Although one of the new gas-fired power plants in Tennessee will cost TVA nearly $50 million more than what was first projected, officials say the two plants still will be cheaper than what other utilities are spending for such units.
The president of the Tennessee Valley Authority said the Lagoon Creek combined-cycle plant in Brownsville -- one of two such natural gas plants TVA is building on opposite ends of the state -- will end up costing $445 milion, up from the original estimate of $396 million.
"It's coming in over our plan, but it's coming in better than industry norms," TVA President Tom Kilgore said of the combined-cycle gas plant being erected northeast of Memphis. "We had some graves that we found on the site that were not disclosed (when TVA bought the site from Enron in the 1990s)."
TVA also is preparing to start construction this year on its biggest gas-fired plant -- an 880-megawatt, twin-unit plant at the John Sevier Fossil Plant near Rogersville, Tenn. TVA is building the $820 million plant, in part, to help provide enough electricity in Northeast Tennessee to replace the power TVA could lose if it shuts down its aging John Sevier coal plant.
A court order in response to a lawsuit from North Carolina's attorney general ordered TVA to install scrubbers on John Sevier by 2011.
Mr. Kilgore previously has said that TVA is studying whether to shutter or repair the 58-year-old plant.
In Brownsville, northeast of Memphis, the new 600-megawatt plant still should provide cheaper rates for TVA than buying comparable power on the grid, Mr. Kilgore said.
By the numbers* $820 million: Projected cost of a new combined cycle plant at the John Sevier Fossil Plant near Rogersville, Tenn.* $445 million: Projected cost to upgrade TVA's Lagoon Creek gas plant to a combined-cycle gas plant* $396 million: Original forecast cost for the Lagoon Creek projectSource: Tennessee Valley Authority
"We do think we'll have this project on line by this fall and it will be a good addition to our portfolio," he told the TVA board last month.
TVA spokesman Scott Brooks said the new Lagoon Creek plant originally was forecast to cost $396 million.
"That was basically a best possible estimate assuming that everything went exactly as it was supposed to be," he said.
The Lagoon Creek project is part of a 5-year-old effort by TVA to diversify its production portfolio with more of its own gas-fired generation.
TVA bought five smaller gas-fired plants in 2006 and 2007 in Kentucky, Tennessee and Mississippi from Enron and other former independent power producers.
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