[Federal Register Volume 61, Number 40 (Wednesday, February 28, 1996)]
[Notices]
[Pages 7572-7575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4497]



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TENNESSEE VALLEY AUTHORITY


Integrated Resource Plan

AGENCY: Tennessee Valley Authority.

ACTION: Issuance of Record of Decision.

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SUMMARY: This notice is provided in accordance with TVA's procedures 
implementing the National Environmental Policy Act. TVA has decided to 
adopt the preferred alternative identified in its final programmatic 
environmental impact statement (EIS), ``Energy Vision 2020, Integrated 
Resource Plan.'' The Final EIS was made available to the public on 
December 21, 1995. The TVA Board of Directors decided to adopt the 
preferred alternative at its February 21, 1996, public meeting. Under 
the preferred alternative, TVA has identified a portfolio of energy 
resource options that it can deploy to meet future energy demands on 
the TVA power system over the next 25 years. In addition, a short 

[[Page 7573]]
term action plan identifies actions that TVA plans to take over the 
next three years.

FOR FURTHER INFORMATION CONTACT: Lynn Maxwell, Manager, System 
Integration, Tennessee Valley Authority, 1101 Market Street, MR 3K, 
Chattanooga, Tennessee 37402, (423) 751-2539.

SUPPLEMENTAL INFORMATION: TVA is a corporate agency of the United 
States Government. It operates the Nation's largest public power 
system. This power system provides power to an 80,000 square mile area, 
in parts of Tennessee, Alabama, Georgia, Mississippi, Kentucky, North 
Carolina, and Virginia. Through independent power distributors, TVA 
serves more than 7.5 million people. TVA also directly serves more than 
60 large industrial and Federal installations. The power produced by 
TVA constitutes approximately 4 to 5 percent of all of the electricity 
generated in the Nation.
    Under the 1992 National Energy Policy Act, TVA has been directed to 
employ a least-cost energy planning process for the addition of new 
energy resources to its power system. This Act also requires TVA to 
provide distributors of TVA power an opportunity to participate in the 
planning process. In response to this directive, TVA began an 
integrated resource planning (IRP) process in February 1994. Although 
TVA prepares project-specific environmental reviews for proposed energy 
resource decisions, TVA committed to employing a public IRP process and 
decided to use the EIS process to obtain public input on the IRP 
itself. Energy Vision 2020 is the result of this commitment and 
process.
    An IRP is simply a plan which broadly identifies the actions which 
a utility anticipates taking to meet demands for electric service and 
to achieve its long-term goals and objectives. TVA announced at the 
outset that its long-term objective was to maintain and enhance its 
competitiveness. ``Competitiveness'' for purposes of Energy Vision 2020 
was viewed as not only maintaining low electric rates and reliable 
service, but also fostering sustainable economic development and 
protecting environmental quality.

Future Demands on the TVA System

    In order to determine future power needs on a utility system, both 
the utility's existing energy resources and forecasted future demands 
must be considered. TVA's existing energy resources have a total 
generating capacity of 25,600 megawatts. (This does not include TVA's 
Browns Ferry Nuclear Unit 3 and Watts Bar Nuclear Unit 1. These units 
were only recently restarted and started, respectively (November 1995). 
Browns Ferry Unit 3 is already returned to commercial operation and 
Watts Bar Unit 1 is expected to begin commercial operation in Spring 
1996. The combined capacity of these two units is 2,235 megawatts.) 
Under its medium load forecast, TVA expects to need an additional 6,250 
megawatts of energy resources by Year 2005 and 16,500 megawatts by Year 
2020. Peak loads on the system in Year 2020 are expected to be about 
40,300 megawatts.
    TVA uses state-of-the-art energy forecasting models to predict 
future demands on its system. Because of the substantial uncertainty in 
predicting future demands, TVA develops three load forecasts: a high, 
medium, and low. The high forecast has a 90 percent probability of not 
being exceeded. The medium forecast has a 50 percent probability of not 
being exceeded. The low forecast has a 10 percent probability of not 
being exceeded. The Year 2020 peak loads under the high and low 
forecasts are 56,400 megawatts and 24,400 megawatts, respectively. If 
future demands approach the high forecast, TVA would need up to 36,000 
megawatts of additional energy resources to meet that demand. If 
demands are closer to the low forecast, TVA would need no additional 
resources.

Alternatives Considered

    The energy resource alternatives formulated for Energy Vision 2020 
were the result of an extensive public and analytical process. Several 
different mechanisms were used to obtain public input at the scoping 
stage, including surveys of local opinion leaders, extensive 
interaction with members of a stakeholders group for over a year, 12 
public meetings, and a nine-month period in which to submit written 
comments. After release of the draft IRP and EIS, TVA provided more 
than 80 days for public review and comment. During this period, TVA 
held nine public meetings throughout the TVA region on the IRP and EIS.
    The primary analytical method used for Energy Vision 2020 was the 
multi-attribute tradeoff method. This approach allowed TVA to 
quantitatively integrate the identified environmental impacts of 
proposed energy resource strategies and to formulate alternative 
strategies to mitigate adverse environmental impacts while retaining 
other beneficial characteristics of specific strategies.
    Energy resource strategies are created from different combinations 
of energy resource options. Energy resource options are either supply-
side options (e.g., new generating resources such as coal-fired or 
nuclear units, gas-fired combustion turbines, repowering of existing 
units, integrated gasification, or wind turbines), or customer service 
options (e.g., demand-side management actions, including energy 
efficiency improvements and energy conservation, or beneficial 
electrification). In TVA's Energy Vision 2020 process, these options 
were first screened for acceptable performance using multiple criteria, 
including environmental criteria. These criteria were developed from 
public input and TVA's objectives.
    TVA developed 2,000 energy resource strategies from more than 100 
supply-side and 60 customer service options. These strategies were then 
analyzed through the use of computer models to identify combinations of 
resource options that best met the evaluation criteria and that 
effectively dealt with various uncertainties (such as increased 
stringency of environmental regulations, changes in natural gas prices, 
or changes in forecasted demands).
    The multi-attribute tradeoff method allowed potential environmental 
impacts of each strategy to be compared to all other evaluation 
criteria (such as debt, electric rates, and economic development) and 
to all other strategies on an objective basis. This process identified 
where real tradeoffs existed. One of the most important tradeoffs 
occurred between better environmental performance and electric rates 
because achieving better environmental performance typically produces 
higher costs and higher electric rates. However, the integrated 
resource planning process used by TVA allowed it to reformulate 
strategies repeatedly to produce strategies that performed better 
across all criteria, including environmental criteria. Potential 
tradeoffs among criteria were reduced or eliminated. This was done by 
replacing resource options with undesirable or less desirable effects 
with options which produced more desirable effects. Eventually, this 
integration process produced seven final alternative strategies that 
performed well across all of the criteria, including environmental 
criteria.
    As a result of the multi-attribute integration process, the final 
seven strategies consisted of similar, although not identical, energy 
resource options and they tended to produce similar environmental 
impacts. All of the strategies performed reasonably well from an 
environmental impact 

[[Page 7574]]
standpoint and all performed better environmentally than the ``no 
action'' alternative. (TVA defined ``no action'' as the actions that it 
would likely have taken to meet future demands in the absence of the 
proposed IRP. Those actions include adding more combustion turbines and 
coal fired units to the system.)
    For almost every air and water quality impact category, the seven 
final strategies showed improvement. Although coal usage on the TVA 
system is projected to increase under all of the final alternative 
strategies, sulfur dioxide emissions are projected to decrease in Year 
2020 from 1996 levels by 47 to 51 percent depending on the strategy. 
System nitrogen oxide emissions are projected to decline in Year 2000 
from 1996 levels by 10 to 20 percent, then increase, but still remain 3 
to 13 percent below 1996 levels. This indicates that TVA's contribution 
to ozone, visibility, and acid rain related impacts should be reduced 
regardless of the final strategy employed. In contrast, greenhouse gas 
emissions from the TVA system are projected to increase under all 
strategies by 25 to 38 percent. This increase is still less than that 
projected for the no-action alternative (it results in a 52 percent 
increase) and on a per unit of electric energy basis produced 10 to 15 
percent less than that produced by the existing system. This means that 
the efficiency of the TVA system is improved under the final seven 
alternatives.
    Water quality impacts vary little across the final alternatives. 
EIS analyses indicated that improving the efficiency of TVA's existing 
hydroelectric units would be environmentally beneficial compared to 
impacts associated with building new hydroelectric units or other 
supply-side resources. The only noticeable difference among the final 
alternatives is that those strategies which employ more repowering 
options produce less water quality impacts. A similar reduction in 
potential air quality impacts also occurs when more repowering options 
are used.
    Most potential land-related impacts are site-specific and would 
result from implementation of specific resource options. These kinds of 
impacts will be examined in subsequent site specific reviews. Energy 
Vision 2020 did look at more generic land-related impacts that are 
associated with the potential ``footprint'' of resource options. The 
larger the footprint (the size of the site needed for an option) the 
more likely there will be adverse land-related environmental impacts. 
Energy Vision 2020 concluded that due to the availability of 
appropriate sites in the TVA region, potential land impacts do not pose 
a constraint. It also concluded that wind turbines posed the greatest 
risk of adverse land impacts because of their footprint (2,000 
megawatts of wind turbines would require up to 50,000 acres).

Preferred Alternative

    Rather than select a discrete energy resource strategy from among 
the final seven strategies as its ``preferred'' alternative, TVA 
identified a ``portfolio'' of energy resource options as its preferred 
strategy. All of the energy resource options included in the final 
seven strategies have been included in this portfolio. In addition, the 
portfolio includes several other resource options that respond 
particularly well to certain uncertainties. It also includes other 
options and actions that the TVA Board directed be included to respond 
to public comments on the draft IRP and EIS that TVA needed to include 
more renewable energy resources and demand side management programs.
    One of the important conclusions that TVA reached in Energy Vision 
2020 was that future events (uncertainties) will likely require changes 
in any discrete energy strategy. The utility industry is entering an 
era of significant changes as it moves from a regulated to a less 
regulated environment. This substantially heightens the already large 
uncertainties associated with long-range utility planning. 
Consequently, flexibility in resource option selection and 
implementation is highly valued. Flexibility heightens a utility's 
ability to respond to events as they unfold.
    The portfolio alternative provides more flexibility than any 
discrete strategy. Much like a portfolio of stocks is chosen to manage 
risk and accomplish specific objectives, TVA's preferred portfolio 
alternative better enables TVA to meet customer needs at an acceptable 
level of risk and still meet the objectives of balancing costs, rates, 
environmental impacts, debt, and economic development.
    Portfolio options include: combustion turbines, the purchase of 
options for both base load and peaking power, improvements to the 
existing hydro system, purchases from independent power producers, 
combined cycle repowering of coal-fired plants, use of landfill and 
coalbed methane and refuse derived fuel, converting TVA's Bellefonte 
Nuclear Plant to an integrated combined cycle gasification plant with a 
chemical coproduct, one additional coal unit at TVA's Shawnee fossil 
plant, demand-side management programs, beneficial electrification 
programs, compressed air energy storage, wind turbines, a coal 
refinery, a biomass energy facility, and cascaded humidified advanced 
turbines. As events unfold, TVA can decide which of the portfolio 
options to deploy. Prior to deploying a specific resource option, TVA 
would conduct an appropriate site- or project-specific environmental 
review that tiers off of Energy Vision 2020.
    The impacts that result from TVA's portfolio alternative depend on 
the energy resource options eventually deployed. Although these impacts 
cannot be definitively assessed at this programmatic level, the impacts 
identified for the final seven strategies are likely to bound those of 
the portfolio. It is unlikely that implementation of portfolio options 
will achieve better or worse environmental performance than those 
identified for the final seven alternative strategies.
    The TVA Board decided to adopt the portfolio alternative as TVA's 
long-range energy resource strategy for the reasons given above. The 
portfolio provides the TVA Board and future Boards with a flexible 
energy plan that will help guide the strategic actions necessary for 
TVA to serve its energy customers efficiently, and to compete and 
succeed in the electric utility marketplace in the future. Because the 
Energy Vision 2020 process integrated economic development and 
environmental goals with other financial goals, TVA's portfolio of 
energy resources will allow it to use innovative approaches to meet 
future demands at competitive prices while providing opportunities for 
economic growth and a quality environment rich in natural resources.
    Because the multi-attribute tradeoff integrated process produced 
final strategies with very similar environmental impacts, there is not 
an alternative which is clearly environmentally preferable. However, 
TVA's preferred alternative, the Energy Vision 2020 portfolio, contains 
all of the resource options that perform best under the environmental 
criteria and from this perspective, the portfolio can be viewed as 
environmentally preferable.

Mitigation and Monitoring Measures

    As TVA deploys specific energy resource options, it will 
appropriately mitigate site-specific environmental impacts. However, 
the most important mitigative measure associated with Energy Vision 
2020 is the multi-attribute tradeoff method used to develop and 
evaluate energy resource strategies. This method allowed TVA to 
reformulate strategies in order to reduce potential environmental 
impacts.


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    Dated: February 22, 1996.
William J. Museler,
Senior Vice President, Transmission/Power Supply Group.
[FR Doc. 96-4497 Filed 2-27-96; 8:45 am]
BILLING CODE 8120-01-P