Bloomberg News

Tennessee Valley Authority Defies McConnell With Coal Cut

November 14, 2013

Tennessee Valley Authority Defies McConnell as It Cuts Coal 50%

Plumes of water vapor emit from the Tennessee Valley Authority Paradise Fossil Plant in Paradise, Kentucky on Aug. 13, 2013. The plant generates and delivers 14 billion kilowatt-hours of coal-fired electricity per year to Western Kentucky and Nashville, Tennessee. Photographer: Luke Sharrett/Bloomberg

The Tennessee Valley Authority said it will cut its use of coal-fired electrical generation by about half of current levels, shuttering some units and converting others to burn natural gas to meet tighter emission-control regulations.

The board of the Knoxville, Tennessee-based public utility voted today to close eight coal-burning generators. Among them are two that will be shut and converted to burn natural gas at Paradise Fossil Plant in western Kentucky, which U.S. Senate Republican leader Mitch McConnell, who represents the state, had urged be kept as coal units.

It is the second time in three years the federally run utility has announced a reduction in coal-fired generation and comes as low natural gas prices and environmental regulations have cut into coal use nationwide. The TVA said it aims to pare the use of coal power to 20 percent of its total generation, down from 38 percent in fiscal year 2013 and 52 percent in 2011.

“Our generating fleet has to look different than it has in the past,” Bill Johnson, TVA’s chief executive officer, told the board. “This will support our focus on cleaner energy and bring additional, necessary balance into our portfolio.”

Use of natural gas, hydropower and nuclear would grow under the plan, which doesn’t have a specific deadline. The plan would lead to a cut of 3,000 megawatts of coal capacity.

EPA Deadline

Most of TVA’s coal plants were built in the 1950s, and face a 2015 deadline by the Environmental Protection Agency to install equipment to curb mercury and related pollutants. The utility, which was founded during the Great Depression, provides power for 9 million customers in the Southeast U.S.

With 59 coal units at 11 separate plants, the TVA is one of the top five emitters of greenhouse gases in the nation, behind utilities such as Southern Co. (SO:US) and American Electric Power Co. (AEP:US) Environmental groups such as the Sierra Club have been pressing the utility to close its old coal plants, which they blame for local health problems and global warming.

“TVA is making a responsible choice to retire coal plants that have become a huge liability,” Abigail Dillen, vice president of the group Earthjustice, an environmental ally of the Sierra Club, said in a statement.

McConnell Defied

Lawmakers including McConnell have pressed the utility to preserve all of the coal units at the Paradise plant. Under the plan approved today, two coal units there would be shut and a new $1.12 billion gas-fired plant built. A third unit at Paradise, which already has pollution controls, would continue to burn coal.

“It’s unnecessary and tragic that the Obama administration’s actions have forced utilities to discontinue coal operations at any of these units,” McConnell said in a statement today. “I fought hard to prevent these changes and fortunately one of the units will continue to burn coal.”

The fall in natural gas prices following the boom in hydraulic fracturing and regulatory efforts by the EPA have blunted investor enthusiasm for coal companies. The EPA issued regulations for curbing mercury and related pollution from coal plants at the end of 2011, and is now writing rules to limit carbon-dioxide pollution. Those rules are expected in 2014.

Climate Change

Carbon-dioxide emissions since the Industrial Revolution have led to an increase in the Earth’s temperature in the past 50 years, worsening forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program. Coal emits twice the carbon dioxide as natural gas when burned to generate electricity.

Power plants account for 40 percent of U.S. carbon emissions, and coal-fired generation is the largest source of those emissions. TVA reached an agreement with government regulators and environmental groups in 2011 to shutter 18 units of coal generation, representing 2,700 megawatts of power.

The TVA also voted to retire five units at Colbert Fossil Plant and one unit at Widows Creek, which are all in Alabama. Construction on both plants began in the early 1950s.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • SO
    (Southern Co/The)
    • $44.81 USD
    • -0.10
    • -0.22%
  • AEP
    (American Electric Power Co Inc)
    • $53.97 USD
    • -0.08
    • -0.15%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus