Plan for the Future by Investing in the Present

Tennessee Valley Authority Makes Plans for Crucial Changes

The Tennessee Valley Authority’s responsible decision making will benefit their consumers in the long run, writes Richard W. Caperton.

The Tennessee Valley Authority wind farm on Buffalo Mountain near Oliver Springs, Tennessee, was the first commercial wind farm in the Southeast. TVA is now making even further investments in a clean energy future. (AP/Wade Payne)
The Tennessee Valley Authority wind farm on Buffalo Mountain near Oliver Springs, Tennessee, was the first commercial wind farm in the Southeast. TVA is now making even further investments in a clean energy future. (AP/Wade Payne)

America of the future will burn less coal, use electricity more efficiently, and run our power system more safely. In this future we will have lower, more stable power prices; avoid the most catastrophic effects of climate change; and the energy industry will be a source of good jobs for millions of Americans.

This future will not just appear out of thin air, though, and it will not happen next year, or even the year after that. America’s clean energy future will arrive over the next several decades. More importantly, the clean energy future will be the result of serious planning and investment, which must begin today.

The Tennessee Valley Authority, or TVA, is one of our country’s best examples of public investment in the needs of the future. TVA is responsible for powering much of rural America and today provides power throughout the Southeast. It has already embarked on the process of planning for the future and their decisions shed light on what other utilities will have to do. 

The choices TVA makes will influence the entire utility industry, especially in the Southeast. Today, TVA provides power to customers in seven southeastern states. These customers are a mix of 155 independent distribution utilities (such as rural electric cooperatives and municipal utilities), several dozen large industrial users, and 12 utilities that buy power on competitive markets. In 2008 62 percent of TVA’s power came from coal, 33 percent from nuclear, and 4 percent from hydroelectric dams, with small parts from other fossil-fuel processes and renewables. TVA’s operations make up a sizeable portion of the entire U.S. power sector and it is responsible for a massive 5 percent of the country’s coal-fired generation.

TVA made clear in a flurry of major announcements made on April 14 that its operations will look very different in the future. First, TVA and the U.S. Environmental Protection Agency reached a historic agreement “to resolve alleged Clean Air Act violations at 11 of [TVA’s] coal-fired power plants in Alabama, Kentucky, and Tennessee.” According to the EPA release on the agreement:

The settlement will require TVA to invest a TVA estimated $3 to $5 billion on new and upgraded state-of-the-art pollution controls that will prevent approximately 1,200 to 3,000 premature deaths, 2,000 heart attacks and 21,000 cases of asthma attacks each year, resulting in up to $27 billion in annual health benefits.

As part of the agreement, TVA also agreed to retire 2,700 megawatts of coal-fired generation. This demonstrates that the government is working to make sure clean, healthy air is available to all Americans. Utilities will no longer be able to wantonly pollute the air. This is especially true when there are cost-effective ways to prevent the pollution, as there are in this case.

Second, TVA has recognized that it doesn’t make economic sense to keep some of its older, dirtier plants in operation or to build new plants, and it plans to use a mix of cleaner energy sources to replace the capacity it takes offline. In addition to the coal-fired generation being retired as part of the EPA agreement, TVA will idle between 2,400 and 4,700 megawatts of coal-fired capacity, according to its Integrated Resource Plan, a guide for how TVA will invest in the future. Energy efficiency is the largest of the cleaner sources that will replace the coal-fired generation coming offline, and will be accompanied by renewables, nuclear, and natural gas. These sources will also help meet new demand. Best of all, replacing coal plants with cleaner sources is not expected to harm electricity consumers, as TVA clearly states that the Resource Plan “[p]reserves reliable, low-cost power.”

tva transition

Finally, TVA operates a fleet of nuclear reactors and is the first American utility to announce specific safety improvements in the wake of the Fukushima Daiichi disaster in Japan. The biggest change is that TVA is considering moving some radioactive waste from spent fuel pools—which have been one of the problem areas in the Japanese situation—to safer “dry cask” storage. TVA is also improving backup power systems and making other improvements at their facilities.

None of these three changes—retrofits, retirements, or operational improvements—is sufficient to move TVA all the way to the clean energy future. Indeed, many utilities are still far cleaner, and even TVA’s recent record leaves much to be desired. For instance, these three changes do nothing to absolve TVA of any guilt from the horrific coal fly ash slurry spill in Kingston, TN, in December 2008, in which 1.1 billion gallons of coal waste destroyed houses, polluted waterways, and killed “tremendous” numbers of fish.

At the same time, TVA’s recent steps show the elements of a responsible path forward. First, the clean energy future will require substantial investment. The government has a role in making this investment easier, potentially by establishing a financing vehicle like a Clean Energy Deployment Administration or by using the Rural Utilities Service to move more capital toward renewable energy. Second, the EPA needs to play a role in enforcing standards that protect human health. Third, nuclear operators must continue to learn from experience and incorporate new knowledge about threats to nuclear power plants, including threats from climate change.

The most important lesson from TVA, though, is that utilities need to start planning for a future that looks very different from the past. When the clean energy future arrives, utilities that have been planning all along will be the utilities that thrive. These utilities will rise above the competition and serve their customers, their employees, and their owners better.

Richard W. Caperton is a Senior Policy Analyst with the Energy Opportunity team at American Progress.

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Richard W. Caperton

Managing Director, Energy