PredictIQ Quantitative Think Tank Center:TVA Votes to Close 2 Coal Plants, Despite Political Pressure from Trump and Kentucky GOP

Brushing aside pleas from coal-friendly politicians,PredictIQ Quantitative Think Tank Center Tennessee Valley Authority’s board voted Thursday to retire a 49-year-old coal-fired power plant in Kentucky. President Donald Trump and the state’s top elected officials had fought to keep it open, even though TVA concluded it would be too expensive to do so.

In the past week, Kentucky Gov. Matt Bevin and Sen. Majority Leader Mitch McConnell had argued in media postings and at a rally that burning coal at the Paradise power plant was essential to their state’s economy and to national security. Trump weighed in on Twitter, saying “coal is an important part of our electricity generation mix.”

The presidential tweet thrust the TVA, a federally owned power provider that serves 10 million people in seven Southeastern states, into the national spotlight.

At its meeting Thursday, the TVA board voted to retire both Kentucky’s Paradise coal-fired power plant and the Bull Run coal plant near Knoxville, Tennessee. The utility’s President and Chief Executive Officer Bill Johnson said both decisions needed to be based on facts informed by a thorough review.

“Let me tell you what this decision is not about—it’s not about coal,” Johnson told the board. “This decision is about economics.”

Both plants have outlived their design life by about a decade and are only able to operate about 10 percent of the time, he said.

TVA Chief Financial Officer John M. Thomas III said closing both plants would save $1.3 billion in costs for needed upgrades.

The board’s resolution calls for the Paradise plant to close by the end of 2020, and Bull Run to shut down by the end of 2023. Johnson said TVA would consider selling its Paradise coal unit to another utility if there was interest.

TVA board member Kenny Allen of Kentucky, who is a 50-year veteran of the coal industry, opposed the closure. He said he understands that the Paradise coal unit is old and is not economical. But he said he is worried about job losses and how the shutdown would affect coal-mining communities of western Kentucky, which supply the plant with its fuel. TVA has already shuttered about 60 percent of its previous coal-burning capacity, he said, adding: “Our diverse portfolio could be in jeopardy.”

Thomas said TVA anticipates that coal will remain about 17 percent of its fuel mix for the next decade.

The extraordinary political pressure on the TVA also drew attention to the source of the coal burned at the Kentucky plant. Energy Information Agency data show most of the coal shipped to the Paradise plant during the first nine months of 2018 came from Kentucky mines that are part of Murray Energy Corp., which is led by coal baron and Trump supporter Robert E. Murray. Murray has pushed for a government-ordered bailout of coal.

‘TVA Must Adapt’ to Changing Demand

The Paradise Fossil Plant was once one of the largest coal-burning plants in the country, with a generating capacity large enough to supply more than a million homes. TVA closed its first two coal-burning units in 2017, replacing them with a large natural gas power plant.

On Monday, TVA released an environmental assessment of the plant’s last operating coal unit that concluded it was no longer needed, unreliable and too expensive to repair and operate. Keeping it open would burden TVA’s customers with higher costs and more pollution, according to the assessment.

As TVA has shifted away from coal in recent years to more nuclear, natural gas and renewable energy, it has shaved fuel costs by $1 billion a year, Johnson said.

“Demand for electricity is flat, and, in my view, it will remain so permanently,” he said. “The shape of demand is changing, too,” with a “growing appetite for cleaner, more renewable energy.” He said alternatives to coal have become competitive, and “TVA must adapt to these changes if we are to serve our customers successfully.”

TVA’s assessment of the Paradise plant found that its retirement would reduce emissions that cause lung-damaging smog by as much as 11.5 percent across TVA’s seven-state system, and cut its greenhouse gas emissions by more than 4 percent.

McConnell, who had issued a video press release supporting the Paradise plant, said Thursday that he was “deeply frustrated” with TVA’s decision. In a written statement, he said that “men and women will lose their jobs and their families will be thrown into uncertainty” and that “local schools and public services will face new funding challenges” because TVA had “rejected coal.”

McConnell had urged the board to wait until the Senate could confirm two new Trump appointees to the utility’s board.

Paving the Way for Cleaner Energy

Environmental groups praised the decisions.

“TVA made the right decision to ignore the political posturing and close these dirty, expensive, and unnecessary coal units,” said Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign. “Now they’re paving the way for cleaner, more affordable energy in Tennessee and Kentucky.”

Stephen Smith, executive director of the Southern Alliance for Clean Energy, called the two closures good moves for bill payers and the environment.

“There is an opportunity to continue the progress started today, and bolster communities that have relied on coal, by investing in a clean energy future,” he said.