EPA and TVA have been negotiating for some time over possible settlements in 
enforcement actions filed by EPA over modifications made to TVA power plants 
in violation of New Source Review (NSR) rules.  Those negotiations to reach 
an out-of-court solution have officially broken down, with TVA filing a 
petition in federal court late yesterday opposing EPA's NSR enforcement 
allegations.

While many felt TVA might settle with EPA (since it was government 
negotiating with government), TVA has taken a very strong stance, indicating 
that they made some offers to EPA but that EPA's unreasonable stance would 
cause severe harm to grid reliability, the financial viability of TVA and 
pocketbooks of the ratepayers.   Southern Company and Duke Energy filed 
petitions supporting TVA.   

EPA is insisting that these court filings will in no way stop the Agency from 
pursuing NSR enforcement measures.

I will keep you posted as to any developments in negotiations or court 
actions in this area.

Jeff Keeler
Director, Environmental Strategies
(202) 466-9157