TVA to pay $10 million penalty in clean air deal

CHATTANOOGA, Tenn. — The Tennessee Valley Authority board will pay a $10 million penalty and shut down more coal-fired operations in an agreement with the Environmental Protection Agency, several states and environmental groups.

TVA chief executive Tom Kilgore said the agreement, which will phase out 300 to 400 jobs, stems from long-running private negotiations.

Coal-unit shutdowns announced at a Thursday board meeting in Chattanooga start in 2012 and include two units at John Sevier Fossil Plant in East Tennessee, six units at Widows Creek Fossil Plant in north Alabama and all 10 units at Johnsonville Fossil Plant in Middle Tennessee.

TVA executives said efforts will be made to provide other jobs. Kilgore said TVA cannot guarantee that every displaced employee will be offered a job at the same location.

About 4,600 of TVA's 12,000 employees work in coal-related jobs.

Environmental activists were commending TVA for initiating the private talks that settled court fights between the nation's largest public utility and Tennessee, Kentucky, Alabama and North Carolina.

"This is the largest coal retirement agreement the nation has ever seen,'" said Bruce Niles, the Sierra Club's deputy conservation director. "We have been battling TVA for more than a decade to get them to address their aging coal fleet and this provides a framework. We are commending TVA for moving in a different direction."

North Carolina Attorney General Roy Cooper sued TVA five years ago, alleging that polluted haze from the utility's plants was hurting residents' health and clouding mountain vistas in western North Carolina.

“North Carolina businesses will benefit with lower health care costs and more tourism dollars, and all of us benefit from better health,” Cooper said in a statement. “This agreement means our air will be more clear and our waters more clean. The settlement is a remarkable accomplishment, and we are pleased that everyone involved could resolve it this way.”

In addition to the $10 million penalty, TVA will pay North Carolina $11.2 million over five years for programs to boost energy efficiency and reduce electricity demand.

Niles said the agreement provides "enormous public health and environmental protections."

He said that in addition to TVA phasing out 2,700 megawatts of its 17,000 megawatts of coal-fired capacity by 2017, TVA agreed to shut down or phase out another 2,800 megawatts, with the rest to be put on modern pollution controls by 2020.

The agreement also calls for TVA to spend $350 million on environmental projects over the next five years.

Kilgore said the timing of his decision to stop the legal fighting in 2009 was not related to the change in presidential administrations and the prospect of new environmental enforcement.

But Niles said "for eight years the Bush administration refused to enforce the Clean Air Act. Under (EPA Administrator) Lisa Jackson's watch they are playing catchup."

"It certainly helps when the federal cops on the beat are doing their jobs," Niles said.

The EPA did not immediately answer a telephone message seeking comment.

The TVA board at its Thursday meeting approved a long-range plan that calls for decreasing the utility's reliance on coal and increasing use of nuclear power, renewable energy, natural gas, hydroelectric and conservation.

TVA supplies power to about 9 million people in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

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