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Coal-ash cleanup could be $1 billion

KNOXVILLE — The nation's largest public utility raised its top estimate for cleaning up a massive ash spill at a Tennessee coal-fired power plant to almost $1 billion and acknowledged that the recovery could take several years.

The Tennessee Valley Authority made those disclosures Friday in a second-quarter financial report showing that earnings were flat at $133 million for the three months that ended March 31, while electricity sales fell 9.4 percent because of the economic downturn, TVA Chief Financial Officer Kim Greene said in a statement.

The new estimates for the cleanup of the Kingston Fossil Plant coal-ash disaster are $150 million higher than previous forecasts and lift TVA's predicted range to $675 million to $975 million.

Some 5.4 million cubic yards of fly ash and sludge breached a storage pond Dec. 22 at the Kingston plant, about 40 miles west of Knoxville. The toxic-laden material flooded the Emory River and a lakeside neighborhood, covering about 300 acres and damaging about two dozen homes.

Four months after the disaster, TVA said it still doesn't know what went wrong — outside consultants have been hired — or "the extent of the (environmental) damage or the remedies that will be required for restoration."

Another unknown is how much this will cost the 8.7 million consumers served by TVA distributors in Tennessee, Alabama, Kentucky, Mississippi, Georgia, North Carolina and Virginia.

The report notes that TVA has property and liability insurance programs that "may cover some of the costs." However, the report said two insurers already have denied coverage for the spill.

Activists continue to raise health concerns for residents, but environmental agencies say that drinking water and air quality remain safe.

TVA has begun limited dredging to get ash out of the river. The financial report said the agency has spent $77 million so far and was budgeting for "a long-term liability."

"TVA currently believes the recovery process will take several years," the report said, acknowledging what some officials have suggested before but never put in writing.

For the six months that ended March 31, TVA reported a $172 million loss on $6 billion in revenue compared to $143 million in income on $4.9 billion in revenue a year earlier.

"The decrease in power sales, continuing expenses to clean up the Kingston ash spill and the impact of the market decline on our pension and other investments are among the factors that make this a challenging year financially," Greene said.

TVA says its Kingston cleanup estimates do not include costs for tighter regulation of coal ash prompted by the spill, regulatory fines, lawsuits and settlements.

Seven federal lawsuits are pending against TVA over the spill. One of them seeks more than $300 million in damages.

The report said the utility has spent more than $40 million settling claims — twice as much as reported two weeks ago. TVA has bought 71 pieces of property and resolved 30 personal property claims.