Sierra Club report claims TVA coal plants too expensive to fix

A new report from Synapse Energy Economics reveals that the Tennessee Valley Authority is risking wasting billions of dollars to keep aging, out-of-date coal plants online instead of pursuing lower cost options like energy efficiency, the Sierra Club said Aug. 14.

The Synapse report, commissioned by the Sierra Club’s Beyond Coal Campaign, outlines what the club calls a dim economic scenario for TVA’s coal fleet, including four coal plants – Gallatin, Allen, Colbert and Shawnee  – on which TVA is considering spending billions of dollars in emissions retrofits. In contrast, Synapse finds that an energy efficiency savings program run at a level that TVA acknowledges is achievable would reduce air pollution, cut customers rates over the long-term and eliminate the need to operate at least one TVA coal plant in the next three years.

“TVA’s coal plants are old and lack many modern pollution controls, meaning they pump out harmful pollutants whenever they run,” said Jeremy Fisher, the lead author of the Synapse report. “Today’s report shows that there are cheaper options that will both improve our air quality and lower customer’s monthly power bills. TVA currently plans to keep these old, out-of-date plants on life support, but we are confident that a good, hard look at the numbers shows that it makes no business sense to run these plants anymore. TVA can do better for Tennessee by pursuing efficiency measures and retiring these plants.”

Compared to the coal-fired power plants of other utilities, TVA’s are older, dirtier and generate less power on average, said the report. The Synapse analysis determined that TVA would need to invest at least $11.8bn to update its aging fleet, with additional costs to operate the retrofitted plants piling up over time. According to the report, going forward, 30 of the 39 TVA coal boilers will cost more to run than market prices, once the capital cost of the pollution controls are counted.

“Pollution from coal-fired power plants threatens the health of communities everywhere,” said Louise Gorenflo, a TVA ratepayer and lead volunteer with Sierra Club’s Beyond Coal Campaign. “TVA’s coal plants pump harmful pollution into our air and water. Responsible utilities don’t throw good money after bad, but that’s exactly what TVA is planning to do now. TVA has an opportunity to prioritize energy efficiency which will boost our local economy while saving customers money and, critically, reduce the use of coal fired power. This is a win-win for our pocketbooks and for our health.”

The report noted that TVA must comply with a settlement requiring clean-ups at many of its coal-fired power plants by specific dates for each plant and control technology. In 2011, TVA entered into a consent decree with four states (Alabama, Kentucky, North Carolina, and Tennessee) and three environmental groups (National Parks Conservation Assn., Sierra Club, and Our Children’s Earth Foundation) requiring significant reductions of certain pollutants from TVA’s coal-fired fleet. Among other requirements, the consent decree requires TVA to fit units at Allen, Gallatin, Colbert and Shawnee with SO2 and NOx controls between 2016 and 2018 if it does not retire these units (or, in some cases, remove them from service or repower them to biomass). Because TVA must announce its decisions on these units at least three years in advance, TVA is facing a rapidly approaching 2013 deadline to determine its compliance plan for many of these units, the report said.

TVA already moving to shut coal units under consent decree

TVA idled the coal-fired Johnsonville Units 7-10 on March 1 (564 MW of summer net capability) and announced plans to idle Johnsonville Units 5-6 and Colbert Unit 5 by Oct. 1 (686 MW of summer net capability), TVA noted in its Aug. 3 Form 10-Q report.

“The idling of the Johnsonville units was earlier than required by the Environmental Protection Agency (‘EPA’) and other parties in 2011 (the ‘Environmental Agreements’),” TVA added. “Due to unanticipated operating challenges of certain generating units, TVA is in the process of re-evaluating the previously announced idling dates of these units. Johnsonville Unit 9 (141 MW of summer net capability) was brought back into service during June 2012. Johnsonville Unit 10 (141 MW of summer net capability) was brought back into service in July 2012. Depending on capacity needs, TVA may bring other previously idled units back into service. TVA still anticipates being compliant with the terms of the Environmental Agreements.”

Consistent with the Environmental Agreements, the coal-fired Units 1-2 at John Sevier will be retired by Dec. 31, 2012. The remaining two units at John Sevier will be idled by Dec. 31, 2012. The four John Sevier units have a summer net capability of 704 MW.

Also, Johnsonville Units 1-4 will be retired by Dec. 31, 2017. These four units have a summer net capability of 428 MW.

In April 2011, TVA entered into two similar agreements, one with the EPA and the other being the consent decree mentioned by the Sierra Club. Under these agreements, TVA committed to: retire on a phased schedule 18 coal units with a combined summer net dependable capability of 2,200 MW; control, convert, or retire additional coal-fired units with a combined summer net dependable capability of 3,500 MW; comply with annual, declining emission caps for SO2 and NOx; and invest $290m in certain TVA environmental projects.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.