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Bermuda re/insurer pays out in Tennessee ash spill

Bermuda's Arch Reinsurance paid the Tennessee Valley Authority (TVA) $42 million to help pay for more than $1 billion in expenses stemming from the cleanup at the 2008 ash spill at the Kingston Fossil Plant.

The deal reportedly resolves one of three arbitration disputes between TVA and re/insurers in Bermuda, including ACE, over coverage for the accident at the coal-fired plant.

The latest payment comes after an arbitrator ruled that one of TVA's insurers, Bermuda-based Arch, had to pay for part of the cleanup expenses from the collapse of a coal ash pond where TVA dumped coal residues for decades at its Kingston plant, AP reported.

The arbitration award is the first of three pending cases between TVA and its insurers over the Kingston ash spill.

The Chattanooga Times Free Press reported that TVA now has collected $92 million from property and casualty insurance companies, and the agency could receive up to $200 million more, depending upon the outcome of pending arbitration cases.

TVA spokesman Duncan Mansfield said TVA is seeking the policy limits of $150 million from ACE Bermuda and another $50 million from Zurich insurance.

Even if successful, TVA still will get back only about a fourth of what the utility expects to spend to repair and clean up the river and surrounding property damaged when an ash dike ruptured at an 84-acre solid waste containment area in Roane County, three days before Christmas in 2008.

The ruptured dike spilled 1.1 billion gallons of coal fly ash slurry into the Emory River and its Swan Pond embayment, and covered nearly 300 acres of nearby property.

TVA has spent $1.013 billion on the Kingston cleanup so far and expects eventually to spend a total of about $1.1 billion on the cleanup when the project is complete by 2015.

TVA is paying for the cost of the cleanup over 15 years, stretching until 2024.

“They claimed that this dredge cell was a dam and they asked us for a list of dams and it wasn't included on that list,” Leon Kellner, a senior partner in the Insurance Recovery Group of Perkins Coie, who represented TVA, told the media. “This was not a dam when we filled out the application and the question did not call for ash bonds like the Kingston facility. ... In my opinion we showed them that their claim was baseless.”

The Tennessee site where ash spilled in December 2008

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Published October 16, 2013 at 9:00 am (Updated October 15, 2013 at 7:17 pm)

Bermuda re/insurer pays out in Tennessee ash spill

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