TVA's board of directors on Thursday approved what they called a historic agreement to settle a 12-year-old string of clean-air lawsuits involving the EPA, four states and three environmental groups.
In the settlement, TVA agreed to idle retire 18 older coal-fired power-generation units at three plants, shutting down the Johnsonville plant entirely and turning the John Sevier plant into a gas-powered electric generating plant. The Widows Creek plant will continue to operate two coal units with advanced pollution controls, TVA said.
Additionally, TVA will invest $3 billion to $5 billion on additional pollution controls at its remaining coal plants and commit $350 million to "environmental improvement" projects over the next five years.
The utility also must pay a $10 million fine to the U.S. Environmental Protection Agency. From that, Alabama and Kentucky will receive $500,000 each and Tennessee will receive $1 million.
"It was the right thing to do," said TVA CEO Tom Kilgore, calling the agreement part of the federal utility's vision of being the nation's leading provider of low-cost and cleaner energy by 2020.
EPA put a slightly different spin on it, noting in a news release that the settlement resolved "alleged Clean Air Act violations at 11 of its coal-fired plants."
EPA also said TVA's expected multi-billion-dollar investment in state-of-the-art pollution controls will prevent about 1,200 to 3,000 premature deaths, 2,000 heart attacks and 21,000 cases of asthma attacks each year, with up to $27 billion in annual health benefits.
EPA alleges TVA upgraded and maintained its older coal plants without installing modern pollution controls.
Anda Ray, TVA's senior vice president of environment and technology, announced the settlement at the board meeting Thursday. She said the agreement was in keeping with TVA's 20-year Integrated Resource Plan, which the board had adopted moments before.
The 20-year plan calls for reducing coal-fired power generation by 4,000 to 4,700 megawatts.
Stephen Smith, executive director of Southern Alliance for Clean Energy, and Louise Gorenflo of the Sierra Club, were members of the stakeholder committee that met with TVA during the development of the 20-year plan.
They said Thursday they thought TVA was thinking of the lawsuits - the first brought by EPA in 1999 - when the plan was in development.
But they said they don't think the negotiations with EPA shaped the 20-year plan.
Smith said he thought the Kingston ash spill and the rising costs of using coal had prompted TVA to look at new cost and generation models.
"I really think it was an aha moment for TVA that they don't have to spend all that money on coal [generation], and if that was the case why continue fight with all the litigation?" Smith said.
After Thursday's meeting, Kilgore wouldn't say why he initiated the move with EPA in late 2009. The negotiations continued throughout all of 2010.
Kilgore said TVA's goal is to minimize the impact on employees at the affected coal plants. Some may continue to work at the plants that are in transition or may work maintaining the idled facilities.
Some employees may have to be willing to relocate, Kilgore said, while others will reach retirement before the last of the retired units are closed in 2017.
Of the required $350 million in environmental projects, TVA will spend $240 million to retrofit low-income housing with the most cost-effective energy efficiency technologies.
TVA also will spend $40 million to reduce greenhouse gas emissions through renewable projects such as hybrid electric charging stations and $8 million for a clean diesel and electric vehicle project for public transportation systems.
TVA also is to provide $1 million to the National Park Service and the U.S. Forest Service to improve, protect or rehabilitate forest and park lands that have been affected by emissions from its plants, including Mammoth Cave National Park and Great Smoky Mountains National Park, according to EPA.
Don Barger, senior regional director for the National Parks Conservation Association, couldn't stop smiling Thursday after the board meeting.
"For decades the Smoky Mountains have suffered from a slow-motion crisis. Air pollution from TVA's plants degraded scenic vistas, damaged plant species and impaired human health. Today's settlement halts that trend and sends us in the right direction."