published Thursday, May 31st, 2012

TVA ignored problems at Watts Bar Nuclear Plant, report finds

The cooling tower of the single operating reactor at the Watts Bar Nuclear Plant belches steam in Spring City, Tenn.
The cooling tower of the single operating reactor at the Watts Bar Nuclear Plant belches steam in Spring City, Tenn.
Photo by Contributed Photo /Chattanooga Times Free Press.
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Problems ignored

• January 2008 -- TVA and Bechtel meet to discuss performance issues three months into the project.

• June 2008 -- TVA letter to Bechtel says that Bechtel's compliance with key contract requirements are not meeting TVA expectations.

• June 22, 2009 -- Bechtel submits a recovery plan for the project schedule.

• February 2010 -- A draft internal assessment finds the project three to five months behind.

• March 2010 -- An internal assessment states the 54-month internal schedule was being challenged by poor engineering, procurement and construction coordination from engineering to work planning to construction activity, as well as insufficient resources.

• July 2010 -- A TVA letter to Bechtel states that without substantial performance improvement, even a 60-month schedule would be at risk.

• July 29, 2010 -- A weekly status report states the internal 54-month schedule might be at risk by 60 days.

• Dec. 9, 2010 -- TVA issues a letter to Bechtel stating that despite multiple letters, Bechtel's performance continues to be unsatisfactory.

• Feb. 4, 2011 -- In an Watts Bar construction site executive meeting, the new Bechtel project manager reports the project does not have a schedule.

• March 4, 2011 -- An executive package states that without change, the project would be $97 million over budget, and using current methodology, the 60-month, board approved schedule was in jeopardy.

• May 20, 2011 -- The site's former senior manager for project control estimates the project to be $200 million over budget.

Source: TVA Office of Inspector General

Inspector general report for Watts Bar construction
Inspector general report for Watts Bar construction

A TVA inspector general's report blasts the agency for its failures to act quickly when it became apparent the Watts Bar Unit 2 nuclear reactor construction will have massive cost overruns and take twice as long to complete.

The inspector general's staff, which attends all the construction meetings, took concerns to TVA management and to a board committee in August 2011 -- months before the electric utility changed the Watts Bar construction management team and made the problems known publicly.

But TVA managers had ample opportunity before that to see the signs of trouble that have increased the new reactor's cost by as much as $2 billion and delayed its completion until late 2015 before that, according to a report from the Inspector General Richard W. Moore made public Tuesday.

The managers, since replaced, "ignored data and opinions of the oversight team and others," the report states.

During the regular construction meetings that Moore's inspectors attended, issues were characterized by management as "recoverable or normal construction problems. Each project schedule, based on its associated assumptions, showed how everything was on track for meeting the early target finish date."

But a timeline of problems beginning in January 2008 -- just three months into the project -- and key events did not jibe with that on-schedule message.

"Additionally, pertinent information critical of the project's performance was not provided to the [Office of Inspector General] by TVA when requested by our office," states the report. "These actions made it harder to identify the extent and potential consequences of the problems on the project."

By 2010, the report states, inspectors thought it evident that many of the issues raised in those meetings "were symptomatic of much broader problems that could increase the risk of exceeding the project's schedule and budget."

The report concludes that deficiencies in the project's set-up and ineffective management oversight affected the cost and schedule for the new reactor that is to provide enough new power for 650,000 Tennessee Valley homes.

The reactor was originally expected to be completed in October 2012 at a cost of just under $2.5 billion. On April 5, TVA announced the overruns and delay.

"Certain warning signs were not adequately addressed," and assessments that documented problems were not addressed, the report states. "[I]t is not clear how high up in the organization problems were being communicated."

Since the April overruns announcement, TVA has acknowledged failures in the project, but utility CEO and President Tom Kilgore has said the reactor still makes economic sense and will not increase rates for customers in the long term.

On Wednesday, the federal utility again did a mea culpa.

"We agree with the report's fundamental findings and recommendations," according to a statement by TVA spokesman Ray Golden.

"We knew the 2007 detailed scoping, estimating and planning for Watts Bar Unit 2 was aggressive but believed it was doable. We have learned, however, the execution and progress reports at the site were not adequate. We also know that initial estimates were incomplete, risk allowances were too small and site leadership ineffective," he said.

Noting new management at the Spring City, Tenn., nuclear site, Golden said TVA has adopted a new "high-confidence" cost estimate and schedule, and the project is moving forward.

"The board will be provided with detailed updates on progress toward completion of Watts Bar Unit 2," he said.

The inspector general issued TVA a draft of this week's report on April 16 -- 11 days after Kilgore announced the size of the overruns and the new schedule dates.

Hoglund said the inspector general meets regularly with the board committee and it is "a normal process" for him to brief the board and management "when significant issues arise that we believe warrant immediate attention."

"We believe the Board and CEO took our findings seriously and took action by bringing in new leadership, beginning an assessment of the root causes and making an assessment as to the extent to which the estimates were off," Hoglund said.

Contact staff writer Pam Sohn at psohn@timesfreepress.com or 423-757-6346.

about Pam Sohn...

Pam Sohn has been reporting or editing Chattanooga news for 25 years. A Walden’s Ridge native, she began her journalism career with a 10-year stint at the Anniston (Ala.) Star. She came to the Chattanooga Times Free Press in 1999 after working at the Chattanooga Times for 14 years. She has been a city editor, Sunday editor, wire editor, projects team leader and assistant lifestyle editor. As a reporter, she also has covered the police, ...

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