February 13, 2009 | Mark Paradies

How Much Can an Accident Cost? TVA is Finding Out.

What a mess. TVA has a massive cleanup on it’s hands.

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Before and after pictures from space.

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When you can see the accident from space … You know you are in trouble.

I saw the chairman of TVA’s board on the TV last night. He was trying to describe the costs associated with the recent ash spill accident and its cleanup. He probably should have said – “I don’t know but it will be more than we ever thought…”

Also, when an accident has to be mentioned on your SEC 10-K/10-Q reports, you know you are in trouble.

Here’s a link to the 10-Q as reported by Market Watch:

http://www.marketwatch.com/news/story/10-q-tennessee-valley-authority/story.aspx?guid=%7B925C5048-D35E-42DA-AB28-5F4B94601FB0%7D&dist=msr_1

Here is some of the cost discussion:

TVA has recognized an accrual of $525 million at December 31, 2008, in connection with the current expected cleanup costs related to the event. Costs incurred through December 31, 2008, totaled $4 million and are included in the accrual above. Through January 31, 2009, actual costs incurred totaled $31 million. The accrual currently includes, among other things, a best estimate of costs to contain the cenospheres, reconstruct roads and railways, perform sampling and analysis, and construct the weir and dike and the low end of a range of estimates to remove an estimated 5 million cubic yards of ash.

Due to the uncertainty at this time of the plan to be proposed, a range of reasonable estimates has been developed and the low end of the range has been accrued. The range of estimated cost varies from approximately $525 million to approximately $825 million, depending largely on the method of disposal that will be used. This range could change significantly if TVA is required to use a method of disposal other than what has been considered at this time or the amount of ash to be disposed of changes. The range can also be impacted by new laws and regulations that may be imposed on TVA as part of changes to ash disposal regulations being discussed at both the state and federal level.

No amounts are included in the estimates above for regulatory actions, or litigation, or any fines or penalties that may be assessed because TVA cannot estimate these at this time. Also, all of the regulatory requirements for the final closure of the site, the continued ground water monitoring requirements, and any ongoing environmental impact studies that may be required are not known at this time and are not included in the estimate.

It certainly is cheaper to prevent a major accident than it is to pay for the after accident consequences.

Maybe this will get you to finally sign up for that TapRooT® Course that you have been thinking about attending? TapRooT® can be used to investigate major accidents. But it can also be used as a proactive root cause analysis tool to prevent major accidents. If you are interested in stopping accidents through the proactive use of TapRooT®, I’d suggest coming to a 5-Day TapRooT® Advanced Root Cause Analysis Team Leader Course.

Don’t wait … Your company can’t afford a major accident. Get started using TapRooT® to improve performance now!

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