TVA Board Approves $5.5 Billion in Power Plant Capital Projects

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Tennessee Valley Authority (NYSE:TVE) (Knoxville, Tennessee) approved more than $5.5 billion of power plant capital projects at its August 18 board meeting, including the completion of a partially constructed nuclear generator and installation of emissions-control equipment at two large coal-fired power plants.

It will cost about $4.9 billion to complete Unit 1 of the Bellefonte Generating Station, a pressurized water reactor (PWR) in Hollywood, Alabama. Construction of the plant began in 1974 but was suspended in 1988. Unit 1 is considered about 55% complete, TVA said. When operational by 2020, the 1,260-megawatt (MW) generator will incorporate lessons learned from the Fukushima nuclear disaster. Completing Bellefonte I will create about 2,800 construction jobs in northern Alabama, and about 650 permanent jobs when the plant is operational. The TVA vote to complete Bellefonte was unanimous.

The board agreed not to restart construction at Bellefonte 1 until fuel loading is complete at another partially built nuclear plant, Unit 2 of the Watts Bar Nuclear Power Station in Spring City, Tennessee. The estimated completion date for this 1,150-MW generator recently slipped by a few months and is not expected to be complete until early 2013. Once Watts Bar Unit 2 is completed and fuel is loaded, construction can begin at Bellefonte, possibly as early as 2013.

TVA has not hired a contractor to finish Bellefonte 1. Last year, the government-owned corporation awarded Areva SA (EPA:CEI) (Paris, France) a $248 million contract to complete preliminary engineering, begin licensing and procure long-lead materials for the plant.

At its August 18 meeting, the TVA board also voted to install emissions-control equipment to lower sulfur dioxide (SO2) and particulate emissions at the Gallatin Power Station and the Thomas H. Allen Power Station, both located in Tennessee. TVA had planned to install flue-gas desulfurization (FGD) equipment at both plants, at a combined cost of about $630 million, but both projects have been on hold since 2009, pending rulemakings by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). The Gallatin station has four coal-fired units with a total generating capacity of 1,254 MW, while the Allen station is a three-unit, 990-MW power plant.

The air-quality controls at Allen and Gallatin will take about six years to complete, TVA said. The scrubbers that will be installed can lower SO2 emissions by more than 95%.

The TVA board also voted to acquire a three-unit, 990-MW gas fired generator, the Magnolia Energy Project, located near Ashland, Mississippi. The plant began operating in 2003 and already is connected to TVA's electric grid.

"With today's actions, TVA will add more clean energy from nuclear and natural gas sources to its generating fleet and install air-quality controls at two additional coal-fired power plants," Tom Kilgore, TVA's president and CEO, said in a statement after the board meeting.

"These strategic investments are key to providing reliable, low-cost electricity now and into the future, while being responsible, good stewards of Tennessee Valley resources," he continued. "To achieve our vision of being one of the nation's leading providers of low-cost and cleaner energy by 2020, TVA must continue to reduce air emissions, offer a balanced power mix and encourage energy efficiency."

Kilgore added that nuclear energy is the best option for clean, reliable and lower-cost electricity, compared to coal, gas and alternative fuels. He pledged to "integrate safety modifications from the extensive review of the lessons learned from the Fukushima nuclear plants in Japan."

Earlier this year, in a settlement with the EPA, TVA agreed to invest between $3 billion and $5 billion over the next 10 years on new emission-control equipment and upgrades of existing equipment at its coal plants. TVA's board action on August 18 represents a down payment on that earlier pledge.

In recent months, TVA decided to permanently close 18 coal-fired generators, with total generating capacity of 2,700 MW, to avoid having to install pollution-reduction equipment there. TVA also will purchase wind power under contract, expand its energy-efficiency programs, and expand its use of gas-fired generation. For more on the strategic resource plan adopted by TVA, see April 20, 2011, article - TVA Decides to Retire 18 Coal Generators, Finish at Least One Nuclear Unit.

In an opinion article in the New York Times last month, Kilgore acknowledged that moving forward with nuclear power is "controversial," given the Fukushima Daiichi disaster and Germany's recent decision to close all of the country's nuclear generators. "For all the recent news, nuclear is still our best choice for producing large amounts of round-the-clock, reliable electricity that is affordable, safe and clean," Kilgore wrote. "No energy source is perfect. But the risks associated with nuclear power are well understood, and--with the proper emphasis on safety--they are entirely manageable."

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