published Friday, November 15th, 2013

TVA to shut down eight more coal units; gas plant will replace idled Paradise

OXFORD, Miss. — The Tennessee Valley Authority will shutter another eight coal units in Alabama and Kentucky and build a new natural gas plant in Kentucky as part of a new strategy to cut the share of its power generated by coal in half while doubling its gas-fired generation.

TVA directors voted Thursday to shut down the newest unit at the Widows Creek coal plant in Northeast Alabama, all five units at the Colbert coal plant in Northwest Alabama and units 1 and 2 at the Paradise plant in western Kentucky.

To replace the shut down of two of the three coal units at the Paradise plant, TVA plans to spend up to $1.1 billion to build a natural gas-fired plant at the Paradise site.

TVA President Bill Johnson said the switch from coal to gas reflects the rising costs of pollution cleanup for TVA's aging coal fleet and the relatively cheaper cost of power from natural gas since gas prices have fallen over the past four years. TVA also is looking to cut its operating costs after power sales for the federal utility have dropped nearly 10 percent from their peak five years ago from the recession and its aftermath.

"These changes are designed to bring the lowest cost and cleanest power to our customers and a higher degree of certainty about our asset utilization," Johnson told reporters following the board's vote.

The move will likely cost the jobs of more than 400 TVA employes and contractors at the coal plants, although TVA officials said they will work with displaced employees over the next couple of years to find other jobs or otherwise ease the transition.

The 9-member TVA board unanimously approved the plant closings, which will cut TVA's coal-fired generation below its nuclear power output for the first time. TVA directors from Alabama and Kentucky conceded it was not a popular vote back home.

TVA Director Peter Mahurin, who grew up near the Paradise plant in western Kentucky, said the vote "is like a nightmare for me." But Mahurin, the chairman of TVA's audit and finance committee, said the move should help TVA save money and keep electric rates lower over time.

Joe Ritch, the TVA director from Huntsville, Ala., said the decision "is painful but it is the right thing to do."

TVA Chief Generation Officer Chip Pardee said that the moves would avoid TVA having to spend more than $1 billion for pollution controls for Colbert and $163 million for pollution upgrades required for Widows Creek Unit 8.

Despite objections from Paradise backers in coal-rich western Kentucky, TVA projects it will be cheaper to use natural gas generation to produce electricity, rather than make costly pollution upgrades required to keep operating the two oldest units at Paradise, which TVA began building in 1959. Johnson said the change is needed to comply with new federal air quaity regulations, including new and proposed regulations on mercury and carbon emissions.

But Kentucky officials said the change will hurt the economy of western Kentucky.

"The majority of people in Kentucky want Paradise to stay on coal," Kentucky state Rep. Brent Yonts, a Democrat from Greenville, Ky. " To do anything other than that, we believe, is in violation of TVA's mission....and will lead to the ruination of western Kentucky."

Senate Minority Mitch McConnell, R-Ky., had urged TVA to invest in keeping the Paradise coal units and other TVA coal facilities operating.

"To allow a historically abundant and proven resource, such as coal, to fall by the wayside would ultimately threaten our energy independence," McConnell said in a statement.

Johnson said TVA's target mix of generation for the future would be to 40 percent from nuclear power, 20 percent from coal, 20 percent from natural gas and 20 percent from hydro and other renewable sources.

Bruce Nilles, the national director for the Sierra Club's Beyond Coal Campaign, called TVA's decision Thursday "historic" and part of a nationwide movement away from coal. Although coal once supplied a majority of America's electric utilities -- and once accounted for more than 80 percent of TVA's power -- coal generation is declining due to higher costs for such plants to meet new environmental rules and the declining price of alternative fuels.

"The age of coal is ending and this is a signicant day in that transition" Nilles said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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