The decision to idle or retire coal-fired units from the Tennessee Valley Authority‘s generation fleet is being influenced by several factors including environmental agreements with various parties, environmental legislation, the cost of adding emission control equipment and other environmental improvements, fuel prices, condition of plants, and demand for energy.
Under the environmental agreements, TVA committed, among other things, to retire, on a phased schedule, 18 coal-fired units. As of March 31, 2015, TVA had retired 11 coal-fired units with a summer net capability of 1,494 MW, the federal utility noted in its May 1 quarterly Form 10-Q report. The retirement of ten of these units, with a summer net capability of 1,370 MW, were carried out to comply with the environmental agreements. In addition, as of March 31, TVA had removed from service, mothballed, and/or idled an additional eight coal-fired units with a summer net capability of 1,715 MW. Thus, the total number of units that are no longer active is 19 with a summer net capability of 3,209 MW. TVA said it continues to assess its power generating facilities, including its aging coal-fired fleet.
Under the terms of the environmental agreements, TVA was required to decide whether to install additional air pollution controls on Units 1 and 4 at the coal-fired Shawnee Fossil Plant, convert those units to burn biomass, or retire them by Dec. 31, 2017. The TVA Board a few months ago approved installation of air pollutions controls (i.e., selective catalytic reduction and dry scrubbers) on Units 1 and 4 at Shawnee with an estimated cost of $185 million. On Dec. 31, 2014, the decision to install additional air pollution controls was communicated to the U.S. Environmental Protection Agency and the other participants in the environmental agreements. These units have a summer net capability of 268 MW.
During 2014, the TVA Board took several actions related to the retirement of certain coal-fired units. Upon the completion of natural gas-fired generation facilities at the Paradise site in western Kentucky, coal-fired Units 1 and 2 at Paradise with a summer net capability of 1,230 MW will be retired (the coal-fired Unit 3 would remain in operation), and upon the completion of a natural gas-fired generation facility at the Allen site, coal-fired Units 1-3 at Allen with a summer net capability of 741 MW will be retired. The TVA Board also approved the retirement of Colbert Fossil Plant Unit 5 in Alabama with a summer net capability of 472 MW no later than Dec. 31, 2015, Colbert Units 1-4 with a summer net capability of 712 MW no later than June 30, 2016, and Widows Creek Fossil Plant Unit 8 in Alabama with a summer net capability of 465 MW in the undefined future.
At November 2013 meeting, the TVA Board approved the completion of a natural gas-fired facility with an expected generation capacity of approximately 1,000 MW at TVA’s Paradise site at a cost not to exceed $1.1 billion. In August 2014, the TVA Board approved the construction of a natural gas-fired generation facility also with an expected generation capacity of approximately 1,000 MW at the Allen site at a cost not to exceed $975 million. Upon completion of each facility, existing coal-fired units at each site will be retired with the exception of Paradise Unit 3, which would continue to be operated on the Paradise site.
To comply with the EPA’s Mercury and Air Toxics Standards, TVA chose to retire two coal-fired units at Paradise and replace them with natural gas generation. Prior to making this decision, TVA completed an Environmental Assessment in November 2013. In July 2014, the Kentucky Coal Association and several individuals filed suit in the U.S. District Court for the Western District of Kentucky alleging that TVA violated the National Environmental Policy Act (NEPA) and the Energy Policy Act of 1992 in deciding to switch to natural gas generation. The plaintiffs demand that TVA prepare an Environmental Impact Statement, and are asking the court to preliminarily enjoin TVA from taking any further action relating to these matters pending compliance with NEPA. The court denied the plaintiffs’ motion for a preliminary injunction in December 2014 and dismissed the case in February 2015. In March 2015, the plaintiffs appealed the court’s decision to the U.S. Court of Appeal for the Sixth Circuit, where it is still pending.