Tennessee: Economy flips switch on power use

The sputtering economy is slowing power consumption in the Tennessee Valley, but TVA officials insist it still makes sense to build more nuclear plants to generate extra electricity.

TVA President Tom Kilgore told utility directors last week that power sales are expected to remain flat this year for the third consecutive year as declining economic activity and rising power rates combine to curb power consumption.

But Mr. Kilgore said new nuclear plants still are needed to limit TVA purchases of power from other, more expensive producers.

“I think we’re very likely to continue to see less growth in the next few years,” Mr. Kilgore said. “We do hear talk from some of our customers about cutting back or laying off people, and everybody is being more conservative in their use of electricity.”

In the fiscal year that ended Sept. 30, TVA estimates that power sales were 2 percent below what the utility budgeted and were slightly below the level of total electricity sales two years ago. TVA electricity sales were growing at more than 2 percent a year prior to the past couple of years, according to TVA financial reports.

But even with more sluggish growth, TVA still had to buy 12 percent of its power from other independent power producers in fiscal 2007, the most recent year for which complete data is available.

nuclear debate

In the past fiscal year, the restart of TVA’s oldest nuclear reactor at the Browns Ferry Nuclear Plant helped the utility save an estimated $800 million, TVA Chairman Bill Sansom said. The $1.8 billion restart of Browns Ferry Unit 1, originally forecast to pay for itself within eight years, should now end up paying for itself in 2 1/2 years because of the unexpected jump in the costs for other power generation.

“Nuclear power is still very cost-effective,” Mr. Sansom said earlier this year.

Critics of nuclear power question the need for TVA to build more power generation when demand is not growing.

“TVA’s original projections for the need for Watts Bar and Bellefonte (nuclear plants) were very unrealistic,” said Louise Gorenflo, a Crossville, Tenn., member of the anti-nuclear Blue Ridge Environmental Defense League. “Energy efficiency and conservation needs to be promoted and that will negate the need to build these expensive and highly radioactive plants.”

adding capacity

Since TVA revamped its board of directors in March 2006, the new board has voted to buy or build more than 3,000 megawatts of non-nuclear additional power.

“That has helped us close the gap, but we are still short,” Mr. Kilgore said.

TVA, which bought or built five gas-fired power plants in the past two years, still is interested in acquiring another gas-fired plant to help limit its purchase of power from independent suppliers, Mr. Kilgore said.

The TVA board also voted last year to finish a second reactor at its Watts Bar Nuclear Plant near Spring City, Tenn., by 2013 at a projected cost of $2.5 billion. TVA projects that another Watts Bar unit will generate power for less than the continued costs of buying power from other generators or building new coal- or gas-fired plants.

“We need Watts Bar so we will keep working on that, but with the prospect of a slowdown in our sales, everything else in our capital budget will get ‘scrubbed’ to make sure we still need it,” Mr. Kilgore said.

TVA benefits from reducing its peak power demand because the utility is now forced to buy the most-expensive power available on the grid to meet the peak demand during hot summer days or cold winter nights.