Air Quality in the Tennessee Valley and TVA’s Emission Reductions

1. Air Quality in the Tennessee Valley and TVA’s Emission Reductions Land of Sky Regional Council Ozone Season Kickoff Event John Myers Tennessee Valley Authority March 30, 2012

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3. Clean Air Progress/ New Standards • With more stringent air quality standards, more people will be living in areas that do not meet these standards • This can contribute to the belief, air quality is degrading • To the contrary - Air quality has improved • Some clean air standards – those “yardsticks” by which we judge progress – are much tougher now. • Continued progress will require comprehensive management strategies involving all emissions sectors

4. Regional Annual Particulate1999 to 2010

5. Regional Sulfur Dioxide Concentrations 1979 to 2010 In the GSMNP total cloud water sulfur deposition has decreased 86.2% since 1999.1 1.Cloud Deposition Monitoring-Clingmans Dome, TN- Great Smoky Mountains National Park-2010, MACTEC Engineering and Consulting, Inc.

6. Regional Ozone Concentrations 1979 to 2010 1997- 84 ppb 2008- 75 ppb 2013/4- (60-70 ppb?)

7. Man-made Sources Of Air Pollution • TVA’s integrated approach to air quality improvements: • TVA emissions • Installing additional clean air controls • Idling some coal-fired units • Adding zero-emitting nuclear, low-emitting gas and renewable generation • Mobile sources • Pioneering electric vehicle infrastructure in the Valley • Enabling electric transportation in the Valley • Area & Industrial sources • Establishing aggressive energy efficiency and demand reduction programs • Sustainability and Smart Growth Planning

8. Air OverviewKey Drivers • Cross State Air Pollution Rule (CSAPR) (stayed on 12/30/11) • Set to replace the Clean Air Interstate Rule with proposed stringent levels for SO2 and Nox • Was to start in 2012 with some additional reductions in 2014, continued tightening with NAAQS • National Ambient Air Quality Standards (NAAQS) • EPA implementing new National Ambient Air Quality Standards and new tighter standards forecasted for ozone and fine particulates • Utility MACT – Mercury & Air Toxics (MATs) • Maximum Achievable Control Technology (MACT) requirements for hazardous air pollutants, including mercury, acid gases, trace metals, and organics • Compliance April 2015 with one-year extension for “control installation” which can include replacement generation and transmission upgrades

9. TVA’s Clean Air Progress BILLIONS OF DOLLARS MILLIONS OF TONS Clean Air Spending SO2 NOx Emissions are reported to EPA on a calendar year basis. TVA Spending is tracked on a fiscal year basis.

10. TVA’s Clean Air NOx Progress Eastern Plants Watts Bar 2 Bull Run John Sevier Kingston Widows Creek

11. Integrated Resource Plan sets direction • Integrated Resource Plan • Guides power system planning • Evaluated over 3,000 cases • Balances costs and risks to benefit all stakeholders • Allows flexible responses to change • Reduces environmental impacts

12. Renewable generation- important part of the mix

13. TVA’s Clean & Renewable Energy Portfolio FY2011 Electricity Savings from Avoided Generation 559 GWh Total TVA Delivered Generation 1 170,844GWh (100%) TVA Defined Clean Energy 65,733GWh (38%) TVA-Defined Renewables 16,171 GWh (9%) 1 TVA generated & purchased power January 2012

14. TVA Fleet Decisions Shawnee Paradise Bull Run Cumberland John Sevier Gallatin Kingston Lagoon Creek Watts Bar 2 Johnsonville Allen Widows Creek Colbert Magnolia Continue to Operate Retire/Idle Evaluate Nuclear Expansion New Combined Cycle

15. Portfolio Diversification TVA has added three combined cycle generating facilities burning clean, low-priced, domestic natural gas Lagoon Creek – Magnolia – John Sevier Generating Capacity of 2,329 Megawatts Anticipated FY2012 generation • 12.4 million kilowatthours $425 million in potential fuel cost savings in FY2012

16. John Sevier Combined Cycle Gas Plant • Construction began April 2010 • 880 MW summer capacity (varies with temperature) • 3 on 1 configuration • Commercial operation is scheduled to • begin before June 1, 2012 • Original approved budget • is $820 M; however, total • project cost is expected to • be under that amount.

17. Positioned within range of IRP * The owner of a 300 MW facility is retaining the renewable attributes, but TVA has the option to purchase in the future. ** Includes contracted and approved projects, including hydromodernization projects included in the FY 12 budget. *** All midwest wind projects. Commitments, and projects that began operations beginning in FY 11. As of 3/1/12

19. Demand-Side Options - EnergyRight® Solutions Achieved 69 gigawatt hours of energy savings and 35 megawatts of demand reduction Performed 4,843 In-Home Energy Evaluations Completed more than 33,000 evaluations since April 2009 Supported installation 1,719 heat pumps Supported completion of 174 commercial and industrial high-efficiency projects Results are for 1st Quarter Fiscal Year 2012

20. TVA Air Monitoring in Mountains • Measurements: hourly SO2, NO, NO2, NOy, CO, O3 (by NPS), PM2.5, PM10 & speciated PM2.5 sulfate, black carbon & total carbon. • Provides data on regional background air quality& trends—tracks benefits of controls—gives insight into effectiveness of air management strategies. • Partnership with National Park Service (IMPROVE visibility site) since 1980. • Research co-sponsored by Electric Power Research Institute, EPA & TVA. Look Rock NPS IMPROVE shelter (left) and TVA NCore shelter (right) at Look Rock near the Great Smoky Mts. National Park.

21. Improvement in Haze at Look Rock Extinction on 20% Worst Day in 1999 and 2009 1999 2009 167 Mm-1 77 Mm-1

22. Summary • Air quality in the nation and region continues to improve • TVA has greatly reduced SO2 and NOx emissions and we now account for a smaller portion of total emissions • EPA continues to revise air quality standards, making them more stringent • Many challenges remain and will require reductions from all sources in a national effort to attain these revised standards