TVA tackles Shawnee, financial reports at board meeting

Tennessee Valley Authority (TVA) Executive Vice President and COO Charles (Chip) Pardee told the TVA board of directors Nov. 6 that the federal utility faces a very compressed timeline in deciding the fate of two coal units at the Shawnee plant in Kentucky.

At issue is whether TVA should instill new environmental controls at Shawnee or potentially retire Units 1 and 4. Under a consent agreement with the Environmental Protection Agency (EPA), TVA must retrofit, retire or potentially replace coal as the fuel source for the two units by the end of 2017.

There are a total of 10 coal units at the Shawnee station near Paducah, Ky. One of them (Unit 10) has already been idled. Only two of the remaining units are covered by the agreement with EPA. The other units should be able to continue operating in compliance with air quality rules for a number of years, Pardee said.

The entire Shawnee station has a generating capacity of 1,750 MW and it reported a capacity factor of more than 45% in 2012, according to GenerationHub data.

“This is one of the best running facilities that we own,” Pardee said of the units under review.

The plant consumes some 9,600 tons of coal a day, according to a TVA website. Rep. Ed Whitfield (R-Ky.) supports keeping the units open both because they burn local coal and because of their positive economic impact on Western Kentucky.

Pardee also said Shawnee is well located for coal delivery flexibility.

Initial engineering indicates that controls could be configured to fit within the footprint of the existing plant infrastructure and avoid the potential for impacts on most natural resource, according to a TVA web site.

Shawnee Units 1 and 4 typically produce about 1,450 tons of NOx and 3,100 tons of SO2 per year each. Adding dry scrubbers and selective catalytic reduction (SCR) systems should reduce these numbers to 145 tons NOx per year and 341 tons SO2 per year for each unit, according to the TVA website.

“We are now evaluating Shawnee fossil units 1 and 4,” Pardee said. An environmental assessment is underway. The first of two public comment periods ends within a couple of days, he said. TVA is expected to make a decision by the end of the year.

TVA CEO Johnson notes federal payments by TVA

TVA President and CEO Bill Johnson said reached an important milestone in September when it made the final payment to the federal government on the government’s original investment to build TVA.

TVA became self-financing in 1960s and was no longer dependent on federal money. “We will still make smaller annual payments to the U.S. Treasury,” Johnson said.

“This may be as close to a mortgage-burning milestone as you can have in the federal government,” Johnson said. “TVA has now repaid the U.S. Treasury for the cost of its creation while continuing to invest in improving the quality of life for the people of the Tennessee Valley every day.

“The federal government’s original investment in TVA amounted to “venture capital” in what came to be known as “the Great Experiment” in the Tennessee Valley,” Johnson said.

TVA has made payments of $10m to $20m a year – plus interest – to the U.S. Treasury since 1961. The final $10m payment came in the closing days of fiscal year 2014, which ended Sept. 30. Payments totaled more than $3.6bn.

“I think we continue to prove our worth every day,” Johnson said. “Personally, I think the government has gotten its money’s worth –maybe a little more,” Johnson went on to say.

During the past year, President Obama’s administration did a strategic review of whether the federal government should continue to own TVA. But a study by the Lazard consulting firm that was made public in the spring found that the government should not sever ties with TVA.

The Lazard report “validated the worth of what TVA is doing every day,” Johnson said.

During the board meeting in Nashville, TVA officials said that TVA delivered electricity reliably through the polar vortex this winter.

TVA nuclear operations are no longer under any increased enforcement from the Nuclear Regulatory Commission (NRC) and that is an important milestone because it shows that TVA is doing things right, Johnson said.

The utility’s integrated resource plan anticipates load growth of about 1% per year along with increased air compliance costs.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.