend $8 million on clean diesel and electric vehicle projects for public transportation systems, EPA said. The agency said it would accept public comments on the deal for 30 days.

In addition, TVA must pay a civil penalty of $10 million, with Alabama and Kentucky receiving $500,000 each and Tennessee receiving $1 million. The alleged violations occurred at TVA power plants in those states.

TVA said it will retire six of the eight units at Widows Creek in Alabama, two of the four units at the John Sevier plant in Tennessee and all 10 units at the 1,254-MW Johnsonville plant in Tennessee.

TVA?s board of directors approved the agreement, which it said is in alignment with the integrated resources plan it also approved Thursday. The IRP is the first for TVA since 1995. Mike Duncan, TVA's former board chairman voted against the settlement, saying it "gives up ground" and is too costly. "I believe it is not in the best interest of TVA," he added.

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