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APPENDIX C

ENVIRONMENTAL MITIGATION PROJECTS 

In compliance with and in addition to the requirements in Section V.F (Environmental 

Mitigation Projects) of the Compliance Agreement, TVA shall comply with the requirements 

of this Appendix to ensure that the benefits of the $290 million in total Project Dollars are 

achieved.

I. Overall Environmental Mitigation Projects Schedule and Budget

A. TVA shall submit plans for review and approval pursuant to Section V.J (Review 

and Approval of Submittals) of the Compliance Agreement for the Environmental 

Mitigation Projects (“Projects’) described in this Appendix (except for actions 

required by Section V of this Appendix), within 120 days of the Effective Date of

the Compliance Agreement.

B. Beginning 120 days after the date EPA approves the plan and continuing semiannually thereafter until completion of each Project (including any applicable 

periods of demonstration or testing), TVA shall provide EPA with written reports 

detailing the activities undertaken and the progress of each Project, including an 

accounting of Project Dollars spent to date, and, if applicable, any GHG 

(expressed as carbon dioxide equivalent (CO2e)), sulfur dioxide (SO2), nitrogen 

oxides (NOx) and mercury (Hg) emission reductions and the methodologies used 

for those calculations. TVA may consolidate the plans required by this Appendix 

into a single plan. For purposes of this Appendix, CO2e means the number of 

metric tons of CO2 emissions with the same global warming potential as one 

metric ton of another Greenhouse Gas, and is calculated using Equation A–1 of 40 

CFR Part 98, Subpart A.

C. Within 60 days following the final expenditure of Project Dollars for each Project

required under the Compliance Agreement and this Appendix (including any 

applicable periods of demonstration or testing), TVA shall submit to EPA a report 

that documents the date that the Project was completed, the emission reductions 

or other environmental benefits resulting from the Project including TVA’s 

methodology or analysis supporting these reductions and benefits, and the Project 

Dollars expended by TVA in implementing the Project.

D. Upon EPA’s approval of the plans required by this Appendix, TVA shall 

complete the Environmental Mitigation Projects according to the approved plans. 

Nothing in the Compliance Agreement or this Appendix shall be interpreted to 

prohibit TVA from completing the Environmental Mitigation Projects before the 

deadlines specified in the schedule of an approved plan.
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E. Plan Revisions. Notwithstanding the submission and approval of a plan for these 

Projects as required by this Appendix, TVA reserves the right to submit to EPA 

for review and approval pursuant to Section V.J (Review and Approval of 

Submittals) a proposed amended plan if it identifies alternative Projects that have 

the potential for greater environmental benefits, are otherwise consistent with the 

requirements of this Section, and may be more cost-effective than projects listed 

herein or previously approved by EPA as part of the initial plan. 

II.

A. No later than 120 days after the Effective Date of the Compliance Agreement

TVA shall submit a plan to EPA for review and approval pursuant to Section V.J 

of the Compliance Agreement (Review and Approval of Submittals) for the 

reduction or avoidance of criteria pollutants, Greenhouse Gases (GHGs), and 

other air pollutants through the Energy Efficiency Projects. The plan shall 

describe how TVA will spend $240 million Project Dollars on Energy Efficiency 

Projects (Projects) within five years of the date of plan approval. The plan shall 

include a phased schedule for the reduction of emissions and TVA’s expenditures

on these Projects. TVA may spread the payments for the Energy Efficiency 

Projects evenly over five years from the date of plan approval. 

Energy Efficiency Projects

B. Nothing in this Appendix is intended to preclude TVA from utilizing any GHG

reductions or avoided emissions achieved through implementation of the Energy 

Efficiency Projects to satisfy any future federal or state legislative or regulatory 

requirements requiring the avoidance, reduction or offset of GHG emissions from 

any TVA System Unit or plant. 

C. TVA shall describe in the plans submitted to EPA for review and approval how 

TVA shall maintain the emission reductions associated with the Projects it 

implements as part of the Energy Efficiency Projects. 

D. The plan required to be submitted pursuant to this Section of this Appendix shall 

also satisfy the following criteria:

1. Describe how the proposed Projects in the plan are consistent with the 

requirements of this Section and the Compliance Agreement, and how the 

Projects will result in the emission reductions projected to be reduced for 

GHGs (expressed in CO2e), SO2, NOx and Hg pursuant to this Section.

2. Include a budget and schedule for completing the Energy Efficiency 

Projects on a phased schedule by five (5) years from the date of plan 

approval and the supporting methodologies and calculations for the 

budget.

3. Describe the methodology and include any calculations that TVA

proposes to use in order to document the emission reductions associated 

with any proposed Project to be implemented as part of this Section.
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E. Upon EPA’s approval of the plan, TVA shall complete the Energy Efficiency 

Projects according to the approved plan and schedule.

F. Energy Efficiency Projects Include:

1. Voltage Optimization (Transmission Loss Reduction). TVA will invest in 

one or more Projects to improve the end-to-end efficiency of the power 

delivery system through optimization of system voltages or other similar 

approaches. An example project would deploy advanced metering and 

control technology to provide real-time measurement and optimization of 

system voltages to reduce transmission line losses, and reduce consumer 

energy consumption. By optimizing distribution feeder voltages to the 

lower portion of the American National Standards Institute service range, 

energy savings are estimated to be 2-3% of the total energy delivered. 

TVA will spend $30 to 60 million in Project Dollars to implement this 

Project within five years from the date of plan approval. 

2. Tennessee Valley Smart Energy Communities: 

a) TVA will establish one or more “Smart Energy Communities” in 

the Tennessee Valley Region to model the most efficient energy 

use processes and upgrades available. An example project would 

provide a range of energy efficiency technologies and the primary 

enabling elements of a smart grid (intelligent devices, two-way 

communications, and information management) on a typical power 

distributor system to demonstrate the range of benefits that can be 

achieved from a smart grid deployment. Technology or efficiency 

applications could include: high efficiency air conditioning or 

water heating, lighting upgrades, smart meters, consumer 

interface/display devices, grid integrated renewable energy, energy 

storage, electric vehicle and vehicle charging, voltage 

optimization, and full characterization of the carbon impact of such 

a deployment. A component of “Smart Energy Communities” 

could be the development of tools and resources for educating 

consumers and communities on the benefits of such upgrades.

b) TVA will provide “Extreme Energy Makeovers” for at least two 

communities of homes or residences located in at least two 

different climate regions in the Tennessee Valley. This Project 

would retrofit a community of residences, such as low-income 

housing, with the most cost-effective energy-reduction packages 

on actual homes and monitor the results, with a goal to achieve 

25% energy use reduction. The estimated energy savings is 1,000 

MWh/yr at approximately $10/sq.ft.
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c) Within five years from the date of plan approval, TVA will expend 

$20 to $50 million in Project Dollars to implement these two 

Projects. 

3. Whole Home Efficiency Upgrades: TVA will reimburse 50 percent of the 

installation cost per item (with a targeted upper limit of $500 per 

household) to homeowners who invest in one or more of the following 

items for their home: insulation; new ENERGY STAR heat pumps, air 

conditioning, and windows; duct repair/replacement and sealing; or 

caulking, and weather-stripping, and maintenance of existing Heating 

Ventilation Air Conditioning (HVAC) systems. TVA and participating 

distributors of TVA power will also provide expert advice, financing, and 

lists of qualified weatherization and HVAC contractors to allow 

homeowners to make the most cost-effective improvements to lower their 

monthly energy bills. TVA will expend at least $45 to $50 million in 

Project Dollars within five years of the date of plan approval to implement 

these Projects. 

4. Commercial Custom and Prescriptive Efficiency Assistance: TVA will 

provide incentives for commercial end-users to invest in energy efficiency 

improvements to such systems as lighting, heating and cooling, and other 

technologies (e.g. refrigeration, food service, office equipment, etc.). TVA 

will fund energy audits and expert consulting services to collaborate with 

businesses to develop energy efficiency improvement plans aimed at 

making commercial facilities (e.g. schools, hospitals, office and 

government buildings, etc.) more energy efficient. TVA will offer custom 

incentives for site specific improvements resulting in calculated or directly 

measured energy and demand reductions and will offer a menu of 

prescriptive incentives for specified, pre-approved types of efficiency 

upgrades to commercial building electric systems and equipment. 

Incentives will be structured to help commercial businesses shorten 

payback periods and move proposed projects to implementation. TVA 

will expend $55 to $60 million in Project Dollars within five years of the 

date of plan approval to implement this Project. 

5. Industrial Custom and Prescriptive Efficiency Assistance: TVA will 

provide incentives for manufacturers to invest in energy-efficient 

industrial process improvements (e.g., high-efficiency motors, drives, 

compressed air, refrigeration, and lighting). TVA will fund expert 

consulting services to collaborate with manufacturers to develop a 

portfolio of energy-efficiency Projects aimed at making processes more 

energy efficient. TVA will offer custom and prescriptive incentives for 

high-efficiency equipment retrofits and process improvements. The 

incentives will be structured to help manufacturers shorten payback 

periods and move proposed Projects to implementation. TVA will expend 
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$45 to $50 million in Project Dollars to implement these Projects within 

five years of the date of plan approval. 

III.

A. Within one hundred twenty (120) days from the Effective Date of this 

Compliance Agreement, TVA shall submit to EPA for review and approval 

pursuant to Section V.J (Review and Approval of Submittals) of this Compliance

Agreement:

Clean Diesel Retrofit and Electric Vehicle Projects

1. A plan to retrofit in-service non-TVA publicly-owned diesel engines (e.g, 

municipal vehicles, public school vehicles, etc) with emission control 

equipment further described in this Section, designed to reduce emissions 

of particulates and/or ozone precursors (the “Clean Diesel Retrofit 

Project”) and fund the operation and maintenance of the retrofit equipment 

for the time-period described below. 

2. TVA may also include a plan to replace in-service non-TVA publiclyowned motor vehicles powered by diesel or gasoline engines with newly 

manufactured hybrid-electric or electric vehicles (the “Electric Vehicle 

Project”). For purposes of this Appendix, “hybrid-electric vehicle means a 

vehicle that can generate and utilize electric power to reduce the vehicle’s 

consumption of fossil fuel. Any hybrid-electric or electric vehicle shall 

meet all applicable engine standards, certifications, and/or verifications 

required by law. 

3. The Clean Diesel Retrofit Project and the Electric Vehicle Project shall 

include, where necessary, techniques and infrastructure needed to support 

such retrofits and/or replacements. TVA shall ensure that the recipients 

operate and maintain the retrofit and/or replaced equipment for five years 

from the date of installation/replacement, by providing funding for 

operation and maintenance as described in Section III.B.7., below. 

4. TVA shall spend no less than $8 million in performing these Projects, and 

shall complete the Projects within five years of the date of plan approval. 

TVA shall limit the use of Project Dollars for administrative and project 

support costs (excluding educational materials) associated with 

implementation of these projects to no greater than 10% of the Project 

Dollars TVA spends. A portion of the funds allocated for administrative 

and project support may be used for training and travel to support the 

Project.

B. In addition to the requirements of Section I, the plan for the Clean Diesel Retrofit 

Project shall also satisfy the following criteria:

1. Involve vehicles based in the TVA service area.
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2. Provide for the retrofit of public diesel engines with EPA or California Air 

Resources Board (“CARB”) verified emissions control technologies to 

achieve the greatest measurable mass reductions of particulates and/or 

ozone precursors for the fleet of vehicles that participate(s) in the Clean 

Diesel Retrofit Project. Depending upon the particular EPA or CARB 

verified emissions control technology selected, the retrofit diesel engines 

must achieve emission reductions of particulates and/or ozone precursors 

by 30%-90%, as measured from the pre-retrofit emissions for the 

particular diesel engine. 

3. Describe the process TVA will use to determine the most appropriate 

emissions control technology for each particular diesel engine that will 

achieve the greatest mass reduction of particulates and/or ozone 

precursors. In making this determination, TVA must take into account the 

particular operating criteria required for the EPA or CARB verified 

emissions control technology to achieve the verified emissions reductions.

4. Provide for the retrofit of diesel engines with either: (a) diesel particulate 

filters (DPF); (b) diesel oxidation catalysts (DOC); or (c) closed crankcase 

ventilation systems with either DPF or DOC.

5. Describe the process TVA will use to notify fleet operators and owners in 

TVA’s service territory that their fleet of vehicles may be eligible to 

participate in the Clean Diesel Retrofit Project and to solicit their interest 

in participating in the Project.

6. Describe the process and criteria TVA will use to select the particular fleet 

operator and owner to participate in this Project, consistent with the 

requirements of this Section.

7. For each of the recipient fleet owners and operators, describe the amount 

of Project Dollars that will cover the costs associated with: (a) purchasing 

the verified emissions control technology, (b) installation of the verified 

emissions control technology (including datalogging), (c) training costs 

associated with repair and maintenance of the verified emissions control 

technology (including technology cleaning and proper disposal of waste 

generated from cleaning), and (d) the incremental costs for repair and 

maintenance of the retrofit equipment (i.e., DPF, DOC, closed crankcase 

ventilation system) for five years from the date of installation, including 

the costs associated with the proper disposal of the waste generated from 

cleaning the verified emissions control technology. This Project shall not 

include costs for normal repair or operation of the retrofit diesel fleet.

8. Include a mechanism to ensure that recipients of the retrofit equipment 

will bind themselves to follow the operating criteria required for the 
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verified emissions control technology to achieve the verified emissions 

reductions and properly maintain the retrofit equipment installed in 

connection with the Project for the period beginning on the date the 

installation is complete through December 31, 2016.

9. Describe the process TVA will use for determining which diesel engines 

in a particular fleet will be retrofitted with the verified emissions control 

technology, consistent with the criteria specified in Section III.B.2.

10. Ensure that recipient fleet owners and/or operators, or their funders, do not 

otherwise have a legal obligation to reduce emissions through the retrofit 

of diesel engines.

11. For any third party with whom TVA might contract to carry out this 

Project, establish minimum standards that include prior experience in 

arranging retrofits, and a record of prior ability to interest and organize 

fleets, school districts, and community groups to join a clean diesel 

program.

12. Ensure that the recipient fleet(s) comply with local, state, and federal 

requirements for the disposal of the waste generated from the verified 

emissions control technology and follow CARB’s guidance for the proper 

disposal of such waste.

13. Include a schedule and budget for completing each portion of the Project, 

including funding for operation and maintenance of the retrofit equipment 

through December 31, 2016.

C. In addition to the information required to be included in the report pursuant to 

Section I.C., above, TVA shall also describe the fleet owner/operator; where it 

implemented this Project; the particular types of verified emissions control 

technology (and the number of each type) that it installed pursuant to this Project; 

the type, year, and horsepower of each vehicle; an estimate of the number of 

citizens affected (if applicable) by this Project, and the basis for this estimate; and 

an estimate of the emission reductions for Project or engine, as appropriate (using 

the manufacturer’s estimated reductions for the particular verified emissions

control technology), including particulates, hydrocarbons, carbon monoxide, and 

nitrogen oxides.

D. In addition to the requirements of Section I, the plan for the Electric Vehicle 

Project shall also satisfy the following criteria:

1. Propose the replacement of conventional gasoline or diesel powered motor 

vehicles described in Section III.A. above with hybrid-electric and/or 

electric vehicles operated in TVA’s service territory.
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2. Prioritize the public fleets in TVA’s service territory that will be selected 

for participation in this Project, including consideration of such issues as 

environmental justice and air quality.

3. Describe the rationale and basis (including a discussion of cost) for 

selecting the make and model of the hybrid-electric and/or electric 

vehicles chosen for this Project, including information about other 

available hybrid-electric or electric vehicles and why such vehicles were 

not selected.

4. Require the recipients of such hybrid-electric or electric vehicles to certify 

that the hybrid-electric or electric vehicles will be used for their useful 

life.

5. Describe the final disposition of the vehicles that are being replaced. 

6. Include a schedule for completing the Electric Vehicle Project.

7. Describe generally the expected environmental benefits of the Project, 

including any fuel efficiency improvements, and quantify emission 

reductions expected.

E. Upon EPA’s approval of the plan, TVA shall complete the Projects described in 

this Section according to the approved plan and schedule.

IV.

A. Within 120 days from the Effective Date of this Compliance Agreement TVA 

shall submit to EPA for review and approval pursuant to Section V.J (Review and 

Approval of Submittals) of this Compliance Agreement a plan for the reduction of 

GHG and other pollutants through the Clean/Renewable Energy Projects listed 

below. TVA shall spend no less than $40 million in Project Dollars performing 

the Clean/Renewable Energy Projects listed below within five years of the date of 

plan approval. For purposes of this Appendix, “renewable energy” means energy 

from solar, wind, biogas, landfill gas, digester gas from wastewater treatment 

facilities, geothermal, hydrokinetic sources, renewable biomass, and biofuels 

derived from renewable sources, or incremental increases in hydro generation 

after 1994.

Clean/Renewable Energy Projects

B. Nothing in this Appendix is intended to preclude TVA from utilizing any GHG

reductions or avoided emissions achieved through implementation of the 

Clean/Renewable Energy Projects to satisfy any future federal or state legislative 

or regulatory requirements requiring the avoidance, reduction or offset of GHG

emissions from any TVA System Unit or plant. 

C. TVA shall describe in the plans submitted to EPA for review and approval, how 

TVA shall maintain the emissions avoided or reduced for the Projects it 
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implements as part of the Clean/Renewable Energy Projects. 

D. The plan required to be submitted pursuant to this Section of this Appendix, shall 

also satisfy the following criteria:

1. Describe how the proposed Projects in the plan are consistent with 

the requirements of this Section and the Compliance Agreement, 

and how the Projects will result in the emission reductions 

projected to be reduced for GHGs (expressed in CO2e), SO2, NOx

and Hg pursuant to this Section.

2. Include a budget and schedule for completing the 

Clean/Renewable Energy Projects on a phased schedule, and the 

supporting methodologies and calculations for the budget.

3. Describe the methodology and include any calculations that TVA 

proposes to use in order to document the emission reductions 

associated with any proposed Project to be implemented as part of 

this Section.

E. Upon EPA’s approval of the plan, TVA shall complete the Clean/Renewable 

Energy Projects according to the approved plan and schedule.

F. Clean/Renewable Energy Projects Include

1.

:

Waste Heat Recovery:

2.

TVA will use its Advanced Lower 

Temperature Power Cycle (ALTPC) or other waste heat 

conversion technologies, to recover waste heat from an industrial 

process to generate approximately 5 MW of clean energy. TVA 

will expend $7-$10 million in Project Dollars within five years of 

the date of plan approval to implement this Project. 

Electric Vehicle and Plug-in Hybrid Electric Vehicle Solar 

Charging Stations

3.

: TVA will develop and provide solar energy for 

vehicle battery re-charging stations across the Tennessee Valley. 

TVA will expend $1-3 million in Project Dollars within five years 

of the date of plan approval to implement this Project. 

Solar Photovoltaic (PV) Installations:

4.

TVA will install at least 500 

kWs of solar PV at TVA facilities, TVA direct serve customer 

locations, or another government-owned facility, and shall 

maintain them for a minimum of ten (10) years following approval 

of the plan. TVA will expend $2-4 million in Project Dollars 

within five years of the date of plan approval to implement this 

Project and secure these commitments. 

Landfill (or Wastewater Treatment) Methane Gas Capture and 

Generation: TVA will enter long-term power purchase agreements
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to develop and secure the generation of approximately 10 MW of 

renewable power from landfill gas or digester gas from wastewater 

treatment facilities. TVA will expend $16 to $30 million in Project 

Dollars within five years of the date of plan approval to implement 

these Projects. 

V. Land and Ecological Restoration & Biological Carbon Sequestration

A. Within two hundred forty (240) days from the Effective Date of this Compliance 

Agreement, TVA shall pay $1 million to the National Park Service in accordance 

with the Park System Resource Protection Act, 16 U.S.C. § 19jj, to be used for the 

restoration of land, watersheds, vegetation, and forests using adaptive 

management techniques designed to improve ecosystem health and mitigate 

harmful effects from air pollution. This may include reforestation or restoration of 

native species and acquisition of equivalent resources and support for 

collaborative initiatives with state and local agencies and other stakeholders to 

develop plans to assure resource protection over the long-term. Projects will focus 

on one or more of the following Class I areas: Mammoth Cave National Park and 

Great Smoky Mountains National Park. 

B. Instructions for transferring funds will be provided to TVA by the National Park 

Service. Notwithstanding Section V. A of this Appendix, payment of funds is not 

due until ten (10) days after receipt of payment instructions. Upon payment of the 

required funds into the Natural Resource Damage and Assessment Fund, TVA 

shall have no further responsibilities regarding the implementation of any project 

selected by the National Park Service in connection with this provision.

C. Within two hundred forty (240) days from the Effective Date of this Compliance 

Agreement, TVA shall pay $1 million to the United States Forest Service in 

accordance with 16 U.S.C. § 579c, for the improvement, protection, or 

rehabilitation of lands under the administration of the United States Forest 

Service. Projects will focus on one or more of the following Class I areas: 

Cohutta Wilderness Area, Linville Gorge Wilderness Area, Shining Rock 

Wilderness Area, Sipsey Wilderness Area, and Joyce Kilmer-Slickrock 

Wilderness Area. 

D. Payment of the amount specified in the preceding paragraph shall be made to the 

Forest Service pursuant to payment instructions provided to TVA. 

Notwithstanding Section V. A of this Appendix, payment of funds by TVA is not 

due until ten (10) days after receipt of payment instructions. Upon payment of the 

required funds, TVA shall have no further responsibilities regarding the 

implementation of any project selected by the Forest Service in connection with 

this provision.