The Tennessee Valley Authority reported in its Aug. 2 Form 10-Q statement that it has notified the U.S. Environmental Protection Agency of plans to retire a new round of coal-fired units.
The decision to idle or retire coal-fired units is being influenced by several factors, including two legal agreements into which TVA entered in April 2011 to resolve a dispute under the Clean Air Act, environmental legislation, the cost of adding emission control equipment and other environmental improvements, fuel prices, conditions of its aging plants, and demand for energy. Under the legal agreements, TVA committed, among other things, to retire, on a phased schedule, 18 coal-fired units.
Said the Form 10-Q: “During the first quarter of 2016, TVA provided notice to the Environmental Protection Agency (‘EPA’) of its election to retire Colbert Unit 5 and Allen Units 1-3 on or before December 31, 2018, and Colbert Units 1-4 on or before June 30, 2019. TVA removed Colbert Units 1-4, with a summer net capability of 712 megawatts (‘MW’), from service in March 2016. Colbert Unit 5 was previously removed from service in 2013, and all five Colbert units were retired on April 16, 2016.
“As of June 30, 2016, TVA had retired 24 coal-fired units with a summer net capability of 4,394 MW, including 16 of the 18 coal-fired units TVA committed to retire under the Environmental Agreements. TVA continues to evaluate the appropriate mix of generation and assess the status of individual power generating facilities given the cost of continuing to operate some of its coal-fired plants including environmental regulations and also changing power demands.”
TVA noted that on April 16, 2016, the EPA issued an Administrative Order (AO) allowing the coal-fired Paradise Units 1 and 2 in western Kentucky to operate for an additional year beyond the compliance date allowed by the Mercury and Air Toxics Standards (MATS). That is until April 2017. The AO allows TVA to continue to operate these units, which, in their current configuration, are not capable of meeting certain requirements of MATS. The AO allows TVA to continue to operate Paradise Units 1 and 2 to maintain electric reliability pending the availability of commercial power from the natural gas-fired units currently under construction at the Paradise site without incurring penalties under the Clean Air Act (CAA).
In 2014, the TVA Board approved the construction of two natural gas-fired facilities. One, with an expected generation capacity of approximately 1,000 MW, is at the Allen site at a cost not to exceed $975 million. The second facility, with an expected generation capacity of approximately 1,000 MW, is at TVA’s Paradise site at a cost not to exceed $1.1 billion. Upon completion of each facility, existing coal-fired units at each site will be retired with the exception of Paradise Unit 3, which will continue to be operated on the Paradise site.
TVA said related to the board’s Paradise decision: “Prior to making this decision, TVA completed an Environmental Assessment in November 2013 under the National Environmental Policy Act (NEPA). In July 2014, the Kentucky Coal Association and several individuals filed suit in the United States District Court for the Western District of Kentucky alleging that TVA violated NEPA and the Energy Policy Act of 1992 in deciding to switch to natural gas generation. The plaintiffs demanded that TVA prepare an Environmental Impact Statement and asked 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 Sixth Circuit, and in October 2015, the Sixth Circuit affirmed the court’s decision. The time period for the plaintiffs to appeal the Sixth Circuit’s decision has expired, so the proceeding has now ended.”