TVA Coal Combustion Products Remediation Plan Proposed

August 20, 2009

The TVA Board today was briefed on a plan to end wet storage of ash and gypsum at TVA fossil plants with the goal of modernizing TVA’s facilities and having the safest and most thoroughly inspected impoundments in the industry.

“The proposed changes to dry storage would provide TVA with state-of-the art storage systems that meet regulatory requirements and lead the industry in the management of coal combustion by-products,” said Tom Kilgore, TVA president and chief executive officer.

“The changes represent important investments in the TVA power system and the integrity of our facilities and will help protect the health and safety of the people we serve.”

Bob Deacy, TVA’s senior vice president for Clean Strategies & Project Development, told the Board the capital program plans are to convert all TVA wet ash and gypsum storage to dry and eliminate the classification of any TVA impoundments as high-hazard for risk to people and property if the impoundment were to fail.  The projected cost over eight to 10 years is $1.5 billion to $2 billion.  Of that total, $181 million is budgeted for Fiscal Year 2010 with $625 million projected to be invested by the end of FY 2012.

All six of TVA’s 11 coal-burning plants that use wet fly-ash handling systems would be converted to dry.  The plants are Allen, Gallatin, Johnsonville and Kingston in Tennessee; Widows Creek in Alabama; and Paradise in Kentucky.  All 11 TVA coal-burning plants now use wet bottom-ash systems, and these would be converted to dry systems, as well.  The proposed program would also build four gypsum dewatering facilities and close 18 existing ash and gypsum ponds.  All of the plans are subject to completion of required environmental reviews and obtaining needed regulatory approvals.

TVA developed the remediation plan at the Board’s direction, following the ash spill at Kingston Fossil Plant in East Tennessee in December 2008.  TVA also is conducting assessments of all its impoundments through an independent, third-party engineering firm and making improvements.

In a report on the Kingston clean-up, TVA’s lead Environmental Executive Anda Ray told the Board that significant progress is being made in restoring the site.  Removal of Kingston ash from the Emory River should be complete by spring of 2010, and the conversion of Kingston facilities to dry storage should be complete in late 2011.

The coal combustion products remediation plan is among several actions called for in a resolution the Board passed in July to address inadequacies in systems, controls and standards at TVA and to institute a culture of accountability following investigations into the cause of the ash spill.

Other actions include establishing a Compliance and Performance Assessment group to support the use of best practices throughout TVA and an extensive organizational effectiveness effort to strengthen management systems and processes and to improve TVA’s corporate culture.  The Board is tracking progress on those and other actions.

Also at today’s meeting, the Board:

• Terminated the “Maintain & Gain Lakeshore Management Program," which had been suspended since December 2008.  Under TVA’s Shoreline Management Policy, this program was designed to allow consideration of proposals from landowners who asked for lake access rights at their properties in exchange for access rights at other properties they owned.  A review by the TVA Office of Inspector General concluded that TVA had administered the provision inconsistently. 
  
• Authorized the CEO to approve economic development agreements that are part of TVA’s response to the Kingston ash spill.
• Approved entering into an agreement with the U.S. Department of Energy to establish a process for TVA’s recovery of costs associated with storing spent nuclear fuel at TVA nuclear plants from 2006 through 2020.
• Approved issuing up to $3 billion of long-term bonds and the ability to hedge interest rates in Fiscal Year 2010.  Power bonds are typically issued for power system purposes; interest rate hedges may be used to reduce exposure to fluctuating interest rates.
• Reaffirmed TVA’s policy on working with distributors to help them comply with any new federal legislation requiring them to meet some of their customer demand with renewable energy.
• Approved an expected $21 million contribution to TVA’s Nuclear Decommissioning Trust and reaffirmed TVA’s obligation to provide adequate funds for the eventual decommissioning of its nuclear plants

TVA is the nation’s largest public power provider and is completely self-financing.  TVA provides power to large industries and 158 power distributors that serve approximately 9 million consumers in seven southeastern states.  TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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