The report on the inspector general's website describes the spill of sludge laden with selenium, mercury and arsenic as "one of the largest environmental disasters in U.S. history."
TVA, the nation's largest public utility, responded in the report, saying the description as one of the largest disasters is "not supportable." Inspector General Richard Moore refused to change it.
"No analysis of TVA management challenges would be complete without recognizing that the Kingston Fossil Plant coal ash spill surfaced cultural problems within TVA that likely extend beyond the management of coal ash," the report said.
TVA's challenge is to change the way its employees view environmental compliance issues, the inspector general concluded.
"Culture is a reflection of a corporate mindset and part of the change that is occurring at TVA is a review of compliance processes along with education of TVA employees to alter the corporate mindset," the report concluded.
TVA spokeswoman Barbara Martocci said in a statement that the utility "believes there is always room for improvement in the work that we do."
It said the report helps clarify where changes can be made.
"TVA appreciates their work and will use their findings to improve our performance," the statement said.
The utility company is fighting damage lawsuits and has released reports that say there is no harm to public health from the 5.4 million cubic yard spill. TVA has been slapped with penalties totaling $11.5 million for the spill, partly to pay for oversight of the cleanup. Environmental groups have said they want TVA to be prosecuted.
The inspector general said the ash contains elements "that can be toxic under certain circumstances."
"Although industry has claimed that fly ash is neither toxic nor poisonous, this is disputed," the report says.
Moore pointed out that the National Academy of Sciences described high levels of coal combustion contaminants as a possible reason for long-term human health and ecological concerns.
In an Aug. 3 memo, Moore said the report answers "How is TVA doing in regard to environmental performance."
The report also says that TVA — compared to other electric utilities — "fared poorly" for not reducing the number of transformers with large quantities of polychlorinated biphenyls, or PCBs, that are regulated by the Toxic Substance Control Act.
Other than PCBs and the ash spill, which TVA is spending up to $1.2 billion to clean up, the inspector general's report gives TVA fair ratings on industry-accepted environmental benchmarks such as air emissions and renewable and clean energy generation.
The report rates Knoxville-based TVA as the "top performer" in its environmental partnership with marinas.
TVA serves about 9 million people in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.