TVA Likely to Retire Three Coal Units in Tennessee

The Tennessee Valley Authority (TVA) is poised to decide on the fate of a coal-fired power plant in Tennessee. 

At its next meeting on Aug. 21, the TVA board will likely choose to retire three existing coal-fired units at the Allen Fossil Plant in Shelby County, Tenn., by December 2018 and replace them with a natural gas plant.

The TVA agreed to reduce pollutant emissions at the 702-MW facility—as part of a 2011 settlement agreement with the Environmental Protection Agency, Alabama, Kentucky, Tennessee, North Carolina, and three environmental advocacy groups—either by installing flue gas desulfurization systems or retiring the coal units by 2018.

But the utility says the three coal units provide “both real and reactive” power for the Memphis area, and it is evaluating how to replace that power. It has proposed construction of a new combined cycle power plant. However, the environmental group Sierra Club has mounted a campaign for the TVA to get replacement power from wind power instead. It has called on the utility to invest in a $20 billion, 3.5-GW high voltage transmission line to be built by Clean Line Energy Partners running from wind-rich Texas and Oklahoma to Memphis.

TVA CEO Bill Johnson recently underscored that the U.S. government–owned corporation must abide by guidance in federal statute that “tells us that we have to do lowest cost resources, lowest cost system planning and system additions, all designed to deliver lowest feasible cost electricity to our customers while meeting all environmental standards.”

While the TVA understands the Sierra Club’s view, “the suggestion of a gas plant at Allen to replace coal meets that standard,” Johnson said during the utility’s Aug. 5 third quarter fiscal year 2014 conference call.

During that call, TVA officials also revealed that its 1.2-GW Watts Bar Unit 2 nuclear plant was on track for commercial operation by December 2015 at a cost of about $4.2 billion. The project is to date 90% complete, and activities completed include conducting open-vessel testing of the unit’s cooling system and construction of an “industry-first” hardened storage building for backup flex emergency equipment in response to lessons learned from the Fukushima accident.

Yet, TVA’s total sales were down about 3% through June 30. Johnson told investors this was primarily due to the closure last year of its largest directly served customer, U.S. Enrichment Corp.’s Paducah, Ky., facility.

In a drive to slash operations and maintenance costs by $500 million over the next few years, Johnson also revealed that TVA won’t fill 1,000 open positions as originally planned. It had also reduced its workforce by about 1,000 positions, he said.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

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