More bad nuclear news: TVA Watts Bar 2 could cost $4.5bn

Spring continues to bring more troubling news for the U.S. nuclear industry with the latest development coming April 5 when the Tennessee Valley Authority (TVA) acknowledged that finishing a never-completed reactor will take longer and cost far more than originally anticipated.

TVA officials said in a news release they now expect completion of the Watts Bar 2 unit in Spring City, Tenn., to cost between $4bn and $4.5bn and be finished sometime between September and December of 2015.

By comparison, when the TVA board approved the project in 2007, it predicted a 60-month construction schedule and a cost of $2.49bn.

The updated figures were issued following a seven-month construction review. TVA President and CEO Tom Kilgore said the project is still worth doing, even at the higher price. The TVA board will be asked to approve the increased funding for the project.

“When Watts Bar Unit 2 comes online, it will produce more than 1,100 MW of energy at competitive prices and be another major source of emission-free electricity,” Kilgore said.

Kilgore and TVA Vice President for Nuclear Construction Mike Skaggs said TVA initially did a poor job of analyzing what the project would entail.

The construction review has shown “walk downs to support the initial estimate were not completed,” Skaggs said. “Management was misaligned, and planning was poor.”

New management is in place at the site, and a more direct line-of-sight to top management has been established, TVA officials said.

Skaggs also said he briefed the TVA board in February on the review’s preliminary findings; his new assessment of the unit’s cost and schedule will be considered by the board in April. His assessment was confirmed by two outside, independent reviews.

TVA plans to use increased nuclear power, as well as more natural gas generation, to help reduce its coal footprint. The problems at Watts Bar 2 have also delayed finishing the never-completed Bellefonte nuclear plant in Alabama. TVA has promised to do one nuclear project at a time in order not to get overextended.

Watts Bar cost overrun latest in drumbeat of bad nuclear news

The U.S. nuclear industry has been experiencing a troublesome few weeks.

An “unusual event” was declared at Duke Energy’s (NYSE: DUK) Catawba nuclear plant in South Carolina on April 4 when offsite power to the station was lost. The plant’s diesel generators operated as designed to provide power to essential plant equipment, Duke said in a news release.

An unusual event is the lowest of four emergency classifications. This condition posed no threat to public safety, but required certain emergency response functions to be in a heightened state of readiness, the company said.

Although power has been restored to the 1,129-MW, two-unit station, the units are not currently generating electricity. An investigation is being conducted regarding the cause.

Duke’s prospective merger partner, Progress Energy (NYSE: PGN), has had its Crystal River nuclear plant in Florida offline since the fall of 2009 following discovery of cracks in the concrete. Progress Energy had been installing new steam generators at the time.

Meanwhile on the West Coast, Southern California Edison (SCE) has seen its San Onofre reactor units 2 and 3 offline since January. The U.S. Nuclear Regulatory Commission recently made clear that the Edison International (NYSE: EIX) subsidiary’s plant won’t reopen until steam generator issues are analyzed and fixed.

Meanwhile, news reports this week indicated it could be months before the Omaha Public Power District (OPPD) is able to return its Fort Calhoun nuclear station to service in Nebraska. OPPD and NRC just unveiled a performance improvement plan for the plant.

Fort Calhoun has been shut down since April 9, 2011, for a planned refueling outage. The Missouri River flooding of mid 2011 interrupted that outage work due to the historic river levels, OPPD notes on its website.

OPPD met with the NRC on April 4 and has assured the NRC that the plant is prepared for any flooding that may arise during the 2012 flood season.

“OPPD leadership and our board of directors are committed to doing everything possible to return Fort Calhoun Station to a high level of performance in a safe, efficient and timely manner,” OPPD President and CEO Gary Gates said in a statement published on the website.

Officials at the South Texas Project said this week that reactor unit 2 should return to service by the end of April. The plant, owned by NRG Energy (NYSE: NRG), CPS Energy and Austin Energy, has been out of operation since late November because of a rotor problem.

On the financial side, Xcel Energy (NYSE: XEL) said recently that lower natural gas prices and delays in NRC’s approval timeline have it rethinking the merits of an extended power uprate for its Prairie Island nuclear plant in Minnesota.

Not all the nuclear power news has been bad. MidAmerican Energy Holdings has seen steady progress on a bill in the Iowa legislature that could make it easier for MidAmerican to eventually build a new nuclear plant in that state.

Finally, the first quarter of 2012 saw NRC issue its first new nuclear plant licenses in more than 30 years. Groups led by Southern Co. (NYSE: SO) and SCANA (NYSE: SCG) won NRC approval to develop new nuclear plants in Georgia and South Carolina respectively.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.