Decision to build Bellefonte 1
Tennessee Valley Authority has decided to complete a nuclear reactor at Bellefonte - selling and leasing back another new reactor to pay for it.Tennessee Valley Authority has decided to complete a nuclear reactor at Bellefonte - selling and leasing back another new reactor to pay for it.
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At the same time, TVA will purchase a 900 MWe combined-cycle gas power plant from a subsidiary of Kelson Energy. It is also going to fit sulphur dioxide and particulate control systems to its older Gallatin and Allen coal power plants to bring them up to "clean standards."
To pay for all this, TVA will raise cash by selling two new power plants it is now in the process of building before leasing them back from the new owners. One comprises two gas turbines at the John Sevier fossil power plant, the other is Watts Bar 2, another large nuclear reactor TVA is completing. The plants will be sold separately, most likely to financial institutions interested in holding industrial assets. TVA will continue to control, maintain and operate them.
Chief financial officer John Thomas said TVA had to use alternative methods to finance its investment because of statutory limits on the amount of bonds it could issue. The leaseback option would be "slightly more expensive" than bonds, he said, but would be cheaper overall than increasing public and commercial rates by more than the 2% approved yesterday. The final analysis will not come until buyers have been found for the new power plants at the end of a competitive process.
TVA's president and CEO, Tom Kilgore, said completing Bellefonte 1 was cheaper on a per-MW basis than the cost of replacing any of its fossil plants. The $4.9 billion project works out at a cost of $3888 per kilowatt of installed capacity.
As essentially a brand-new reactor, the sale of Watts Bar 2 will be unprecedented and the price is impossible to predict. In the last decade prices seen in the US for old reactors, normally after some 30 years of service, have trended upwards from less than $400 to over $874 per kilowatt. Exceptionally, EDF paid some $2253 per kilowatt overall for its shares in Calvert Cliffs, Nine Mile Point and RE Ginna plants in 2009 when investing in Constellation Energy.
Re-working and restarts
Both the power plants, Watts Bar and Bellefonte, share a history of planning in the 1970s and suspended construction in the 1980s on a combination of rising costs and falling power demand. Another slightly older TVA plant with three reactors, Browns Ferry, achieved operation but was mothballed for the same reasons, exacerbated by operational problems.
However, TVA brought Browns Ferry 2 and 3 back into service in 1991 and 1995 respectively, with Watts Bar 1 following in 1996 and Browns Ferry 1 in 2007. Earlier this month, Watts Bar 2's return date was pushed back slightly to 2013.
Actual construction work on Bellefonte 1 will not start until fuel has been loaded at Watts Bar 2, said Kilgore, noting a conscious decision to constrain the risk of nuclear construction to one project at a time. By the same token, Kilgore said the "future decision" on the potential completion of Bellefonte 2 will not come until at least mid-way through work on unit 1.
Researched and written
by World Nuclear News
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