TVA at a crossroads

TVA at a crossroads

April 13th, 2011 in Opinion Times

When TVA managers present the utility's 20-year energy plan to the agency's board of directors here Thursday, they are expected to call for shutting down several of the agency's dirtiest coal-fired plants in favor of near-term investments in natural gas generation and, over the long term, more nuclear capacity. They are expected to seek only modest additions of renewable and alternative power sources, and to propose even weaker plans to reduce energy consumption through conservation and energy efficiency programs.

Such a plan would be predictable, and strangely akin to the agency's last integrated resource plan. But it would also be predictably deficient in its focus on renewable energy, conservation and energy efficiency, though the latter two are by far the safest, cleanest, least costly and most underrated way to meet a substantial portion of the Tennessee Valley's future demands for electricity.

TVA's unfortunate lack of enthusiasm for conservation since the late 1980s - when it virtually shut down the nation-leading conservation program it had erected over the previous 15 years - is as predictable as it is lamentable. It owes partly to the agency's traditional engineering prowess and build-a-plant mindset, and partly to its reliance on the 155 independent distributors of TVA power. These municipal and rural utility managers have long eschewed conservation and energy efficiency programs because they finance their operations by selling electricity - not by helping their customers whittle their power usage.

TVA and its power distributors, organized under the Tennessee Valley Public Power Association, must do better if they are to keep power rates affordable and competitive. Resource and cost trends for nuclear, gas and coal-fired plants make that evident.

The agency has good reason to consider shutting down some of its dirtiest old coal-fired plants - the ones which account for about 7,000 megawatts of power generation capacity, or nearly a quarter of TVA's mainstay capacity.

Though major parts - boilers, furnaces and coal shuttles - have often been replaced over the decades, some of these plants are upwards of 60 years old. But despite Clean Air Act standards that were mandated by Congress in the 1970s, these plants have never been retrofitted with the scrubbers and filters needed to control health-damaging, smog producing and acid-rain generating sulfur and nitrogen oxides, much less mercury and carbon dioxide.

Installing filters and scrubbers at the dirtiest plants would cost billions of dollars, and the work take more time than TVA now would be granted by courts and regulators. TVA is believed to be close to proposing shuttering the worst plants, of between 2,400 and 4,000 megawatts. The board should set a course for closing the whole batch of dirty plants, but closing the plants with the dirtiest 4,000 megawatts would be a good start. To do less would be myopic and needlessly harmful to ratepayers' health.

To replace lost capacity, TVA plans to build up to 9,200 megawatts of new natural-gas-fired plants, to finish the second reactor at the Watts Bar nuclear plant for 1,150 megawatts, and to get 1,500 to 2,500 megawatts of power from renewable energy. With the Japanese crisis worsening, it may temporarily defer further consideration of reviving the old, unfinished Bellefonte nuclear plant, but it's targeting more than 4,500 megawatts from that plant in the early 2020s.

The proposed mix would suit the engineers, but it is woefully deficient in the energy capacity that can be gained through renewable energy, and the energy savings that can be achieved through energy conservation and energy efficiency programs. The Southern Alliance for Energy reasonably believes that the reduction of new capacity needs that can be captured by a robust conservation program and energy efficiency focus would, alone, reduce TVA's projected capacity needs by 1 percent, as opposed to its projected increase of 1 percent.

To achieve sharper reductions, TVA would have to commit to innovative financial incentives, built around progressive rate structures and load management programs, that reward conservation and off-peak-power use, and that make peak power use more expensive, for distributors as well as customers. It would have to re-establish a robust conservation and energy efficiency program, similar to what it had in the 1980s.

And it would have to commit vigorously to solar energy (think: collaboration with Tennessee's three huge solar facilities, including the $1.5 billion Wacker Chemical plant now being built in Charleston); and to green and alternative fuels.

In fact, TVA is at a crossroads. Finishing Bellefonte would require an investment of more than $8 billion in an old plant that was judged to be 90 percent finished 40 years ago. The agency is bumping up against its $30 billion debt level. It's got nearly 5 million pounds of hazardous spent nuclear fuel lying in vulnerable pools at its existing three nuclear plants. And the Japanese disaster is bound to lead to a tightening of regulatory measures, and far higher expense.

So-called "clean coal" is not yet on the horizon. Natural gas plants that may soon need fuel from supplies produced by the notorious fracturing (fracking) of underground shale are bound to become more expensive, more unwanted and rejected.

Renewables and conservation deserve more attention. It's time they got it.