U.S. Sen. Bob Corker, R-Tenn., brought a discussion about electricity and jobs to Chattanooga on Thursday by asking Tennessee Valley business and energy leaders to put their concerns on the table—a UTC roundtable.
One after another, the speakers assembled by Corker for the electricity and economic development roundtable at the University of Chattanooga at Tennessee said ever-increasing regulation and rising electric rates are a costly combination. Especially in an era when loss of competitiveness can mean even fewer jobs.
Lloyd Webb, energy director of Olin in Charleston, Tenn., said TVA's below-average electric rates helped Olin make a decision years ago to keep its Tennessee plant open and spend $160 million to make its manufacturing process mercury-free.
"Now TVA industrial rates are no longer competitive with the rest of the country," Webb said.
TVA President and CEO Tom Kilgore told Corker that TVA, too, wants to see the rates lower. But meeting environmental regulation -- sometimes on a tight deadline -- is a high cost.
"We have a myriad of those," Kilgore said. "And the cost is built into our rates."
Kilgore said TVA's low-cost rates once were among the top 25 percent in the nation. Now TVA's electricity affordability ranks 42nd among the top 100 electric utilities.
"We do have a plan. Our goal is to regain our place in the top [low-cost] quartile," he said.
But Kilgore was quick to add that TVA needs more time to continue cleaning up its coal plants' air controls than the three years currently proposed in some of the new rules.
Kilgore said TVA also is hampered by a federally imposed $30 billion debt ceiling as the utility continues to bring online two nuclear reactors at its Watts Bar and Bellefonte plants. The utility owes $23.4 billion.
TVA officials have said the utility hopes to pay for the $2.5 billion bill to complete Watts Bar Nuclear Plant Unit 2, the $820 million cost of the new combined-cycle natural gas plant at the John Sevier Plant and the $4.9 billion plan to finish Bellefonte Nuclear Plant Unit 1 by getting outside investor help.
The utility hopes to sell the new John Sevier plant and the new Watts Bar reactor when it is completed in 2013. The utility then would lease back the plants and operate them.
Corker said now is not the time for Congress to relax the utility's debt ceiling, given the state of the nation's debt. But he said he is interested to see how TVA's pilot financing plan works out.
EPB President Harold DePriest, who also is chairman of Seven States Power, told Corker he and Kilgore will meet today for discussions.
Seven States Power Corp., a cooperative of TVA power distributors -- including EPB -- already has agreed to buy and lease back to TVA a combined cycle natural gas plant at TVA's Southaven plant in DeSoto County, Miss., and distributors could buy other TVA assets.
On the subject of pending regulations, Paul Bailey, senior vice president for federal affairs and policy at American Coalition for Clean Coal Electricity, said new and proposed environmental rules could particularly affect the Tennessee Valley, which still gets about 60 percent of its electricity from coal.
Bailey said six economists prepared a study for the industry-backed trade group on the impact of four major proposed EPA rules. They concluded the United States would lose 183,000 jobs, or four jobs lost for every green job gained by the new pollution rules.
He said the study also estimates the proposed regulations could boost the cost of electricity in Tennessee and Kentucky by 13.5 percent by 2020, or double the 6.5 percent predicted impact nationwide.
Christopher Guith, vice president for policy at the U.S. Chamber of Commerce Institute for 21st Century Energy, showed the roundtable and its audience a slide with more than 50 regulations Guith called "hurdles" for energy developers and businesses.
"Nearly 6,000 rules were proposed or finalized in 2010, requiring some $1 trillion in compliance costs on the back of American business," Guith said.