The giant utility says won’t fund completion of the 1260 MW plant
In a new Integrated Resource Plan released for public comment this week, the Tennessee Valley Authority (TVA) said it no longer has plans to finish the partially complete Bellefonte Unit I nuclear reactor for which construction started in 1974. With this decision the utility’s work to finish Watts Bar II later this year may turn out to be the last large reactor project at TVA for quite come time.
The reasons for the change in plans, which still have to be ratified by the utility’s management and board, are low natural gas prices and flat demand for electricity. The last time the board looked at the Bellefonte project in 2012, it voted to spend $6 billion to complete it by about 2020. A major contract was awarded to Areva to proceed with engineering services including development of a digital instrument and control system. However, the board also said that the most significant portion of the work could not start until Watts Bar II was done.
In the meantime, the country has been flooded with cheap natural gas. A new 700 MW natural gas plant can be build for about $1M per MW and completed in three-to-four years from the time it breaks ground. Additionally, licensing and regulatory costs are peanuts compared to completing a decades old reactor.
Rapid increases in the estimated cost to complete Bellefonte also may have also contributed to the utility taking it out of future plans for new generation capacity. In 2013 the costs reportedly jumped from about $5 billion to a range of between $7.4 and $8.9 billion. A private equity effort headed by Franklin Haney, an investor, offered to complete the reactor and operate it for $10 billion. TVA turned him down saying the plan didn’t have good enough numbers to proceed.
More recently, cost overruns at four reactors under construction in Georgia and South Carolina may also have given TVA a case of cold feet in committing to completing Bellefonte.
Behind all of the cost estimates is the lurking issue of TVA’s debt ceiling of $30 billion. The utility won’t ask Congress to raise it and has taken several steps, including sale and lease back arrangements for various parts of the electrical generation system, to avoid breaching the limit which was set in 1979.
As of February 2015 the debt stood at $25 billion leaving little headroom for completing Bellefonte and doing anything else by way of major capital expenditures. Earlier this year President Obama cited TVA’s debt as a risk, and suggesting selling the entire system, but later backed off saying the utility was being prudent in its management of the obligations.
Other elements of the new TVA energy plan include closing older coal fired plants as new gas plants are built and generating more electricity from solar and wind sources. Improving energy efficiency will be a long term effort.
Separately, Last October TVA withdrew its request to the NRC for license amendments for power uprates to the three BWR nuclear reactors at Browns Ferry which would have added as much as 400 MW of new generating capacity.
TVA at one time was also serious about exploring an option to collaborate in the design and licensing of two B&W mPower 180 MW small modular reactors (SMR). That relationship did not mature. Since then B&W has mothballed its SMR work. TVA is seeking an Early Site Permit (ESP) for a future SMR effort, but has not selected a vendor. The ESP cites TVA’s Clinch River site which already has nuclear infrastructure including connections to the regional power grid.