TVA Loses Largest Customer Leaving Future of Coal Plant Uncertain

Guest Blog | June 6, 2013 | Coal, Energy Policy
Aerial view of USEC plant with TVA's Shawnee coal plant in the background

After 61 years, the USEC gaseous diffusion plant in Paducah, KY , which produces enriched uranium, is shutting its doors and ending its longstanding power purchase contract with the Tennessee Valley Authority.  As plans for new nuclear plants were scrapped, demand for enriched uranium dropped.  This changing landscape resulted in a global surplus of enriched uranium, making continued operation of the USEC plant unnecessary.  TVA’s Shawnee coal plant, whose first units came online in 1953, sits next door to the USEC plant and has provided power to the plant for the past 60 years.  Now that USEC is ceasing operations, the future of the Shawnee plant is in question.

As of May 31, 2013, USEC will no longer buy power from TVA and TVA will lose almost $600 million in revenue as a result.  Historically, the USEC plant accounted for about 5% of TVA power sales.  TVA was considering retiring some of the units at Shawnee, even before the USEC plant’s closure announcement.  Under a 2011 consent decree, TVA agreed to either retire two of the ten units at Shawnee or retrofit them with modern pollution controls by December 31 2017.  Regardless of the consent decree, the remaining eight units must install new air pollution controls to comply with EPA’s MATS regulations if these units are to remain operational after the 2015 MATS compliance date.

Now that the Shawnee plant has lost its primary customer, TVA will need to reassess whether or not they actually need the generation capacity provided by the 60-year-old plant.  Any pollution control upgrades made at Shawnee will cost a significant amount of money and TVA is already under pressure from the Obama Administration to shore up its financial situation.  A recent presidential budget proposal points to TVA’s “increased capital expenditures” as a possible cause of some of the federal governments current fiscal conditions (expenditures such as the $1 billion scrubber installment planned for TVA’s 60-year-old Gallatin plant).

Making a substantial investment in this ancient coal plant is clearly not the best business decision for TVA, especially in light of the decrease in electricity demand caused by USEC’s closure.  Furthermore, the Shawnee plant currently has over 8 billion tons of coal ash stored on site.  Continuing operations at Shawnee would only increase the amount of toxic ash stored on site, right next to the Ohio River.  Depending on the type of pollution controls installed, any new coal ash created may pose increased danger due to an increase in the ash’s ability to leach into the surrounding environment.  We hope TVA will take a hard look at all of its choices regarding the future of the Shawnee plant and come to the realization that the best decision, both financially and environmentally, is to retire Shawnee and replace any lost generation capacity with implementation of robust energy efficiency measures or renewable generation sources.

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