Tom Kilgore

KNOXVILLE — The Tennessee Valley Authority could spend up to $1 billion over the next five years to convince its customers not to buy the electricity it generates during peak demand periods.

A draft energy efficiency plan presented to TVA directors Thursday proposes the utility add consumer education, time-of-day pricing and other conservation measures to cut the growth in peak electricity demand by about 30 percent by 2012. Under the proposal, TVA expects to reduce the amount of power it sells on hot summer afternoons by about 1,400 megawatts, or more than the power generated by one of TVA’s nuclear reactors.

“We are going to have to spend some money on that,” TVA President Tom Kilgore said after the board reviewed a staff plan. “It doesn’t come for free.”

But cutting TVA’s power peaks also will save the federal utility from having to buy or generate its most expensive power. TVA’s peak power demand has been growing about 1.7 percent a year, primarily on hot summer days when air conditioners are running the most and electricity on the grid is sometimes priced as much as 10 times above average. The federal utility wants to slow that rate of growth with new energy efficiency programs to be developed later this year.

TVA is spending $22 million this year to study and develop energy efficiency programs. Mr. Kilgore said spending will go up in the future, but budgets and specific plans have yet to be developed and will require cooperation from distributors and consumers.

TVA plans to hold nine public meetings across the valley and confer with its 159 power distributors before adopting an overall policy at its May 19 board meeting in Muscle Shoals, Ala.

The energy efficiency targets proposed in the draft plan are higher than those set less than a year ago when the current TVA board adopted a strategic plan for the next decade. But some environmentalists still urged TVA to do far more.

The proposed environmental policies presented here Thursday don’t set any specific target for cutting overall energy use by TVA and don’t specify a higher goal for renewable power from wind, solar or biomass.

Stephen Smith, executive director of the Southern Alliance for Clean Energy, said he was impressed by the overall framework of the environmental policy. But he said he was disappointed TVA didn’t embrace more renewable fuel and is focusing primarily on shifting its power sales away from peak periods rather than cutting overall usage.

“If they concentrate only on shifting power away from the peak, it does not get at the broader mission of reducing the problems of air pollution, global warming and other problems caused by the increased operation of these power plants,” he said.

Mr. Smith said TVA distributors “have a vested interest in selling more power and not looking at conservation” to improve their profit margins.

He also urged TVA to do more to promote solar, wind, biomass and other renewable fuels. More than half of all U.S. states have set standards for utilities to use renewable fuels, including a 12.5 percent renewable portfolio standard by 2020 in neighboring North Carolina.

“North Carolina doesn’t have any more wind or solar than Tennessee, but they do have people willing to take the lead,” Mr. Smith said.

David Reister, an Oak Ridge National Laboratory scientist active in the Sierra Club, urged TVA to adopt a tax on carbon emissions in the valley to help curb global warming and encourage both conservation and renewable energy.

Anda Ray, a TVA executive who is leading a team drafting TVA’s environmental policy, said there is less wind and solar power potential in the Tennessee Valley than in other parts of the country. She said generating electricity from such sources would be more expensive for TVA than existing sources.

TVA GOALS

* Cut peak power demand by 1,400 megawatts, or 30 percent of projected growth, by 2012.

* Reduce greenhouse emissions linked to global warming. To become a top quartile utility, TVA needs to trim carbon dioxide emissions by 16 percent.

* Continue to cut smog-related pollution. To meet Clean Air Interstate Rules, TVA must cut in half sulfur and nitrogen oxide emissions by 2019.

* Reduce wastes, improve water quality and promote sustainable land use.

Source: Draft 2008 TVA Environmental Policy