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Kingston Fossil Plant Ash Spill
12 Months Ended
Sep. 30, 2015
Environmental Remediation Obligations [Abstract]  
Kingston Fossil Plant Ash Spill
Kingston Fossil Plant Ash Spill

The Event

In December 2008, one of the dredge cells at Kingston failed, and over five million cubic yards of water and coal fly ash flowed out of the cell. TVA, in coordination with federal and state agencies, has completed cleanup and recovery efforts.  TVA completed the removal of time-critical ash from the river during the third quarter of 2010.  In November 2012, the EPA and the Tennessee Department of Environment and Conservation ("TDEC") approved a plan to allow the Emory River's natural processes to remediate the remaining ash in the river, and to conduct a long-term monitoring program. TVA submitted a final completion report to the EPA on April 22, 2015, for review and approval. The report was approved by the EPA on September 9, 2015.

Claims and Litigation

See Note 22Legal ProceedingsLegal Proceedings Related to the Kingston Ash Spill and — Civil Penalty and Natural Resource Damages for the Kingston Ash Spill.

Financial Impact

In August 2009, TVA began using regulatory accounting treatment to defer all actual costs already incurred and expected future costs related to the ash spill.  The cost is being charged to expense as it is collected in rates over 15 years, beginning October 1, 2009.  As of September 30, 2015, TVA had spent $1.1 billion related to the ash spill. The remaining estimated liability at September 30, 2015 was $6 million and is included in Accounts payable and accrued liabilities.

Insurance

TVA had property and excess liability insurance programs in place at the time of the Kingston ash spill.  TVA pursued claims under both the property and excess liability programs and has settled all of its property insurance claims and some of its excess liability insurance claims.  In April 2012, TVA initiated arbitration proceedings against the remaining excess liability insurance companies in accordance with the policies’ dispute resolution provisions. TVA is seeking recovery of certain costs incurred in the cleanup project, including the costs of removing ash from property or waters owned by the State of Tennessee, and related expenses. TVA has received total insurance proceeds of $336 million, of which $63 million was received during the year ended September 30, 2015, and $7 million was received in November 2015. The insurance proceeds are being recorded as reductions to the regulatory asset and will reduce costs collected in future rates.