Bellefonte pricetag debated as nuclear plant is idled again

Bellefonte pricetag debated as nuclear plant is idled again

November 16th, 2013 by Dave Flessner in Business Around the Region

The Unit 1 turbines sit idle at the Bellefonte nuclear power plant in Hollywood, Ala.

Photo by Staff File Photo/Times Free Press.

The mayor of Hollywood, Ala., calls the unfinished Bellefonte Nuclear Plant where he once worked "the eighth wonder of the world."

"Bellefonte is as fine of a built facility as there is, but TVA keeps changing its mind about what it will do with it," Buster Duke, a retired 66-year-old TVA employee who was elected mayor of Bellefonte's hometown last year, said Friday. "We would love to see it finished and operating some day, but once again we seem to be getting a different message from TVA."

The Tennessee Valley Authority, which resurrected engineering work on the stalled twin-reactor project in 2011, halted work again this summer and released new cost estimates this week suggesting completion of the North Alabama plant will cost from 50 to 78 percent more than what was projected just two years ago. The higher cost, combined with a slowing demand in power, convinced TVA to mothball the 40-year-old construction project yet again.

TVA President Bill Johnson told TVA directors Thursday that a new assessment of the plant raised the estimated price tag of just one of the units to between $7.4 billion and $8.7 billion. In 2011, TVA estimated the first reactor could be finished for $4.9 billion.

Former TVA Chief Operating Officer Bill McCollum on Friday questioned the new higher cost estimate.

"Given the fact that we have been in a recession and not seen much increase in materials prices or labor rates, it's difficult to understand that degree of increase in just a couple of years," he said."We put a lot of time and effort into puting together the completion estimate (of $4.9 billion) in 2011 and it sort of boggles the mind to fast forward only two more years and for some reason to think it would now cost more than 50 percent more."

McCollum, who has worked at six nuclear reactors and worked as a consultant on many others, said Bellefonte is one of the best designed and built he has seen.

"The physical plant was built with quality and is a tremendous asset," said McCollum, who now works as a consultant for a private investment group headed by financier Franklin L. Haney.

Haney proposed a $10 billion deal to privately finance the completion of both Bellefonte reactors, but Johnson said Thursday the Haney plan didn't make economic sense for TVA.

Johnson said TVA learned a lot of lessons from work on its Watts Bar Unit 2 reactor, where the initial $2.5 billion price tag to finish the plant five years ago has since jumped to more than $4 billion. Cost overruns at other new plants under construction in Georgia and South Carolina also convinced TVA to raise its completion estimate for Bellefonte.

"We've learned from those experiences," Johnson said.

McCollum, who directed the previous assessment of Bellefonte, insists that Bellefonte and Watts Bar are different and the lessons from Watts Bar's delays can be applied to avoid similar problems at Bellefonte.

"The two plants are very, very different and I don't think it would make sense to compare Bellefonte with a compact ice condenser unit like at Watts Bar," McCollum said. "It's much easier to get work done at Bellefonte."

Finishing Bellefonte after Watts Bar also would be more efficient than trying to complete Bellefonte later, McCollum said.

For now, the debate over the price tag to finish Bellefonte may be just an accounting dispute since TVA officials contend they don't need the extra power. Power sales in the Tennessee Valley have slumped nearly 10 percent in the past four years and the completion of the Watts Bar Unit 2 should meet new growth for the next decade.

When TVA decided to resurrect work on Bellefonte more than two years ago, it was seen as part of a rebound in nuclear power. Although no new nuclear plants have been started in America is more than three decades, more than two dozen were proposed over the past decade.

But only Watts Bar in Tennessee, Plant Vogtle in Georgia and Virgil Summer Plant in South Carolina are adding new reactors.

U.S. Sen. Lamar Alexander, R-Tenn., one of the top proponents of nuclear power in the Congress, said Friday that the hoped-for resurgence in nuclear power has yet to occur primarily because of the slowndown in the economy, the growth in electricity demand and the decline in the price of natural gas.

"The nuclear renaissance has slowed down because of the low price of natural gas, but I think wise utilities are going to continue to include nuclear power as an important part of their baseload power because it is cheap, reliable and absolutely clean," he said.

Alexander said he believes Bellefonte in still a valuable asset for future generation. Alexander, U.S. Sen. Bob Corker, R-Tenn., and U.S. Rep. Jimmy Duncan, R-Tenn., heard the proposal to privately finance Bellefonte during a hearing in Knoxville two months ago.

"But it's best to let the TVA board run TVA," Alexander said during an editorial board meeting Friday at the Chattanooga Times Free Press. "That's not something we in Congress should do."

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340