This week marked the end of the public comment period on the Tennessee Valley Authority’s Draft 2015 Integrated Resource Plan (IRP). SACE staff, who have been engaged in the planning process for the 2015 IRP since it began almost two years ago, submitted technical comments outlining concerns with how energy efficiency (EE) and renewable energy (RE) were treated in the Draft IRP.
TVA received input from stakeholders via the IRP Working Group as well as from RE and EE specific TVA working groups and TVA’s Regional Energy Resource Council (SACE is a member of each of these stakeholder groups). Previously, SACE has published blogs on our initial thoughts on the Draft IRP and our perspectives on TVA approached valuing wind and solar generation resources. Now that we are past the public comment period, we are sharing the highlights from our technical comments as well as outlining next steps as TVA works to finalize its 2015 IRP.
While the scope of TVA’s IRP process has been unprecedented in the Southeast, some significant gaps between the IRP planning intent and recent decisions by TVA’s management and Board of Directors still exist. Even as electric demand growth has slowed to only 1% per year, TVA’s capital budget for 2015 is a record $3.5 billion. While TVA claimed that these decisions (below) were consistent with the 2011 IRP, this capacity expansion policy exists concurrently with TVA’s failure to invest in energy efficiency and meet the modest energy efficiency commitments made in the 2011 TVA IRP.
• Approved construction of larger-than-necessary gas plants at Allen and Paradise to serve not only reliability needs, but future growth needs
• Purchased the Choctaw gas plant in Mississippi
• Invest in costly environmental upgrades at the Shawnee coal plant, again without an immediate power need
With respect to energy efficiency, it is unfortunate that TVA’s Draft 2015 IRP does not meet the standard of taking all cost-effective steps to help families and businesses reduce their energy bills. In its 2011 IRP, TVA promised to become a regional leader in energy efficiency, helping customers cut energy bills by targeting energy savings as high as 1% of retail sales. Instead, TVA cut its energy efficiency budget and is stalled at one-third of its 2011 IRP goal.
TVA Energy Savings Performance and IRP Targets Compared to Performance of Southeastern Utilities
Even though the Draft 2015 IRP prompts TVA to resume EE program growth, ultimately it falls significantly short of 2011 targets and fails to rely on best industry practices. Two of the biggest departures TVA made from EE industry practices were including growth caps and excessively high program cost assumptions. While it was reasonable for TVA to restrict the annual growth in energy efficiency programs at some level, utilities across the Southeast and the nation have recorded multiyear periods of annual growth rates that substantially exceed the restrictive caps used by TVA. TVA’s recent sensitivity analyses, undertaken concurrently with the public comment period, show that these EE growth caps improperly drive up system costs.
With respect to renewable energy, TVA’s Draft 2015 IRP does not demonstrate a full awareness of, and progress towards, emerging opportunities that would lower power supply costs and risks. While the Draft IRP supports a reasonable growth rate for solar resources (potentially around 2,000 MW), we are dismayed by the skeptical posture that the planning staff has taken towards recent low-cost solar deals, dismissing the broad market for low-cost solar power as an anomaly.
More disappointing is the response to data on the wind power market: TVA’s Draft IRP relies on inflated cost assumptions and outdated technology assumptions, resulting in little to no wind development and suggesting that TVA may soon exit the wind market entirely at the very time when other Southeastern utilities are deepening their investment. In fact, TVA’s sensitivity analyses show that if TVA accepts the availability of cheap, plentiful and reliable wind energy (particularly from wind powered high voltage direct current transmission), then wind resources will drive down customer costs and rates, becoming one of TVA’s leading energy resources as soon as the project can be completed.
Next Steps
TVA staff will now begin reviewing public comments submitted on the Draft IRP as well as comments on the accompanying Draft Supplemental Environmental Impact Statement (click here to view joint comments submitted by SACE and allies on TVA’s Draft SEIS). While this review is underway, the IRP Working Group and other TVA resource planning and advisory groups will continue to meet and work with TVA to address major concerns in the Draft IRP. Once TVA staff completes its tweaks on the Draft IRP, the Final 2015 and SEIS will be presented to the TVA Board of Directors for approval at its August Board meeting in Knoxville, TN. The TVA Board will also meet during the TVA IRP review period, in Huntsville, AL, on May 7th.
We will continue to provide updates on this process throughout the next stage of the TVA IRP process. Stay tuned!
