The Tennessee Valley Authority is losing its largest industrial customer, a government-owned uranium enrichment plant. When the plant near Paducah, Kentucky closes next year, TVA will lose about 5 percent of its electricity sales, resulting in a loss of about $600 million in annual revenue. What does this mean for TVA and for its fleet of coal-fired electric generating facilities?
The Tennessee Valley Authority is the nation's largest public power provider and a corporation of the U.S. government. TVA provides electricity for about 9
million people in seven southeastern states: Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia. TVA is independently financed, meaning it neither receives no taxpayer money nor retains any earnings as profits. It owns the most operating electric capacity of any utility in the U.S. (33,804 MW as of 2011), and leads the nation in both volume of annual energy sales (167,730 million kilowatt-hours) and annual revenue ($11.841 billion).
TVA's largest customer has been the Paducah Gaseous Diffusion Plant. Originally built by the U.S. Department of Energy to enrich uranium into fuel for U.S. nuclear power plants, the plant has been leased to and managed by USEC, Inc. since 1993. Paducah has been the nation's only facility for processing low-enriched uranium since 2001.
Last month, USEC announced that it plans to close the Paducah plant in 2014. When that happens, TVA will face a new, smaller landscape of demand for its power. As a result, some observers expect TVA to close the nearby Shawnee Fossil Plant. The Shawnee facility is a
1,200-megawatt coal-fired power plant built at the same time as the Paducah enrichment plant at a site about 2 miles away.
TVA has not yet indicated whether it will close Shawnee, but in recent months it has announced plans to close 3 other older coal-fired power plants: the Widows Creek Fossil Plant in northeast
Alabama, and the John Sevier and Johnsonville fossil plants in
Tennessee. On the other hand, TVA continues to modernize and invest in refurbishing other older coal-fired plants, including the Gallatin Fossil Plant near Nashville, Tennessee. TVA is investing about $1.1 billion in Gallatin to install pollution controls including sulfur dioxide
How TVA responds to the loss of the Paducah uranium plant remains to be seen. TVA's relatively low rates for power may attract another large industrial customer to the region. If that happens, it may continue to operate the Shawnee facility and other plants that can be made economical. Otherwise, TVA may find itself faced with choices to mothball Shawnee or to do something else with its newfound surplus power.