Tennessee: Estimates Rise for Nuclear Plant

December 12, 2008

Chattanooga Times Free Press by Dave Flessner

The Tennessee Valley Authority may have to spend as much to build its next nuclear power plant as what it spent to build all three of its already operating nuclear units, according to a recent filing with the Nuclear Regulatory Commission.

But even with the higher price tag, TVA officials said Thursday that building new reactors at the Bellefonte Nuclear Plant in Alabama likely will provide a cost-effective source of future power.

"Everybody's costs are going up," TVA President Tom Kilgore said, referring to new cost estimates of up to $17.5 billion for another twin-reactor nuclear plant. "But it's still economical. If you take into account the fact that we also see carbon costs in some form, we think it's very prudent to keep looking at our next nuclear option."

BELLEFONTE COSTS

* 2007 Bellefonte estimate - $6.4 billion to $7.1 billion for two reactors, without interest expenses or cost escalation

* 2008 Bellefonte estimate - $5.6 billion to $10.4 billion for two reactors, without interest expenses or cost escalation

* 2008 industry estimate - $9.8 billion to $17.5 billion for comparable reactors by four other U.S. utilities

In a revision to its environmental impact report on proposed reactors at the Bellefonte site in Hollywood, Ala., TVA said industry estimates for the proposed Westinghouse AP-1000 reactors range from $9.8 billion up to $17.5 billion. TVA estimates the current construction expenses for two AP-1000 reactors at Bellefonte range from $5.6 billion to $10.4 billion, excluding any escalation in construction costs and the interest expenses incurred during construction. Those estimates compare with an estimate range from TVA a year ago of $6.4 billion to $7.1 billion.

Critics of nuclear power said the rising cost estimates for the next generation of nuclear power make such investments risky to ratepayers and potentially dangerous to the environment.

"The type of plant that TVA is proposing has never been built in the United States, and the prototype in Finland has doubled in cost because of cost overruns and delays," said Louise Gorenflo, an activist with the Bellefonte Efficiency and Sustainability Team anti-nuclear group. "TVA has tried to minimize the costs of these new plants, but the economics have changed and the projected price tag just keeps going up."

Although TVA estimates are below other utilities, the latest NRC filing still reflects an increase of nearly 50 percent on the upper range from the cost estimate TVA gave regulators a year ago. Mr. Kilgore said higher material, design and labor expenses, combined with greater uncertainty about the capital and regulatory environment for major new projects, has raised the potential cost.

TVA was the last U.S. utility to finish a nuclear reactor when it completed Watts Bar Unit 1 near Spring City, Tenn., in 1996 at a cost of more than $6 billion. Other TVA operating plants at Browns Ferry near Athens, Ala., and the Sequoyah plant near Soddy-Daisy were completed in the 1970s and 1980s at far less cost.

TVA Chairman Bill Sansom said the federal utility needs to carefully study building new reactors at Bellefonte. But he said nuclear power is cheaper and more reliable than solar and wind generation and cleaner than coal plants, which emit sulfur and nitrogen oxides and carbon dioxide.

"We've got to keep looking at this alternative," he said. "I personally think (nuclear) is a great source of energy, especially to help us become more energy independent."

Mr. Kilgore said he believes each of the two reactors being considered at Bellefonte could be built for about $4 billion to $5 billion.

"Unlike other utilities, we have transmission lines to the Bellefonte site, we have cooling towers already built and intakes ready to go," he said.

TVA stopped construction of the initial Babcock & Wilcox reactors at Bellefonte in 1987 when the demand for new power declined and projected construction costs escalated.

TVA is part of a consortium of utilities and engineering companies known as NuStart Energy LLC that helped prepare an application for the AP-1000 reactors at Bellefonte. Mr. Kilgore said TVA could build the plant itself or share ownership with other companies.

The TVA board likely will be asked during the next year to continue funding for the application process, Mr. Kilgore said.

"This will be one of those projects where the board will probably have to look at it two or three times and there will be potential stopping points along the line," he said.

In addition to TVA, the Southern Co., Progress Energy and Florida Power & Light have filed combined operating licenses to build AP-1000 reactors.