Insurer to pay TVA $150 million more for Kingston ash spill damages

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Coming Sunday: A look back at the Kingston ash spill five years later

On the eve of the fifth anniversary of its worst environmental disaster, the Tennessee Valley Authority said Friday it will receive another $150 million from one of its insurers to help pay for the ongoing cleanup from the 2008 coal ash spill in Kingston, Tenn.

ACE Bermuda Insurance Ltd., a property and casualty insurance company, will pay TVA for a portion of the damages to nearly 300 acres of property caused when a dike ruptured and spilled coal ash into the river and nearby land. The insurance settlement, which was reached under an arbitration agreement between TVA and ACE, is believed to be the biggest insurance payment ever to TVA.

Previously, TVA was paid a total of $92 million from insurers for the Kingston ash spill, including $42 million from the Bermuda-based Arch property and casualty insurance company. TVA has one other insurance claim pending for $50 million from the 2008 ash spill.

Even if successful in its claim, TVA's insurance claims will still pay less than a third of the $1.03 billion TVA has spent to repair, clean up and compensate property owners damaged in the Kingston incident.

More than 1.1 billion gallons of coal fly ash slurry spilled into the Emory River and its Swan Pond embayment when a dike ruptured three days before Christmas in 2008. TVA had used the pond for a half century to store coal ash and other sentiments leftover from the burning of coal used to fuel the Kingston fossil plant.

TVA expects to eventually spend between $1.1 billion and $1.2 billion on the cleanup and recovery program, which is projected to be complete by 2015. But in its annual report issued this fall, TVA said that expense could escalate if lawsuits against TVA from the incident are successful.

TVA is paying for the cost of the cleanup over 15 years, stretching until 2024. Friday's settlement will cut the annual cost to ratepayers from the accident by 13.3 percent, according to a regulatory filing from TVA to the U.S. Securities and Exchange Commission.

TVA spokesman Duncan Mansfield said the insurance payments will help TVA lower the costs incurred by electric ratepayers for the cleanup.

"Ratepayers should be pleased that they will not have to pay for as much of these costs," Mansfield said.

Beyond the cleanup costs from the Kingston ash spill, the incident prompted TVA to convert its remaining wet ash storage facilities to dry ash storage. That conversion, according to TVA financial reports, is projected to cost another $1.5 billion to $2 billion.

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

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