[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] ======================================================================= ----------------------------------------------------------------------- TENNESSEE VALLEY AUTHORITY Integrated Resource Plan AGENCY: Tennessee Valley Authority. ACTION: Issuance of Record of Decision. ----------------------------------------------------------------------- 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. [[Page 7575]] 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