Supreme Court delay of Clean Power Plan won't affect TVA

TVA President Bill Johnson said the court order Tuesday halting the Environmental Protection Agency's Clean Power Plan isn't changing plans to close more TVA coal plants. The federal utility plans to replace its coal-fired generation with lower carbon-emitting sources of power, including nuclear, natural gas, solar, hydro and wind.

"The stay of the Clean Power Plan will not affect our actions in any way," Johnson said after a TVA board meeting in Chattanooga. "For us, we're probably as well positioned as anyone in the country to comply with the EPA regulations so I don't think this will change any of our actions or decision making. It really wasn't driving our decisions in the first place."

TVA developed a 20-year power plan for the future last year based upon what it determined to be the lowest cost and most reliable method of meeting future power demand and complying with existing smog and other air pollution requirements. TVA's aging fleet of coal-fired power plants, most built more than a half century ago, must be shut down or retrofitted with pollution controls to comply with air pollution regulations even prior to the carbon limits EPA proposed two years ago in its Clean Power Plan.

In a 5-4 decision Tuesday, the U.S. Supreme Court said EPA may have overstepped its regulatory authority with its carbon controls. The high court said the carbon regulations can't be implemented until an appeals court "confirms the legal justification" for the rules. That is expected to push any implementation of the pending rules until after the presidential election. If a Republican is elected president, it is likely the EPA may back off the Clean Power Plan.

U.S. Sen. Lamar Alexander, R-Tenn., a member of the Senate Committee on the Environment and Public Works, said the high court "was right to stop implementation of the Obama administration's arbitrary energy plan that favors unreliable wind power over more reliable clean sources of energy like nuclear power.

"The best path to a clean energy future is to end wasteful subsidies for unreliable wind power and other mature technologies and instead unleash energy innovation through doubling funding for basic energy research and expand nuclear power." Alexander said.

Johnson, a lawyer who has headed three major electric utilities, said TVA's integrated resource plan was developed to meet TVA's mandate to deliver power at the lowest cost, not to comply with carbon limits. TVA operates 29 hydroelectric dams and will soon bring on its seventh nuclear reactor at its Watts Bar Nuclear Plant near Spring City, Tenn. Hydro and nuclear plants generate virtually no carbon emissions and, combined with limited solar and wind generation, will soon deliver more than half of all of TVA's power generation.

Last month, coal industry advocates suggested that electric rates by TVA could rise by 20 percent because of the carbon rules and TVA's decisions to shut down more coal plants. TVA has, or plans to, shut down its Widows Creek and Colbert fossil plants in Alabama, the John Sevier, Allen and Johnsonville plants in Tennessee and some units at the Paradise plant in Kentucky.

The Partnership for Affordable Clean Energy, a nonprofit group that works on energy policy across the South, said TVA's plan to shutter 7,000 megawatts of coal-fired electricity generation will push up TVA rates and cut 65,000 jobs and $900 million of manufacturing output in Tennessee.

"We've seen coal go from 60 percent of TVA's generation to 40 percent in recent years," said Lance Brown, the Montgomery, Ala.-based director of PACE. "This is a drastic shift that has real consequences for consumers."

TVA dismissed the projections by PACE, claiming they were based upon old information when TVA's power demand was bigger and natural gas prices were higher.

Regardless of the outcome of the court decisions on the EPA carbon controls, TVA has emerged as an early leader in cutting its carbon outputs, which have already shrunk by 30 percent since 2005 and are projected to be down by 40 percent in 2020 and by 65 percent by 2030, Johnson said.

No sale of TVA

TVA may not get the credit it could have needed under the Obama carbon control rules. But it did get some nod of approval from the White House this week, which dropped its previous efforts to privatize or transfer TVA out of the federal government.

For the first time under Obama, the Office of Management and Budget did not suggest that TVA be sold to a private utility or be transferred to another government entity. In the fiscal 2017 budget plan released Tuesday, White House budget planners noted that TVA's debt is projected to remain below its $30 billion cap and the agency should be able to continue to operate as a self-funding, federally owned corporation. Last year, TVA earned a record $1.1 billion on revenues of just over $11 billion.