TVA's Clean Air Settlement With EPA

A senator's staff asked for information pertaining to the Tennessee Valley Authority's (TVA) clean air settlement with the Environmental Protection Agency (EPA). The total estimated cost of all Consent Decree compliance was $6.063 billion in 1982 present value dollars. These costs resulted from the clean air initiatives that TVA agreed to undertake in order to comply with EPA clean air standards. They represent the total costs of compliance for 10 individual steam plants through their life expectancy computed from 1982 on. Capital costs were computed using the latest TVA estimate of total capital outlay for scrubbers, electrostatic precipitators, and coal washing facilities as of 1982; they represent approximatedly 14 percent of the total. About 56 percent of the total represents the additional money TVA will spend for the higher-quality coal needed to reduce pollutants in the emissions at the individual steam plants. Operating and maintenance costs, about 30 percent of the total, were computed by multiplying the individual estimated operations and maintenance costs for 1982 by the remaining years of life for each plant. When errors were discovered in the air quality dispersion model which formed the basis for the decision to install scrubbers at the Cumberland steam plant, the project was canceled. A reanalysis of the precipitator project to determine the realization of cost savings revealed that almost $19 million had been invested. While this capital outlay is unrecoverable, TVA anticipates future installation of scrubbers at the Cumberland plant to accommodate future industrial growth. Although the agreement is still being litigated, TVA believes it must continue with actions to comply with the agreement, or face penalties and fines. Therefore, TVA obligated 58 percent of the capital cost estimates for the clean air agreement. This represents the amount of the contracts entered into on the projects plus the overhead for design and construction experienced by the TVA Office of Engineering Design and Construction.