OXFORD,MS โ The Tennessee Valley Authority board of directors took action Thursday to further diversify TVAโs power generating mix to keep pace with changing economic and regulatory conditions, and in keeping with TVAโs commitment to keep electric rates low and reliability high.
TVA must respond immediately to challenging trends in lower power demand, a slow economy, uncertainty in commodity pricing, and tougher
Bill Johnson
environmental requirements, particularly on air emissions, TVA President and CEO Bill Johnson said.
โThis will support our focus on cleaner energy and bring additional, necessary balance into our portfolio for managing our current and projected load profile,โ Johnson told the board.
โOver the past months, we considered a number of capacity studies, including TVAโs 2011 Integrated Resource Plan and associated financial and environmental analyses. We also looked hard at the effect on rates, our employees and any potential economic impact to local communities.โ
The board approved a coal fleet plan that will retire eight coal units at three plant sites with more than 3,000 megawatts of combined generating capacity. ย A number of these units were already idled or scheduled for idling and/or retirement based on an agreement with the Environmental Protection Agency.
The retirements affect all five coal units at the Colbert Fossil Plant in Tuscumbia, Ala.; one of two operating coal units at Widows Creek Fossil Plant in Stevenson, Ala., and two of three coal units at the Paradise Fossil Plant near Central City, Ky. Paradise Unit 3, one of TVAโs largest coal units, will continue to operate.
TVA conducted detailed analyses including an Environmental Assessment to review options for meeting stricter air quality regulations at the Paradise plant, including installing additional emission controls on Units 1 and 2, building a new gas-fired generating plant at the site or taking no action.
Based on that review, the board on Thursday approved the construction of a gas-fired plant at Paradise. This will result in an investment of 
approximately $1 billion at the site. The two coal units will be retired when the gas plant is available.
The new plan, which does not affect the FY 2014 budget approved by the board in August, moves TVA toward a more balanced generation fleet of about 40 percent nuclear, 20 percent coal, 20 percent gas and 20 percent hydro, renewables and energy efficiency. This more diversified portfolio will help TVA manage load growth and provide maximum flexibility, and is consistent with the range of options analyzed in TVAโs 2011 Integrated Resource Plan, which is now being updated.
โThese were difficult recommendations to make as they directly impact our employees and communities,โ Johnson said. โBut the plan is whatโs best in terms of its positive impact on TVAโs rates, debt and the environment; and it will bring the greatest benefit to the people of the Valley.โ The board delegated authority to Johnson to establish a schedule for the coal unit retirements.
