The Tennessee Valley Authority’s board of directors on Aug. 22 approved an FY20 budget that does not increase wholesale power rates and sets a new strategic direction through 2030. The board also approved an updated integrated resource plan that provides directional guidance for meeting the Tennessee Valley’s energy needs for the next 20 years.
TVA said that its $10.59 billion FY20 budget continues to emphasize efficiency and operational excellence while balancing investments existing assets, new capabilities and debt reduction.
“Our success to this point has come from a disciplined approach to how we run our business, which has allowed us to reduce our debt to its lowest point in 25 years and still invest in our generation and transmission system,” said TVA CFO John Thomas. “That same financial discipline will now allow us to maintain stable rates through 2030 and implement the initiatives recommended by the IRP.”
TVA’s updated IRP looks forward 20 years and calls for a continued reduction in TVA’s carbon footprint partially through the inclusion of up to 14 gigawatts of new solar capacity by 2038.
TVA on June 28 released its final IRP and associated Environmental Impact Statement that evaluates options to meet the region’s power generation needs over the next 20 years.
Among the recommendations included in the final TVA IRP was the addition of up to 2,400 megawatts of storage by 2028 up to 500 MW of demand response by 2038, depending on availability and cost of the resource.
“The energy market continues to evolve and the IRP helps provide us flexible ways to keep delivering safe, reliable and cleaner power at the lowest feasible cost while supporting efficient use of energy,” said TVA President and CEO Jeff Lyash.
“More importantly, the IRP reflects the collective thoughts and suggestions of the more than 1,200 people who commented on the plan, as well as the hundreds more who attended public meetings and webinars – all individuals who will directly benefit from the improvements the IRP recommends.”
The board also approved two actions that TVA said will further strengthen the Tennessee Valley public power model.
The first is the adoption of a long-term partnership agreement option between TVA and local power companies to better provide competitive rates and the flexibility to meet changing market needs.
A second board-approved initiative modifies TVA’s regulatory policies to provide local power companies options in financing investments to support broadband while maintaining oversight to ensure electric system operations do not subsidize other utility functions, TVA said.
In other actions, TVA’s board, among other things, approved: (1) authority for TVA to issue power bonds and enter into other financial arrangements, (2) an agreement to provide over 100 megawatts of firm power to an existing directly served customer; and (3) modifications to TVA’s large generator interconnection procedures.
TVA is on track to cut carbon emissions by 60 percent
The Tennessee Valley Authority has less coal-fired generation on its system and more natural gas, putting the public power provider on track to cutting its carbon dioxide emissions by 60 percent between 2005 and 2020, according to its first-ever environmental, social and governance report.
TVA said Aug. 16 it decided to publish the report using the Edison Electric Institute’s ESG template because of the importance the financial community and other stakeholders place on sustainable business practices.
Utilities need to foster a sustainable environment or risk losing customers, according to the report.
“The energy industry is evolving based on customer preferences, regulatory drivers, and international pressures and expectations,” TVA said, noting that its energy mix has shifted from a largely fossil fuel-based portfolio to a more diverse mix that includes coal, gas, nuclear, hydroelectric and renewables.
Last year, TVA owned 33,526 megawatts, up from 30,644 MW in 2005, according to the report. Although TVA’s owned capacity increased, its power production fell 12 percent in 2018 to 141.5 million megawatt-hours from 160 million MWh in 2005.
TVA’s coal-fired capacity fell to 7,886 MW last year, down from 15,075 MW in 2005, while its natural gas-fired capacity jumped to 12,509 MW from 4,662 MW in the same period.
TVA’s nuclear capacity increased to 7,723 MW in 2018 from 5,790 MW 13 years earlier while its hydroelectric generation increased to 5,398 MW from 5,104 MW. The public power provider owns 1 MW of solar and zero wind or biomass, according to the report.
Generation from coal-fired power plants plunged to 31.5 million MWh last year, down 68 percent from 98.4 million MWh in 2005. Natural gas-fired production surged to 32.1 million MWh from 595,000 MWh in the same period.
Last year, TVA delivered electricity with a system average carbon rate of 825 pounds/MW, about 17 percent below the current EPA eGRID national rate and 30 percent below the current EPA eGRID SERC Reliability Corporation Tennessee Valley regional rate, the public power provider said. TVA expects its emissions rate to fall below 600 lbs/MW next year.
“This allows TVA to offer clean and affordable electricity, which helps the region attract and retain business and employment for people in the Tennessee Valley,” the public power provider said.
TVA noted it calculates carbon dioxide rates for certain customers based on their hourly electric consumption profiles. The public power provider said it gives annual carbon awards for the top performing and most improved companies in an effort to spur changes in how customers use electricity.
TVA is adjusting and expanding its business model to incorporate distributed energy resources and partnerships with local power companies on renewable projects, according to the report.
To adapt to future business dynamics, TVA is also studying strategic options for improving its generation and transmission system, according to the report.
TVA noted it has several programs and initiatives that support its sustainability strategy, including a climate change adaptation plan that guides the federal power marketer’s planning process so it incorporates a long-range view of how climate change will affect the TVA’s system.
Looking ahead, TVA expects to have relatively flat load growth.