Supreme Court's coal reprieve won't stop TVA from shutting down plants

TVA won't change course away from coal, despite court decision

The site of the TVA coal ash spill is pictured on Jan. 21, 2009 near Kingston.
The site of the TVA coal ash spill is pictured on Jan. 21, 2009 near Kingston.

By diversifying our portfolio, were diversifying ourselves from the impact of fuel cost changes and environmental rules, and getting additional benefit from cleaner sources.

A Supreme Court ruling that struck down the Obama administration's attempt to limit power plant emissions of mercury and other hazardous air pollutants won't affect TVA's plans for shrinking its fleet of coal-fired power plants, a spokesperson said Monday.

Despite the breathing room afforded to TVA and other producers of electricity thanks to the 5-4 ruling, TVA's strategy to diversify away from coal and toward nuclear and renewable sources of energy is still a sound plan that will future-proof the agency's fleet of power plants, said Jim Hopson, TVA spokesperson.

Hopson said TVA believes that moving away from coal is the "the right direction," regardless of this ruling or any other ruling from the EPA.

"Obviously we're still looking at what the ruling could eventually do, but the reality of it is that our mercury reductions within TVA are going to continue as we decrease generation from the coal fleet over the next three or four years, as we bring the rest of the sites that have been announced offline, and as we bring in new clean sources of power like Watts Bar 2," Hopson said, referring to a project to bring a new nuclear reactor online near Chattanooga.

While TVA's moves are costly in the short term, they protect the agency from future environmental rules, as well as from fluctuations in the cost of fuel, and provide an environmental benefit for the Tennessee Valley, he said.

"Just like your own personal financial planning, its not wise to have all of your eggs or the majority of your eggs in one basket, because as environmental regulations change, as cost of fuel changes, you're going to have a greater impact for ratepayers because of that," he said. "By diversifying our portfolio, we're insulating ourselves from the impact of fuel cost changes and environmental rules, and getting additional benefit from cleaner sources."

The Supreme Court split along ideological lines to rule that the EPA failed to take cost into account when it first decided to regulate the toxic emissions from coal- and oil-fired plants.

The EPA did factor in costs at a later stage, when it wrote standards that are expected to reduce the toxic emissions by 90 percent. But the court said that was too late.

The rules, which took effect in April, will remain in place while the case goes back to a lower court for the EPA to decide how to account for costs, environmental advocates say.

They were supposed to be fully in place next year. The issue was whether health risks are the only consideration under the Clean Air Act.

The challenge was brought by industry groups and 21 Republican-led states, which argued that the regulations were too costly for coal miners, businesses and consumers.

Writing for the court, Justice Antonin Scalia said the EPA was unreasonable in refusing to consider costs at the outset. He was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito.

In dissent, Justice Elena Kagan said it was enough for EPA to consider costs later in the process.

photo TVA is considering shutting down or retrofitting units 1 and 4 at the Shawnee Fossil Plant

"Over more than a decade, EPA took costs into account at multiple stages and through multiple means as it set emissions limits for power plants," Kagan said.

She was joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.

The EPA said it is reviewing the court's decision and will determine any appropriate next steps once a review is completed.

"EPA is disappointed that the Supreme Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance," EPA spokeswoman Melissa Harrison said.

Indeed, more than 70 percent of power plants already have installed controls to comply with the rules, said Vicki Patton, an attorney at the advocacy group Environmental Defense Fund.

"EPA already has an economic analysis that it can rely on to demonstrate that the public health benefits of the standards far outweigh the costs," Patton said.

The case is the latest in a string of attacks against the administration's actions to use the Clean Air Act to rein in pollution from coal-burning power plants.

EPA is readying rules expected to be released sometime this summer aimed at curbing pollution from the plants that is linked to global warming. States have already challenged those rules even before they are final, and Congress is working on a bill that would allow states to opt out of any rules clamping down on heat-trapping carbon dioxide.

The legal and political challenges ahead could undermine U.S. efforts to inspire other countries to control their emissions, as they head into negotiations in Paris on a new international treaty later this year.

In the case of mercury, the costs of installing and operating equipment to remove the pollutants before they are dispersed into the air are hefty - $9.6 billion a year, the EPA found.

But the benefits are much greater, $37 billion to $90 billion annually, the agency said. The savings stem from the prevention of up to 11,000 deaths, 4,700 nonfatal heart attacks and 540,000 lost days of work, the EPA said. Mercury accumulates in fish and is especially dangerous to pregnant or breastfeeding women, and young children, because of concern that too much could harm a developing brain.

A disproportionate share of the 600 affected power plants, most of which burn coal, are in the South and upper Midwest.

TVA's Hopson said it was too early to speculate on whether the court's decision to roll back EPA's anti-coal rules would result in any cost savings for TVA or its ratepayers during the transition.

"I'm not sure that we've looked that far ahead," he said. "Our plans were designed to provide this diversification that would keep that cost as low as possible, and whether it's this environmental regulation or future environmental regulations, diversifying gives us the capability to play across a bigger field without having any one element overtly impact us."

The Associated Press contributed to this report.

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