Ash cleanup price tag nears $1 billion

Ash cleanup price tag nears $1 billion

May 2nd, 2009 in News

Cleaning up a coal ash spill in Kingston, Tenn., is projected to cost the Tennessee Valley Authority and its ratepayers nearly $1 billion, the utility disclosed in a regulatory filing Friday.

In just the past month, TVA has raised the estimated cleanup expense for its Dec. 22 spill by $150 million. In a quarterly financial report filed with the U.S. Securities and Exchange Commission, TVA said removing the coal ash that spilled across nearly 300 acres will cost between $675 million and $975 million.

In February, TVA said the cleanup would cost $525 million to $825 million.

Most of the extra cost included in TVA's newest cleanup estimate is because of higher-than-expected expenses to transport and store the ash once it is removed from the Emory River and adjacent property, agency officials said.

"TVA currently believes the recovery process will take several years," agency officials said in its quarterly report.

"The rising cost of cleaning up this mess is truly shocking because the reality is that nobody wants coal ash and its disposal is proving very complex and expensive," said Stephen Smith, executive director for the Southern Alliance for Clean Energy. "Those of us in the Tennessee Valley have enjoyed low electric rates from coal, but those costs have been kept artificially low for years because the company hasn't had to properly dispose of coal wastes and pollution."

TVA Chief Financial Officer Kim Greene said the cleanup expense comes at a time of falling power sales and investment losses for TVA because of the recession. Electricity consumption fell 9.4 percent in the first three months of this year, and the value of TVA's pension plan is down by more than $2 billion.

TVA still reported net income of $133 million for the quarter, down only $2 million from a year ago.

"The decrease in power sales, continuing expenses to clean up the Kingston ash spill and the impact of the market decline on our pension and other investments are among the factors that make this a challenging year financially," Ms. Greene said.

More than 5.4 million cubic yards of ash spilled out of a storage pond Dec. 22. The ruptured pond had stored ash residue from the Kingston coal plant for more than a half century.

The cleanup expense from one of the nation's biggest industrial spills could go even higher if TVA is fined or loses any of the landowner lawsuits filed after the accident. TVA said seven lawsuits are pending in federal court in Knoxville involving 347 property owners.

Insurers have denied coverage to TVA for the accident, and its costs could show up in future rate increases.

"As expensive as this will be for ratepayers, this accident has also been very expensive for the land, water and people of this area," said Lisa Evans, an attorney for Earthjustice, a nonprofit environmental law firm.