Southeast's largest green power program running deficit

By DUNCAN MANSFIELD
Associated Press Writer

The Tennessee Valley Authority's renewable energy program, the largest in the Southeast, is selling far more premium-priced "green power" than it is producing, according to an internal audit.

The nation's largest public utility sold 11.6 million more megawatt hours of renewable electricity in 2003 than it made - a 42 percent deficit from the 27.4 million megawatt hours generated, according to a TVA inspector general's report obtained by The Associated Press.

Fifteen wind turbines being erected on a former strip mine on Buffalo Mountain near Knoxville could turn that deficit into a huge surplus that would make renewable energy available to more consumers.

But without the windmills, the national accreditation of TVA's Green Power Switch program hangs in the balance.

"From Day One we were in a deficit," program manager Gary Harris said. "We didn't have any facilities. But that was the design of our program."

From the start four years ago, TVA committed to supply Green Power Switch with homegrown energy - instead of buying credits for green power made outside the sometimes smoggy Tennessee Valley.

TVA would add generation as consumer demand grew, but an assortment of delays hampered the plan.

Fifteen solar collectors built around the valley provided more visibility for the program than power. Three small wind turbines on Buffalo Mountain were more of an experiment than power generators.

The main supplier was to be a landfill gas conversion project near Murfreesboro that never worked. A new source was found in Memphis, but it took time to develop - burning methane from the city's wastewater treatment plant at TVA's Allen fossil plant.

Expanding the Buffalo Mountain wind farm with 15 larger turbines, owned by Chicago-based Invenergy LLC, could give Green Power Switch its first significant surplus.

But property negotiations and expiration of federal tax credits delayed the project more than a year. The windmills are now being hauled up the mountain and should be operating by early next year.

"TVA has had its challenges in developing supply, but they are in good standing with us," said Dan Lieberman with the Center for Resource Solutions, the national green power accrediting group in San Francisco.

Under association rules, an accredited utility has one year to make up a supply deficit - a so-called "true up" period.

"They have stayed within the 'safe harbor,'" Lieberman said of TVA, "although we are definitely watching carefully."

TVA's program ranks seventh in power sales and ninth in the number of customers out of more than 500 utilities in 33 states offering green power, the Department of Energy reports.

Still, TVA pales compared to the top programs. Austin (Texas) Energy has more than seven times the sales as TVA and Minnesota-based Xcel Energy has six times as many customers as TVA.

TVA has 7,241 residential and 332 business green-power customers. The program is only offered to 66 of TVA's 158 power distributors largely because of the lack of supply. Advertising has been limited for more than a year for the same reason.

Harris expects Green Power Switch will be offered to all distributors in TVA's seven-state region when the new wind turbines come on line. Already, other utilities are vying to buy the surplus.

"TVA is constantly chasing the demand, and I think that is a good thing," said Steve Smith, director of the Southern Alliance for Clean Energy and a member of the advisory panel that oversees TVA's green power accreditation. "That shows people want it."

TVA charges a premium of $4 per month for a 150-kilowatt hour block of green power - about 12 percent of a typical home's usage. Most consumers buy more than one block.

Harris said TVA has invested about $9 million in Green Power Switch, which accounts for about one-tenth of 1 percent of TVA's total generation. It gets back about $1 million in annual sales.

TVA serves about 8.5 million people and several major industries directly in Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina and Virginia.

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