Tennessee Valley Authority to close 8 coal-fired power plants

The Tennessee Valley Authority, one of the nation’s five biggest users of coal for electricity generation, said Thursday it would close down eight coal-fired power units with 3,300 megawatts of capacity.

The decision was prompted by a combination of environmental requirements, the age of the plants, competition from natural gas and declining electricity consumption in the TVA’s service area.

TVA executives said at an open meeting of the agency’s board of directors in Oxford, Miss., that they aim to reduce coal to 20 percent of total generating capacity, about half of what it was in 2010.

The plant closures include two coal-fired units in Kentucky, despite an appeal from Senate Minority Leader Mitch McConnell (R-Ky.), who tried to persuade TVA President Bill Johnson to leave them open. McConnell and most of the Kentucky congressional delegation wrote to Johnson warning that the closure would lead to job losses.

“Senator McConnell did what his constituents would expect him to, advocate on their behalf and on behalf of their state,” Johnson said. But, he added, “our objective is to make the best decision for the entire region, and that’s what we did.”

Environmentalists were satisfied. Many of the plants were more than 50 years old, and under a consent decree between the TVA, four state governments and the Sierra Club, the authority was required to install additional pollution control equipment known as scrubbers or shut down the plants.

Coal plants also face stiff competition from natural gas-fired plants. TVA executives said they wanted to build a new 800 megawatt gas-fired plant, but two of the TVA directors at the meeting wanted more information before approving the project.

“The economics of coal for 50 years were great, and then the world turned upside down,” said Bruce Nilles, a lawyer with the Sierra Club who took part in negotiations with the TVA. “There was a confluence of economics plus the requirements of our consent decree and the looming concerns from two other forthcoming environmental rules regarding coal ash and a carbon standard.”

The coal plants slated for closure include the TVA’s five Colbert units in Alabama, two units at Paradise in Kentucky, and one unit at Widows Creek in Alabama.

The closures come on top of ones announced in 2011.

Johnson said that electricity demand has dropped nearly 10 percent over the past five years., half of that because one company, USEC, which produced and sold enriched uranium for commercial nuclear power plants, ceased its energy-intensive operations.

“We find ourselves at a time when we don’t need as much capacity as we have,” Johnson said. “There has been a significant reduction in demand over four or five years, and we don’t see robust demand in the future.” Moreover, the TVA president said, “with all these coal plants we had to make a decision about how much we would have to invest” to keep them open.

The TVA is finishing construction of one nuclear power plant, but it has stopped work at two other units. On Thursday, TVA executives disclosed that the cost estimate to complete those two units had increased from $5 billion to a range of $7.3 billion to $8.7 billion. Johnson said that “the need for the plants is further out in the future than we thought” and, he added, nuclear power plants “are just very expensive propositions.”

The TVA, created by President Franklin D. Roosevelt to bring cheap hydroelectric power to the Tennessee Valley and the rural South, delivers electricity to Tennessee and parts of six other states. Although not a government agency, the president appoints the members of the TVA’s nine-member board to five-year terms. Among those he has named: Marilyn A. Brown, an energy efficiency expert and professor at Georgia Institute of Technology.

The pressures on the TVA are the same as those throughout the utility industry. The recent surge in shale gas production has pushed down the price of natural gas, and many utilities around the country are switching to natural gas. Electricity use nationwide has hit a plateau, according to Energy Information Administration figures.

On Nov. 1, AEP, one of the other five biggest coal-fired electric utilities, filed a plan to Indiana and Michigan regulators saying that the only new generating capacity it would need over the next decade would be wind and, starting in 2020, solar. The company said it “expects that utility-scale solar resources will become economically justifiable by 2020.”