Air Quality: TVA Plans to Reduce Air Emissions Further, but Could Do More to Reduce Power Demand

The Tennessee Valley Authority (TVA) relied on its 11 coal-burning plants to supply 60 percent of its electric power in fiscal year 2001. These plants account for almost all of TVA's emissions of two key air pollutants--sulfur dioxide (SO2), which has been linked to reduced visibility, and nitrogen oxides (NOx), which contribute to the formation of harmful ozone. To meet an increase in demand of 1.7 percent annually through 2010, TVA estimates that it will need to expand its current generating capacity of 30,365 megawatts by 500 megawatts annually. Building new generating capacity can produce more emissions, which raises environment concerns. To lessen the need for new capacity, TVA and other electricity suppliers promote the efficient use of electricity through "demand-side management" programs, which seek to reduce the amount of energy consumed or to change the time of day when it is consumed. Even though TVA intends to increase its capacity to generate electricity through 2005, it also expects to reduce its SO2 and NOx emissions during the same time period, primarily by burning lower-sulfur coal, installing devices to control emissions at its existing plants, and relying on fuels other than coal for new capacity. Although TVA's demand-side management programs have allowed customers to cut their electrical consumption, these programs have made only modest contributions to reducing peak-time demand. TVA has limited the scope of its key program to reduce peak-time consumption by residential customers because TVA believes the program is not cost-effective. TVA projects that its demand-side programs will produce nearly twice as much in savings between 2001 and 2005 as was achieved in the previous five years. Other large utilities have more fully implemented the types of programs that TVA now has in place and have also implemented a greater array of demand-side management tools. These programs have involved a much higher proportion of their residential customers and established different prices for electricity used during different times of the day.