The Tennessee Valley Authority is a federal agency and corporation charged with fostering the economic and social well being of the residents of the Tennessee Valley. This includes managing the Tennessee River system, with responsibilities for flood control, navigation and stewardship of land and water resources. As part of this mandate, TVA operates the nation's largest integrated public power system, providing electricity to eight million residents in a seven-state region.
In total, we have over 28,000 megawatts of generating capacity. Coal-fired generation comprises about 60 percent of this capacity, with 59 units at 11 plants in three southeastern states. This places us among the largest coal-using utilities in the country. TVA has been operating various kinds of generating technologies for more than 65 years and has substantial expertise in the maintenance of fossil plants. I am here today to represent TVA's dual responsibilities as a power producer and an environmental steward.
Although there has been some criticism of its complexity, TVA believes the NSR program has generally been a success. EPA has largely applied the program's requirements in a way that does not impede routine maintenance of the nation's electric- utility generating resources. Moreover, in the past the program has not been applied in a way to discourage improvements in unit efficiency and reliability. TVA believes such improvements -- long a part of routine maintenance -- are desirable to ensure a reliable supply of electricity and are in the public interest.
As the person responsible for the operation and maintenance of 59 coal units, I urge great caution as EPA contemplates changes to the program that could preclude improvements in efficiency and reliability. Unfortunately, some of the ideas being presented to EPA by others as part of the rule-making process could discourage such desirable improvements and have a detrimental impact on the electric-utility industry's ability to safely and effectively operate our plants.
EPA's stated goal in its proposed regulation is to "reduce the costs and regulatory burdens for applicants" to the program. However, I would counter that, rather than achieving this admirable goal, these potential changes to the proposed rule will actually impede the NSR process. In fact, several aspects of the proposal are not only unsound on policy grounds, but appear counter to the intent of the Clean Air Act.
The current NSR regulations have long excluded routine maintenance, repair, and replacement projects at existing sources. Industries of all kinds, including the electric utility industry, have relied upon this exclusion to maintain production capabilities and capacity. Historically, EPA has employed a common-sense understanding of the term that encompassed those maintenance activities that are customary in the industry to optimize reliability, safety, availability and efficiency.
It would be a serious mistake in this rule-making for EPA to change its historic interpretation of the definition of routine maintenance. EPA should not make changes to the program that discourage utilities from making improvements that increase plant efficiency and improve reliability.
Utilities in the Eastern Interconnect have been straining to meet demand and keep the lights on the last two summers. Now more than ever, utility maintenance programs are key to meeting demand and reliably serving the public. TVA has recently released a technical report on routine maintenance on the TVA system and in the utility industry. This report demonstrates how important maintenance is to reliable service. I would like to submit a copy of this report for the record.
Mr. Chairman, TVA finds itself in the position of agreeing with what appears to be EPA's broader goals in these NSR changes -- improving the nation's air quality. However, we remain concerned that the agency may be tempted to shoehorn this admirable goal into a program that is primarily designed to address the permitting and control of new sources. Literally, the new source review program is about who turns a wrench, when and where. It is not intrinsically designed to handle broad shifts in air quality policy. Instead, this rule should use a straightforward approach that does not block the maintenance practices that have allowed this nation's industrial capacity to support the booming economy.
In the summer of 1998, TVA announced the voluntary installation of selective catalytic reduction controls to control nitrogen oxide emissions at 10 of our larger coal units. TVA is undertaking this effort because we believe it is necessary if air quality improvements are to continue in the Tennessee Valley region. We are committed to this effort although it will cost more than $500 million on top of the more than $2.5 billion that TVA has already spent to reduce emissions from its coal-fired plants. By 2005, TVA will have reduced its system sulfur dioxide emissions by SO percent. Moreover, by the same period, we aim to reduce our ozone season its nitrogen oxide emissions by 70-75 percent, driven in large part by our voluntary efforts.
I note this voluntary effort for two reasons. First, I think it demonstrates our commitment to environmental stewardship. Second, it represents an emissions control effort based on a comprehensive analysis of our entire system to achieve efficient air quality throughout the Tennessee Valley and adjacent areas. TVA carefully considered the air quality challenges facing our region, and we are placing SCR controls where they will do the most good.
When considering how the NSR program should be improved, an approach similar to TVA's system-wide plan for nitrogen oxide reductions can be a template. Although the utility industry has just finished substantially reducing its NOx emissions, TVA thinks more can and should be done. What is needed is a program that allows utilities to reduce emissions on a system-wide or industry-wide basis over time while still allowing units to be maintained as they have been historically. TVA stands ready to work with this subcommittee and EPA to build on the improvements already well under way.
Finally, in general, there should be greater emphasis on multi-pollutant planning, taking a look at how to improve air quality generally rather than just one pollutant at a time. Utilities need greater certainty as they plan for emissions control. Most importantly, air quality improvement efforts must have adequate mechanisms to ensure the most cost- effective air quality improvements. Unfortunately, the attempts to achieve these goals through the New Source Review program will likely fall flat. The underlying program is ill-equipped to answer these far-reaching policy considerations.
Mr. Chairman, the subcommittee's interest in the proposed changes to the New Source Review program is well timed. We are at an important juncture, trying to find a way to continue improvements in air quality without sacrificing the maintenance of individual facilities or the reliability of the overall electric system.