TVA Deal For 600,000 Tons Of Emission Eclipses 'Credits'

TV A Deal For 600,000 Tons Of Emission Eclipses 'Credits'

By DUNCAN MANSFIELD
Associated Press Writer
KNOXVILLE, Tenn. (AP) — The Tennessee Valley Authority's purchase of acid rain-causing pollution credits pales compared to the 600,000 tons of emission allowances it expects to get through a utility pool.

TVA directors will discuss the pooling agreement May 21 in Rogersville.

Earlier this week, the giant federal utility was widely criticized by environmentalists for buying 10,000 tons of credits from Wisconsin Power & Light Co. TVA directors endorsed the move without public notice.

Environmentalist Karl Kurka of the Knoxville-based Tennessee Valley Energy Coalition criticized TVA's decision to buy. He was equally critical of TVA's acquiring free credits through the pool.

The credits are "rights to pollute," Kurka said Thursday.

"I have nothing against free-market mechanisms for reducing pollution," he said, "but what about the people here that breathe the air."

The credits give utilities that fail to meet requirements of the 1990 Clean Air Act extra time to comply. The act's objective is to cut sulfur dioxide emissions by 50 percent — about 10 million tons a year — by the end of the decade.

TVA, one the nation's major emitters, discharged 1.1 million tons of sulfur dioxide in 1991 from its 11 coal-fired power plants in Tennessee, Alabama and Kentucky.

The utility plans to spend nearly $1 billion reducing that to 800,000 tons a year by 1995, primarily by installing scrubbers at its Cumberland fossil fuel plant near Nashville and converting its Gallatin steam plant to low-sulfur coal.

TVA wants to reduce emissions to 450,000 tons by 2000. How that will be done or what it will cost hasn't been determined.

TVA spokesman John Doty maintained Thursday the utility would not depend on emission credits to meet 1995 mandates.

"TVA is committed to scrubbers at Cumberland's two units. We're not going to delay the installation. We are going to put those scrubbers in by Jan. 1, 1995," Doty said.

But TVA will still be eligible for some of the 3.5 million tons of emission extension credits provided by the law for utilities that agree to meet clean-air requirements with scrubber technology.

The Environmental Protection Agency will distribute the credits later this year through a first-come, first-served telephone queuing system.

Paul Horwitz, EPA's acid rain division policy chief, said some utilities considered the distribution system too risky. They set up "side-bar pooling agreements" in which participating utilities would share their EPA credits.

TVA has joined a pool with 15 other utilities, including Illinois Power and Commonwealth Edison, according to a TVA internal publication.

The utility expects to get at least 600,000 tons of emission credits from the pool. It said the credits could be worth $120 million to $240 million either by deferring emission control costs or selling the credits to other utilities.

TVA estimates the only cost will be expenses from creating and administering the pool — $70,000 in 1992, dropping to $20,000 annually in 1999.

Doty said TVA won't need the credits to meet the 1995 requirements. In fact, the utility predicts it will exceed mandates by more than 60,000 tons a year.

Meeting the mandates of the year 2000 could be more difficult and more expensive. The utility "might use the pool credits then," he said.

"Any allowance or credits, whether they are purchased from Wisconsin or whatever, we can use later in our compliance or we can sell them. It's a choice," he said.