With power sales down, TVA plots new strategy

When the Tennessee Valley Authority adopted its last strategic plan in the spring of 2008, agency directors wanted to build at least three more nuclear reactors and buy several more gas-fired generators by 2020 to keep pace with the growing demand for electricity.

But the slowing economy and rising conservation has since caused some utility officials to rethink those plans.

“This economic downturn has changed some of our energy habits and I do think what we see coming out of this will be different,” TVA Vice President Joe Hoagland said Friday. “We do expect growth to return, but we think it’s going to be a lot slower than it has been.”

Mr. Hoagland said the slowdown in power consumption, combined with pending regulations on carbon, smog and ash emissions and proposed new standards for renewable energy, underscore the need for a new blueprint for TVA’s future. TVA officials are drafting a new Integrated Resource Plan this winter to update the Energy 2010 plan prepared in the early 1990s.

A task force that is helping guide TVA officials draft such a plan wrapped up two days of meetings in Chatttanooga on Friday. Following the closed-door meetings with the advisory panel, TVA officials met with the public and heard several environmental activists urge TVA to do more to cut energy use and turn to more renewable fuels.

Chattanoogan Bill Reynolds said the energy landscape has shifted because of the recession and the new White House push for energy efficiency and renewable energy.

“In California, the average household is using only half as much electricity as we do so there are tremendous opportunities for people to save,” Mr. Reynolds said.

TVA has set a goal of shaving at least 1,400 megawatts of power from its peak demand by 2012 through energy audits and other conservation incentives, Mr. Hoagland said. The utility also is testing pilot efficiency programs with more than 20 distributors as it negotiates to develop time-of-day pricing across the Tennessee Valley in the next year or two.

“We’re glad to see TVA’s renewed interest in energy efficiency,” said John Sibley, program director for the Southeast Energy Efficiency Alliance. “Their goal of reducing peak demand by 1,400 megawatts is to be applauded but we hope there will also be even more goals toward overall energy efficiency.”

TVA has purchased four gas-fired power plants since 2006 to help meet its peak power demands during hot summer afternoons and cold winter mornings. The utility also is spending $2.5 billion to finish a second reactor at the Watts Bar Nuclear Plant near Spring City, Tenn., by 2012 and is studying plans to build or finish another reactor at its Bellefonte site in Northeast Alabama.

But the initial Bellefonte plans were cut this summer to only one reactor and those were pushed back two years because of the drop in power demand, officials said. On Thursday, TVA announced plans to buy 450 megawatts of renewable energy from wind farms in North Dakota and South Dakota. TVA Executive Vice President Van Wardlaw said the agency is negotiating to buy even more wind and biofuels power.

Stephen Smith, executive director for the Southern Alliance for Clean Energy and a member of the task force advising TVA on future power plans, said economic and political shifts should alter TVA’s future.

“TVA was in a mindset for the past decade or more that growth was inevitable and that they were behind the growth curve and needed to build a lot more additional generation,” he said. “A lot of us believe we’re not going to return to those worlds, at least in the near future, and some of what TVA was setting up for new generation may not be necessary.”

Dr. Smith said his group believes all of the future energy growth demand in the Tennessee Valley can be met through a combination of energy efficiency, natural gas and renewable fuels like wind, solar and biofuels.

But even with slower energy growth, TVA may still need new generation to make up for aging coal plants the utility may shutter.

“We’re looking at our options at plants like John Sevier (near Rogersville) and we hope this process will help us analyze the best approaches as we move forward,” Mr. Hoagland said.