In the time of year when summer heat drives electric bills to peak level, it could be hard for electricity consumers to imagine rates climbing — again — over the next few years.
While a regular increase still could happen, as it did in October, higher rates due to a North Carolina court ruling are now less likely, following a U.S. Appeals Court ruling filed last Monday in which the Tennessee Valley Authority, along with its customers and perhaps other utilities, may have dodged an expensive bullet.
That’s expensive to the tune of $1.8 billion that TVA customers, including Nashville Electric Service and its patrons, would have absorbed over the next several years.
The 4th U.S. Circuit Court of Appeals unanimously overturned a January 2009 decision in the Western District Court of North Carolina that would have required TVA to install greater emission controls at three coal-fired plants — the Kingston, Bull Run and John Sevier plants — in Tennessee and one in Alabama.
The district court originally ruled in favor of a lawsuit filed in January 2006 by North Carolina Attorney General Roy Cooper against the TVA for some of its power plants in Tennessee, Kentucky and Alabama, calling the plants “public nuisances” to North Carolina and seeking to impose emission control upgrades on the plants.
On May 21, 2009, U.S. Rep. Jim Cooper of Nashville wrote a letter to TVA Chairman Mike Duncan encouraging the utility that serves 9 million regional customers to appeal a North Carolina district court’s decision.
Cooper viewed the North Carolina court’s ruling not only as a “pot shot” at Tennessee that could have burdened TVA customers with a rate increase but also a poor way to go about reducing pollution controls on power plants.
According to the congressman, a sensible national approach regarding decisions on reducing pollution should move through the federal level and be done in a uniform way, fair to all states.
“If you don’t have that approach and you allow a patchwork quilt and you allow states to take pot shots at each other, then you’re going to have chaos,” Cooper said, referring to the perceived can of worms opened if states start suing each other over alleged public nuisances from neighboring states.
Cooper and other members of Congress filed an amicus brief (a filing by interested parties) last year in support of the TVA, stating that the Clean Air Act is enough comprehensive regulation and does not allow room for legal remedies such as public nuisance laws.
With a yearly budget in the $11 billion range and the utility having spent $5.5 billion since 1977 improving air quality emissions, the potential cost to the TVA imposed by the North Carolina ruling would have been significant.
Brooks said because customer rates fund the utility, any capital projects such as improvements to facilities would be absorbed in the budget.
“Would it have been an immediate impact in one year? No,” Brooks said. “Over five years, 10 years, 15 years — yes, it would have to have been absorbed in the yearly budget process somehow. We would spread it out so that it would be as little an impact as possible.”
Far beyond the average electricity bill, Cooper said the case poses a significant issue of constitutional law that could have had implications in other aspects of the public utility sector.
“This is one of these hidden but really important issues, because these are billion-dollar issues when you get down to it,” Cooper said.
Allowing states to impose restrictions outside of federal regulation could lead to a division of the power grid dependent on the whims of individual judges at the state level.
“This ruling is disappointing but the fight for clean air is far from over,” said Noelle Talley, public information officer for the North Carolina Department of Justice. “I’m pleased that the TVA is cleaning up the four plants cited in the order and I trust this will continue during the appeals process.”