TVA to lose largest industrial customer

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 capture technology.

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.

Tropical Storm Isaac threatens energy production in Gulf

Tropical Storm Isaac is bearing down on the U.S. Gulf Coast -- and whether or not it becomes Hurricane Isaac, the storm is already impacting energy production across the Gulf of Mexico.

Satellite image of Tropical Storm Isaac, courtesy of the U.S. National Oceanic and Atmospheric Administration (NOAA).

Isaac is currently about 300 miles south of the mouth of the Mississippi River and is expected to become a hurricane before reaching the northern Gulf Coast late Tuesday.  Concern over human and environmental safety has led oil and gas production and drilling companies to pull their personnel off remote structures in the Gulf.  According to the federal Bureau of Safety and Environmental Enforcement or BSEE, personnel have been evacuated from 346 production platforms across the Gulf of Mexico -- more than half of the 596 manned platforms in the Gulf.  Personnel have also been evacuated from 41 out of the 76 exploration and drilling rigs currently operating in the Gulf.

When production platforms and drilling rigs are evacuated, companies are required to close safety valves located below the surface of the ocean floor to prevent the release of oil or gas. This "shut-in" process is designed to protect the environment, but it has obvious consequences for the production of energy resources like oil and gas.  The BSEE estimates that 1,076,642 barrels of oil production per day has been shut-in as a result of Isaac (about 78.02 percent of the current daily oil production in the Gulf of Mexico), as has 2,165.94 million cubic feet per day of natural gas production (about 48.13 percent of the current daily natural gas production in the Gulf).

Provided the storm leaves Gulf production and drilling assets unharmed, these platforms and rigs may resume operations after the storm has passed (and after they have passed inspection).  But the disruption to offshore petroleum and natural gas production will already have affected the markets, driving short-term prices upward.

Particularly if it intensifies into Hurricane Isaac, Tropical Storm Isaac may also damage onshore energy assets, ranging from local electric distribution lines to major transmission lines, and from distributed generation projects like rooftop solar panels to utility-scale nuclear or other power plants.  Wind, rain, flooding, and a significant storm surge of 6 to 12 feet are all expected for southeast Louisiana, Mississippi, and Alabama.

NOAA forecasts call for the storm to have passed New Orleans by Thursday, by which time the extent of any damage may begin to be apparent -- and the process of restoration and recovery will begin.

April 28, 2011 - storms knock TVA nuclear plant offline

The rash of tornadoes and powerful storms across the American midwest and south have knocked three nuclear reactors in Alabama offline.

This small dam maintains water levels in Haley Pond in the village of Rangeley, Maine.

I've previously noted the Tennessee Valley Authority's nuclear power program, and how stormy weather can impact generation and the electric grid.  Yesterday, a series of severe storms and tornadoes damaged eleven major transmission lines in the Southeast, cutting the power supply to TVA's Browns Ferry nuclear plant in Alabama.  Browns Ferry is home to three reactors with a combined capacity of 3,274 megawatts.


The TVA is a congressionally-chartered federal corporation operating a variety of generation resources.  Most famous among these may be the TVA's 29 hydroelectric dams, although TVA also operates three nuclear power plants (totaling six reactors), as well as coal plants, natural gas combined-cycle plants, and some non-hydro renewable power.




The storms may have some electric upside: TVA is running 8 of its 9 dams on the Tennessee River at full production -- primarily to control flooding, but producing hydroelectricity at the same time.