TVA about 90% finished with Watts Bar 2 testing, Johnson says

The Tennessee Valley Authority (TVA) has nearly completed its battery of tests on operation of the Watts Bar 2 nuclear facility, which could be declared in full-scale commercial operation within a couple of weeks TVA President and CEO Bill Johnson indicated on Aug. 2

“Commercial operation mostly an accounting term,” Johnson said during a quarterly call with news reporters and the financial community. “Commercial operation” is typically declared once a generating unit attains 100% power “or close to it” for 20 days, Johnson said.

Watts Bar 2 has already been supplying power to the grid for many weeks, Johnson noted. Indeed, the Nuclear Regulatory Commission (NRC) listed the facility at 74% power early Aug. 2.

TVA is “almost there” for full-time operation of Watts Bar 2 and 100% power will be achieved “very soon,” Johnson said at various points during the half-hour call.

Watts Bar Unit 2, which will be the first new U.S. nuclear power facility of the 21st Century. The unit, which achieved initial criticality on May 23, is undergoing final ascension testing in preparation for commercial operation expected later this summer. 

On other nuclear power issues, Johnson was asked about small modular reactors. “We did file an early site permit,” for SMRs. At the same time, Johnson hinted that continued flat or declining power demand would temper the market for such an investment.

Johnson declined to speculate whether any potential buyer of the Bellefonte nuclear power plant site in Alabama might eventually use the property for power generation. Johnson said that he didn’t want to speculate in advance of an upcoming auction for bids for the property.

Johnson did say that TVA might offer more details soon on an offer of early retirement to certain employees to TVA’s 3,500-member nuclear power group. Officials also noted that TVA last year received a 20-year license extension for the Sequoyah nuclear units.

TVA works on reducing emissions

TVA is working on reducing emissions, while maintaining reliability and keeping rates low, TVA officials said.

Dry scrubber construction is completed at the Gallatin coal plant. Also first selective catalytic reduction (SCR) systems at Gallatin come online during 2017, officials said.

The financial report also outlines TVA’s progress on other key projects, including the new natural gas-fired facilities being constructed at the Paradise site in Kentucky and the Allen site in Tennessee, and clean air equipment at TVA’s Gallatin, Tennessee, fossil plant.   

TVA reported net income of $572m for the first nine months of the fiscal year ending June 30, 2016, $37m lower compared to the same period last year. As a federal utility, TVA runs on a federal fiscal year.  

Power sales were down approximately 5% the first three quarters of FY 2016, as compared to the same period in FY 2015, primarily due to the extremely mild winter experienced in TVA’s service territory compared to record-setting cold temperatures in FY 2015.

Operating revenues were 6% lower than the same period last year, partially as a result of lower total sales.

“Even though the Tennessee Valley experienced a warm spring, it was not enough to offset a very mild winter in terms of revenue,” Johnson said. “As we noted at the end of the second quarter, despite the challenges we are maintaining a healthy financial picture and we continued to improve in the third quarter.”

Compared to the same period last year, total operating expenses decreased over $400m, or approximately 7%, largely driven by savings from lower fuel and purchased power costs. This was in part the result of lower market prices for natural gas as well as changes in TVA’s generation mix.    

“TVA has positioned its generation fleet to benefit from lower fuel prices,” remarked TVA CFO John Thomas. “In addition, TVA’s efforts to reduce operating and maintenance costs in recent years are helping us provide the Tennessee Valley with power rates among the lowest in the nation,” Thomas said. 

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.