Power drain: TVA coal policy could take charge out of Tennessee economy, report says

Power drain: TVA coal policy could take charge out of Tennessee economy, report says

By Chris Butler

The Tennessee Valley Authority now relies less on coal power and more on alternative energy sources, but those sources are more expensive, will raise electricity rates and hurt Tennessee’s economy, a new report says.

The report, released this month by the Alabama-based Partnership for Affordable Clean Energy, says relying on more expensive energy sources such as natural gas would cost Tennessee more than 65,000 jobs annually by 2025.

If the TVA has its way, electric rates in Tennessee will jump more than 20 percent and exceed the U.S. average. The state’s manufacturing output will decrease about $900 million, the report says.

Photo courtesy of Flickr.

A nonprofit group warns that the TVA’s decision to rely less on coal could derail Tennessee’s economy.

That decrease in output will ultimately lead to a $700 million drop in tax revenue for state and local governments.

The report says Tennessee’s auto manufacturing plants, including GM, Volkswagen and Nissan, have the most to lose. They chose Tennessee, in part, because of its lower-than-average rates for electricity.

“We’re not trying to scare anybody,” Harry Alford, president of the National Black Chamber of Commerce, said during a news conference in Nashville this month.

Alford presented the report alongside members of groups who say the TVA’s policies on coal will hurt their bottom lines.

“We’re just trying to tell you about unintended consequences,” Alford said.

The TVA recently closed four coal-producing generators and might close three more; it now relies more on natural gas, according to the report.

Natural gas is at historic lows —about $2 per million metric thermal units —but PACE’s report says its history is littered with “volatile prices,” and relying on natural gas “makes Tennessee vulnerable to price spikes.”

Photo by Chris Butler

Harry Alford, president of the National Black Chamber of Commerce.

“If the price of natural gas increases then customers are really going to be on the hook for higher power rates,” PACE Executive Director Lance Brown said.

The prospect of paying more for electricity may force potential business owners to think again before relocating to Tennessee, and businesses already in the state may leave, the report says.

The TVA’s decision to rely less on coal will also affect barge traffic flowing through the state’s Tennessee and Cumberland rivers, said Cline Jones, executive director of the Tennessee River Valley Association, which represents towing companies.

“About 40 percent of what moves on the two rivers has historically been coal. As utilities move away from using coal, the volume of freight on our rivers is decreasing,” Jones said.

“That is problematic for us as the U.S. Army Corps of Engineers gets their appropriations for operations and maintenance based on volumes of freight that moves on the rivers. Our infrastructure is at or near beyond the design of its 50-year design life across the region, requiring more maintenance, and we’re having to deal with less dollars to do that maintenance with. It’s going to cause a great deal of trouble.”

TVA spokesman Scott Brooks disagrees with the study.

Cline Jones

Cline Jones

He said the TVA relies on nuclear and hydro energy, in addition to natural gas.

“We believe this puts us in a position to adjust to any market changes in any one particular fuel source,” Brooks said.

Brown said Tennessee’s automakers didn’t participate in the report.

Representatives for Volkswagen and Nissan failed to return requests for comment.

Andrea Hales, spokeswoman for GM’s Spring Hill plant, said she isn’t familiar with the PACE report and had no comment.

Contact Christopher Butler at chris@tennesseewatch.wpengine.com 

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