The Tennessee Valley Authority reported in its Feb. 4 Form 10-Q filing at the SEC that it is well along on a program to retire much of its existing coal-fired capacity and may see a commercial operation start late this year on its Watts Bar Unit 2 nuclear project.
The decision to idle or retire coal-fired units from TVA’s generation fleet is being influenced by several factors including Environmental Agreements with various parties, the cost of adding emission control equipment and other environmental improvements, fuel prices, condition of plants, and demand for energy. Under the Environmental Agreements, TVA committed, among other things, to retire, on a phased schedule, 18 coal-fired units. As of the end of 2014, TVA had retired 11 coal-fired units with a summer net capability of 1,494 MW. The retirement of ten of these units, with a summer net capability of 1,370 MW, were carried out to comply with the Environmental Agreements.
In addition, as of the end of 2014, TVA had removed from service, mothballed, and/or idled an additional eight coal-fired units with a summer net capability of 1,715 MW. Thus, the total number of units that are no longer active is 19 with a summer net capability of 3,209 MW. TVA said it continues to assess its power generating facilities, including its “aging” coal-fired fleet.
Under the Environmental Agreements, TVA was required to decide whether to install additional air pollution controls on Units 1 and 4 at Shawnee, convert those units to burn biomass, or retire them by Dec. 31, 2017. On Dec. 30, 2014, the TVA Board approved installation of air pollutions controls (i.e., selective catalytic reduction and dry scrubbers) on Units 1 and 4 at Shawnee with an estimated cost of $185m. On Dec. 31, 2014, the decision to install additional air pollution controls was communicated to the EPA and the other participants in the Environmental Agreements. These units have a summer net capability of 268 MW.
During 2014, the TVA Board took several actions related to the retirement of certain coal-fired units. Upon the completion of natural gas-fired generation facilities at the Paradise site, coal-fired Units 1 and 2 at Paradise with a summer net capability of 1,230 MW will be retired, and upon the completion of a natural gas-fired generation facility at the Allen site, coal-fired Units 1-3 at Allen with a summer net capability of 741 MW will be retired. The TVA Board also approved the retirement of: Colbert Unit 5 with a summer net capability of 472 MW no later than Dec. 31, 2015; Colbert Units 1-4 with a summer net capability of 712 MW no later than June 30, 2016; and Widows Creek Unit 8 with a summer net capability of 465 MW in the unspecified future.
At a November 2013 meeting, the TVA Board approved the completion of a natural gas-fired generation facility with an expected generation capacity of approximately 1,000 MW at TVA’s Paradise site in western Kentucky at a cost not to exceed $1.1bn. A lawsuit has been filed challenging TVA’s Paradise decision by coal industry backers. An injunction or court order that delays TVA’s plans at Paradise could increase the project’s cost. On Aug. 21, 2014, the TVA Board approved the construction of a natural gas-fired generation facility also with an expected generation capacity of about 1,000 MW at the Allen site at a cost not to exceed $975m. Upon completion of each facility, existing coal-fired units at each site will be retired with the exception of the coal-fired Paradise Unit 3, which would continue to be operated on the Paradise site.
In July 2014, the Kentucky Coal Association and several individuals filed suit in the U.S. District Court for the Western District of Kentucky alleging that TVA violated the National Environmental Policy Act (NEPA) and the Energy Policy Act of 1992 in deciding to switch to natural gas generation at the Paradise site. The plaintiffs demand that TVA prepare an Environmental Impact Statement, and are asking the court to preliminarily enjoin TVA from taking any further action relating to these matters pending compliance with NEPA. TVA filed an opposition to the plaintiffs’ motion for a preliminary injunction as well as a motion for judgment on the administrative record. A hearing on the preliminary injunction motion was held in November 2014, and the court denied this motion in December 2014. Briefing on TVA’s motion for judgment has been completed.
Pumped storage hydro facility mostly back in operation, nuclear work continues
Units 1-4 at the Raccoon Mountain Pumped-Storage Plant, with a total net summer capability of 1,616 MW, were taken out of service for maintenance activities in 2012 after an inspection of the turbines in each unit identified cracking in the rotor poles and the rotor rims. All four units have subsequently completed maintenance overhauls to correct these cracking problems. However, an unrelated issue was identified in certain oil-filled power cables that convey power out of the facility, resulting in TVA limiting service to three units until resolved. As of Dec. 31, 2014, three of the four Raccoon Mountain units were in service. The return to service date for the fourth unit is estimated to be in the third quarter of 2015.
TVA is preparing an early site permit application to the Nuclear Regulatory Commission to license small modular reactors (SMRs) at TVA’s Clinch River Site in Oak Ridge, Tennessee. TVA continues to interact with Babcock & Wilcox through the contract entered into in February 2013 to support TVA’s licensing activities and is participating in a cost-share industry partnership program between the DOE and B&W. TVA’s site characterization work that will support an early site permit application for planned submittal to the NRC in early 2016 is progressing. Submittal of a subsequent construction and operating license application is subject to a future TVA decision to proceed and will follow submittal of one or more Design Certification Applications to the NRC by SMR vendors. The construction and operating license application is not expected to be submitted before 2017.
TVA’s Watts Bar Unit 2 construction project continues on track with an estimate to complete ranging from $4bn to $4.5bn and commercial operation between September 2015 and June 2016. This cost estimate and schedule is in accordance with expectations approved by the TVA Board in April 2012. Based on construction and testing progress to date, fuel load is currently forecast for summer 2015 with commercial operation by December 2015. Challenges that could potentially affect the forecast include completing complex work and required documentation; reverification of previously completed systems; addressing emergent work identified during testing; current and emergent licensing issues; and successfully transitioning the site into dual-unit operation.
The regulatory reviews associated with the issuance of an NRC operating license are continuing. The NRC issued an extension to the Watts Bar Unit 2 construction permit in November 2013. The revised permit expires on Sept. 30, 2016. The NRC reviews of TVA’s actions associated with post-Fukushima requirements are underway and are not currently anticipated to result in any significant concerns that would affect the timely issuance of an operating license. Resolution of the waste confidence issue helped mitigate a significant risk related to the completion date of Watts Bar Unit 2, TVA noted.
Although work on the Bellefonte Unit 1 nuclear site was slowed in 2014, TVA believes that the resulting budgeting and staffing levels should be sufficient to preserve Bellefonte for potential future development. TVA plans to utilize its integrated resource planning process to help determine how Bellefonte best supports TVA’s overall efforts to continue to meet customer demand with low-cost, reliable power.
On Aug. 26, 2014, the NRC approved a final rule on the environmental effects of continued storage of spent nuclear fuel and terminated a two-year suspension of final licensing actions for nuclear power plants and renewals. The rule, renamed the “Continued Storage of Spent Nuclear Fuel Rule,” adopts findings from a supporting generic environmental impact statement and concludes that spent nuclear fuel can be safely managed in dry casks indefinitely. Issuance of this rule helped mitigate a significant risk to the timely completion of Watts Bar Unit 2 and may alleviate some issues in the relicensing processes related to Sequoyah while helping ensure compliance with the requirement of the National Environmental Policy Act to disclose the environmental impacts of spent nuclear fuel storage.