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TVA Strikes Deal with EPA to Close 18 Coal Units

With the prospect for widespread shuttering of the oldest, most inefficient coal-fired power plants in the face of stiffer federal clean air requirements, the Tennessee Valley Authority (TVA) said Friday it will close 18 coal-fired boilers, or 16% of its coal-based capacity, during the next five years. Shutdowns are to start next year.

In play would be the phasing out of 2,700 MW of TVA's 17,000 MW of coal-fired generating capacity. Environmental groups praised the public-sector generating giant, noting that the deal settles legal battles ongoing in Tennessee, Kentucky, Alabama and North Carolina.

TVA is looking at replacing the coal-fired capacity with a combination of new natural gas-fired and nuclear plants, energy efficiency and renewables, a TVA spokesperson told NGI.

The move is part of an agreement TVA reached with the U.S. Environmental Protection Agency (EPA) and various environmental groups. The deal also involves the public-sector power producer paying $10 million in a civil penalty. EPA said the retirement agreement resolves alleged federal Clean Air Act violations at 11 coal-fired TVA plants in Tennessee, Kentucky and Alabama.

TVA also is required to invest upward of $5 billion in new and upgraded state-of-the-art pollution controls. The deal also calls for TVA to spend $350 million on various environmental programs during the next five years.

"This is the largest coal retirement agreement the nation has ever seen," said Bruce Niles, the Sierra Club's deputy conservation director, who noted that environmentalist have been battling TVA for more than a decade. "We are commending TVA for moving in a new direction."

The power sector regulatory environment is ripe for plant closings given proposed EPA rules, although those rules face increasing attacks in Congress and the business community as job-killers. Nevertheless, investment and industry analysts project that 50-78 GW of coal-fired power could be retired out of a national total of about 340 GW of coal-based power capacity (see Daily GPI, July 29, 2010).

The TVA closures would involve all 10 units at the Johnsonville Fossil Plant and two units at the John Sevier Fossil Plant, both in Tennessee. The other six units would be at Widows Creek Fossil Plant in Alabama.

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