TVA board approves Johnson to negotiate buy of Choctaw gas plant

The Tennessee Valley Authority board of directors on Feb. 12 discussed TVA’s improved financial and operational performance, and the addition of cleaner generating sources to the federal utility’s diversified energy mix.

TVA President and CEO Bill Johnson reported that first quarter fiscal year 2015 revenues were up, and operations and maintenance costs down, resulting in net income of $81m on $2.4bn in revenues. “We are making good progress toward our goal of reducing annual costs by a sustainable $500 million by the end of 2015,” Johnson said. “In addition, improved operations at our coal and nuclear plants means we are buying less power from more expensive sources.”

The board moved  to increase TVA’s gas-fired and renewable power capacity by adopting resolutions authorizing the CEO to conclude agreements to:

  • Acquire Quantum Utility Generation’s Choctaw combined cycle natural gas plant near Ackerman, Miss. TVA has been buying power from the 700-MW plant since 2008. This would be TVA’s sixth combined cycle plant, with two more under construction, all since 2007. The Quantum website says this is a 2×1 facility held under affiliate Quantum Choctaw Power LLC. Quantum Utility Generation is an operating company based in Houston, Texas, that was established to invest in the North American power generation space, and is co-funded by Quantum Energy Partners, a private equity fund.
  • Establish a power purchase agreement with NextEra for electricity from its planned 80-MW solar farm in Lauderdale County, Ala. The installation would be significantly larger than any existing solar facility in the Tennessee Valley.

“Both transactions offer good value for TVA ratepayers and are consistent with our Integrated Resource Plan for meeting energy requirements today and tomorrow,” Johnson said. “We can purchase the gas plant for substantially less than it would cost to build one, and the solar power is at a price competitive with other energy sources.”

Johnson noted that the Obama Administration’s recently released FY 2016 budget proposal concluded its strategic review of TVA and recognized TVA’s improved financial and operational performance. “TVA remains committed to its mission of service in the region and to being financially healthy. Our priority is keeping energy affordable and reliable for the people of the Valley,” Johnson said.

Johnson said TVA is focused on producing electricity more efficiently, with cleaner, more diverse energy sources. TVA is working toward an optimal generation portfolio that is based on least-cost planning, demonstrates environmental stewardship, serves customers in a variety of future conditions, and promotes economic prosperity. “Overall, we must be able to efficiently match power supply to changing demands over the long term and from day to day,” Johnson said.

During the board meeting, Jeffery Phillips was recognized as TVA Engineer of the Year and was presented with the Ike Zeringue Engineer of the Year award. Phillips, a senior design engineer for the power transmission system, has utilized innovative thinking to help TVA save money and ensure system reliability, resulting in low-cost, reliable power for TVA’s customers.

In other action, the board:

  • Designated Executive Vice President and General Counsel Sherry Quirk as TVA corporate secretary.
  • Recertified the TVA Regional Energy Resource Council, an advisory panel created in 2013 to provide input on the development and management of energy resources in the Tennessee Valley.
  • Extended the GUBMK fleet services contract for three years.
  • Heard an update on TVA’s right of way activities from Senior Vice President for Transmission Jacinda Woodward.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving 9 million people in parts of seven southeastern states.

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.