Review of TVA's Environmental Performance Results

This review was the fourth in a series of reviews that will benchmark TVA's performance in key areas and answer the question, "How is TVA doing in regard to environmental performance." In conducting this review we: (1) assessed environmental performance, including key performance measures and, (2) evaluated TVA's performance relative to available benchmark information, and (3) identified key management challenges that could affect how successful TVA is in achieving these strategic objectives. Our report found that overall TVA's results in the area of environmental performance are mixed. In summary:The ash spill at the Kingston Fossil Plant represented one of the largest environmental disasters in U.S history and demonstrated TVA's poor performance in managing coal ash. The ash spill released 5.4 million cubic yards of coal ash containing a number of toxic substances into the environment. As we reported previously, the culture surrounding the management of coal ash at TVA reflected a culture that coal ash was unimportant and relegated to the status of garbage at a landfill. There was very little recognition of the potential hazard to the public and the environment. TVA is now taking steps to clean up the spill, assess the stability of other ash ponds, and improve ash management practices. More importantly, TVA has taken effective steps to address the cultural problems that led to the spill.TVA recently changed its approach to measuring its environmental performance. It now measures twelve industry-accepted metrics identified by the Global Reporting Initiative and six (6) measures for which there are not good industry benchmarks.Through the production of energy by its coal-fired plants, TVA produces a large amount of air pollutants. While it has made advances in the reduction of air emissions over the last several decades, TVA, along with other utilities, is still a polluter based on the nature of its business. TVA has incurred high capital investments to comply with evolving environmental requirements, and the future costs of compliance and pending legislation addressing air pollution and climate change will continue to put upward pressure on power rates.We assigned TVA a rating of "fair" for measures related to clean energy generation and renewable generation. This rating was achieved in large part due to TVA's hydro production efforts. However, pending standards may eliminate the use of hydro production as a renewable generation source. Additionally, hydro production is not a consistent source of generation due to fluctuating precipitation.TVA performs in the middle of the pack compared to its peers with respect to measures such as number of "Reportable Environmental Events," amount of environmental fines, generation of low-level radioactive waste, and office materials recycled. However, TVA lags other utilities in the removal of polychlorinated biphenyl equipment. In two other categories, the amount of coal combustion products recycled and the Certified Clean Marinas, TVA performs comparatively well.It is important to note that TVA faces many significant management challenges in incorporating effective environmental amelioration measures into its operations. Our report discusses the top five challenges that affect environmental performance, including: (1) increased environmental regulations related to sulfur dioxide (SO2), nitrogen oxide (NOx), mercury, carbon dioxide (CO2), and coal combustion waste disposal; (2) cleanup of the Kingston Fossil Plant ash spill; (3) remediation or improving stability of the ash and gypsum impoundments at TVA fossil plants; (4) mandated renewable portfolio standards; and (5) ability to maintain TVA's current low-cost of power while meeting environmental regulations.