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TVA to Spend as Much as $5 Billion to Resolve Carbon Violations in U.S.

The Tennessee Valley Authority agreed to close 18 coal-fired generators and install as much as $5 billion in pollution controls to resolve alleged Clean Air Act violations in Alabama, Kentucky and Tennessee.

The settlement with the Environmental Protection Agency and the states requires TVA to install equipment targeting nitrogen oxides and sulfur dioxide, which create acid rain, the TVA said today in a statement. The authority, created in 1933 by President Franklin D. Roosevelt, will invest $350 million in clean-energy projects and pay $10 million in civil penalties.

The TVA, which owns 59 coal-burning units, said it will replace the units with low- or zero-emitting sources, including renewable energy, natural gas and nuclear. The government-owned company, faulted by environmental groups for operating old and polluting plants, said it aims to become a top U.S. provider of cleaner energy by 2020.

“These units are among the first built by TVA and have served us well over the years,” Chief Executive Officer Tom Kilgore said in a statement. “But as times change, TVA must adapt to meet future challenges.”

Bruce Nilles, head of energy programs at the San Francisco- based Sierra Club, said the agreement is “by far the largest coal-retirement settlement in the nation’s history.”

Tennessee and the surrounding region have been getting hammered by the pollution from TVA’s coal plants for more than half a century,” Nilles said in an interview. The generators are, on average, 47 years old, exceeding their intended life span of 30 years to 40 years, he said.

‘Drive Up Bills’

Representative John Duncan, a Tennessee Republican, said the agreement will increase energy costs for consumers.

“The EPA has gone power mad,” he said in a statement. “I’m disappointed that TVA caved in to these demands. This settlement will drive up utility bills for people in Tennessee and the surrounding states and hurt poor and lower income people the most.”

Representative Ed Whitfield, a Kentucky Republican and chairman of the House Energy and Commerce Committee’s energy and power panel, said the agreement reflects the efforts of environmental groups to dictate policy.

“Today’s announcement is a prime example of what is wrong with national environmental policy in the U.S., it’s being determined by privately settled lawsuits and monetary payoffs with absolutely no input from elected representatives,” he said in a statement. “We intend for this to stop.”

Whitfield said he’s concerned that the agreement will boost electricity costs for consumers, jeopardize jobs and add to the TVA’s already heavy debt load.

Low Bills

Kilgore said the agreement is in line with TVA’s goals to “keep bills low, keep our service reliability high and further improve air quality as we modernize the TVA power system.”

The retirements will help reduce discharges of sulfur dioxide by 97 percent from 1977 levels and cut emissions of nitrogen oxides, which contribute to smog, by 95 percent from 1995 levels, according to the utility.

By the end of 2017, the Knoxville, Tennessee-based TVA said it will have shut or retired about 2,700 megawatts of its 17,000 megawatts of coal-fired capacity. The coal plants generate about two-thirds of the TVA’s electricity, according to its website.

EPA Administrator Lisa Jackson praised the agreement.

“We don’t have anything against coal, but we have to reduce the pollution that comes from coal,” Jackson told reporters today on a conference call.

Health Benefits

The EPA said the settlement with the TVA, which was created to bring electricity to the rural U.S. south, will generate almost $27 billion in annual health benefits and “significantly reduce” particulate matter and carbon dioxide, a primary greenhouse gas blamed for climate change.

“This agreement will save lives and prevent billions of dollars in health costs,” Jackson said. “Investments in pollution control equipment will keep hundreds of thousands of tons of harmful pollutants out of the air we breathe.”

The TVA agreed to spend $240 million on energy efficiency initiatives and $40 million to reduce greenhouse-gas emissions through renewable projects such as hybrid electric charging stations,’’ according to the EPA.

The utility also will spend $8 million for a clean diesel and electric vehicle project for public transportation systems, the EPA said.

The settlement resolves legal challenges from groups including the Sierra Club as well as North Carolina, Tennessee, Alabama and Kentucky. All of TVA’s 11 coal-fired plants were accused of violating the federal Clean Air Act.

The Sierra Club’s Nilles said he’s disappointed that the TVA hasn’t committed to developing more wind and solar energy.

“We will push them on this,” he said. “They are a public agency so there will have to be public input.”

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at

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