TVA raises coal ash tab to $1.2B, reports 3Q loss
KNOXVILLE, Tenn. — The Tennessee Valley Authority raised its estimates for cleaning up a massive coal ash spill to $1.2 billion on Friday, and partly blamed its third-quarter loss of $167 million on that cleanup.
Officials also suggested a rate increase could be looming.
The nation’s largest public utility said in a filing to the Securities and Exchange Commission that the tab could reach $933 million to $1.2 billion to restore the Kingston, Tenn., community after 5.4 million cubic yards of toxic ash breached a holding pond at a coal-fired power plant on Dec. 22.
No one was injured, but the spill of millions of tons of ash and sludge swept into a river, damaged two-dozen homes, covered 300 acres, raised health concerns throughout the community and brought congressional attention to the lack of regulation of similar sites around the country.
TVA’s latest cleanup estimate is at least $200 million higher than previous calculations and still doesn’t include potential fines, penalties, or the outcome of seven federal lawsuits filed by residents.
“This range could change significantly depending on whether new coal ash laws and regulations are implemented at the state or federal level,” said the report from TVA Chief Financial Officer Kim Greene.
The cleanup cost also “is in large part dependent on the final disposal plan, which is still in development by TVA and by regulatory authorities,” the report said.
TVA told the SEC it has spent $143 million so far on the spill, but recognizes at least $933 million in potential cleanup expenses.
Knoxville-based TVA is a self-financing government corporation that issues bonds to raise capital but does not sell stock. Its ratepayers in Tennessee and six surrounding states feel the consequences of its financial decisions in their power bills.
In its SEC filing, TVA reported a $167 million loss on $2.5 billion in revenue for the quarter ending June 30, compared with a $100 million gain on similar revenue for the same period a year ago. The utility is running $339 million in the red on $8.6 billion in revenues through the first nine months of the year.
TVA blamed the poor performance on the ash spill and a drop in electric sales because of the economy. Power sales are down 7 percent for the year, notably among major industrial customers served by TVA directly.
Greene noted that TVA would need to invest in cleaner energy resources, and said some of the utility’s expenses may need to be covered by power rate increases.
A 20 percent rate increase approved last fall for TVA’s nearly 9 million consumers was largely in the form of an adjustable charge to cover spiking fuel costs and has since been removed.
A rate increase could take effect in the new fiscal year beginning Oct. 1. Increases may be needed to fix coal ash storage facilities at Kingston and several other TVA coal-fired power plants, and to add more pollution controls to their smokestacks.
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