TVA Settlement for Clean Air Act Violations Includes $3 To $5 Billion in Pollution Control Upgrades at Coal Plants

Despite a growing renewable energy portfolio which currently generates 4,300 MW as well as a target to be the United States' leading provider of low-cost, clean energy by 2020, the Tennessee Valley Authority (NYSE: TVC) (TVA) is required to pay significant fines for its Clean Air Act violations.

The TVA, which is an independent corporate agency of the U.S. government, is one of the largest providers of electricity in the nation -- serving nine million people across seven states.  Recently, the power giant settled with the Environmental Protection Agency (EPA) for alleged Clean Air Act violations at all 11 of its coal-fired power plants.

In January 2011, Anda Ray, TVA  senior vice president for Environment and Technology said that part of the utility's vision to become the nation's leader in providing cleaner energy includes "being a national leader in improving air quality."

Based on the numbers attached to the settlement this vision is going to come with at a serious price. TVA has agreed to pay:

• US$3 to US$5 billion to upgrade its coal-fired plants with state-of-the-art pollution controls.
• US$350 million toward investments in clean energy projects.
• US$1 million to the National Park Service and the National Forest Service to improve, protect, or rehabilitate forest and park lands that have been impacted by emissions from TVA’s plants.
• US$10 million civil penalty.

According to the EPA, when all of these actions have been fully implemented, they will reduce TVA's emissions of nitrogen oxide (NOx) by 69 percent and sulfur dioxide (SO2) by 67 percent from the utility's 2008 emissions levels.  This reduction, the EPA estimates, will result in US$27 billion in annual health benefits.

“Investments in pollution control equipment will keep hundreds of thousands of tons of harmful pollutants out of the air we breathe, and help create green job opportunities that will reduce pollution and improve energy efficiency," said EPA Administrator Lisa P. Jackson.

Although this settlement may not have been part of TVA's original "vision" to meet its 2020 nation leading target, it will surely move the utility significantly closer to meeting that mandate. The company has also unveiled plans to retire 18 coal-fired generation units at three plants. The combined 1,000 MW capacity will be replaced with low-emission or zero-emission electricity sources.

“These units are among the first built by TVA and have served us well over the years. But as times change, TVA must adapt to meet future challenges,” said TVA President and CEO Tom Kilgore.

He added, “In the longer term, these actions reinforce our vision to keep bills low, keep our service reliability high and further improve air quality as we modernize the TVA power system.”

Image Credit: Ken Lund via Flickr