TVA chief: Economics, efficiency of natural gas lessen coal's power production role

TVA President and CEO Bill Johnson speaks to rate opponents following a TVA public meeting Friday, Feb. 16, 2018, inside the Chattanooga office complex auditorium.
TVA President and CEO Bill Johnson speaks to rate opponents following a TVA public meeting Friday, Feb. 16, 2018, inside the Chattanooga office complex auditorium.

Donald Trump vowed as president he would end America's "war on coal."

But one of the federal government's biggest coal users continues to cut its coal consumption and expects within the next couple of years to use less than a third of the coal generation than it did a decade ago.

The Tennessee Valley Authority, which derived more than 60 percent of its electricity from the burning of coal a decade ago, expects by 2020 that only about 18 percent of its generation will come from coal. The shift is simply due to economics, not any regulatory battle against fossil fuels, according to TVA President Bill Johnson.

photo Tennessee Valley Authority president and CEO Bill Johnson speaks during an editorial board meeting Thursday, Feb. 8, 2018, at the Chattanooga Times Free Press.

"It really wasn't any war on coal that is doing this," Johnson told the Chattanooga Rotary Club Thursday. "This is about natural gas and its supply and advantages."

Most of TVA's aging fleet of coal plants were built in the 1950s "and many of these plants were built to last only 20 or 30 years," Johnson said. As a result, the fossil plants are not as efficient as the combined cycle natural gas plants that can replace such generation today.

The new gas plants use fewer workers, require less maintenance, burn cheaper and cleaner fuel and don't leave the coal residues and ash such as that which led to the rupture of the coal ash pond in 2008 at the Kingston Fossil Plant.

The coal ash spill at Kingston ruined local houses, polluted the nearby Clinch River and cost TVA more than $1 billion to clean up.

TVA has shut down more than half of the 59 coal-fired units it once operated, although Johnson said TVA's main coal plants (Gallatin, Bull Run, Kingston) will probably run for another 30 years or more.

"This (move away from coal) was all about a business decision to deliver our power at the lowest possible cost, not because of some preference for one source of power over another," Johnson said. "I don't think you'll see any new coal plants simply because natural gas is so cheap and its efficiency is twice that of an existing coal plant."

President Trump moved aggressively in his first year in office to roll back regulations he says hurt America's coal miners. Trump also appointed to the TVA board retired coal executive Kenneth Allen, a former chief operating officer for Armstrong Coal Co., in Kentucky who was a critic of Obama's coal regulations.

"I made them this promise: we will put our miners back to work," Trump said last year.

But the industry itself remains mired in long-term decline, a downturn that one of Trump's own government agencies predicts will only worsen over time. Johnson said "TVA is a microcosm" of the entire industry, which continues to shut down older coal plants.

TVA also forecasts that total demand for the electricity it sells will be 13 percent less in 2027 than it was in 2007 as more consumers shift to energy efficiency appliances, heaters, air conditioners and energy control monitors.

In its newest energy projections released this month, the U.S. Energy Information Administration projects that the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 32 percent in 2017 to 34 percent in both 2018 and 2019. The forecast generation share from coal in both 2018 and 2019 averages 29 percent, down from 30 percent in 2017 and more than 50 percent a decade ago.

Experts told The Hill newspaper this week that Obama-era regulations, including the Clean Power Plan scrapped by President Trump, may have hastened the coal industry downturn. But the decline started with market forces far more powerful than any presidential administration.

"Coal in the U.S. is in secular decline. It's more than regulation, and it's more than environmental concerns," said Anna Zubets-Anderson, a vice president and senior analyst at Moody's Investors Services.

"The deregulation push is not something we think makes a material impact," said Molly Shutt, a commodities analyst at BMI Research.

With the shut down of its oldest coal units, TVA is now getting 55 percent of its power from non carbon-producing sources, including nuclear power from its three nuclear plants, hydro power generation from its 29 power-generating dams, and renewable sources such as solar, wind and geothermal.

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

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