OXFORD, Miss. - The Tennessee Valley Authority may never need the power from America's biggest unfinished power plant. But if TVA decides to finish its stalled Bellefonte Nuclear Plant in Alabama, it will likely cost nearly twice as much as earlier estimates and won't be financed by former Chattanooga billionaire Franklin L. Haney.
TVA President Bill Johnson told TVA directors Thursday a new assessment projects that finishing just one of the two reactors would cost $7.4 billion to $8.7 billion. The earlier estimate was $4.9 billion.
The numbers and the recent decline in TVA power sales mean there's no need to finish Bellefonte anytime soon. Johnson said a proposal from former TVA Chairman Dennis Bottorff and Haney to help the utility finance the work doesn't add up and won't be done in time to qualify for needed federal tax credits.
"Their proposal is not an operative proposal because we cannot justify, in the near term, completing the plant to meet the needs of our customers," Johnson said.
Haney, who first offered a plan to help finance Bellefonte's completion more than a decade ago, has spent much of this year lobbying Congress, TVA distributors and industrial customers.
He's seeking support for a $10 billion plan to finish Bellefonte by 2021 to qualify for federal tax incentives for new nuclear generation.
"This is the best way to achieve all of TVA's goals of low-cost, clean and reliable power," Bottorff told Tennessee's two U.S. senators in September.
Because Bellefonte is already half built and has a construction permit, Bottorff and energy experts from Credit Suisse estimate that both units could be finished for $11 billion -- about half the cost of comparably sized new nuclear plants.
If work resumed early next year and the plant began producing power within the next eight years, private owners or financiers could qualify for up to $2 billion of federal tax credits. But such credits expire in 2021.
The Bottorff and Haney plan sweetened the deal by using savings from shutting down aging coal plants to cut industrial rates by 30 percent and other rates by 1.5 percent. Bellefonte, if completed, could make up for the lost coal generation, Bottorff said.
But Johnson said any such savings would be temporary since total borrowing under the Haney and Bottorff proposal would go up by about $16 billion and require rate increases of up to 25 percent to meet the new debt obligations after the initial rate cut.
"We'd either have to borrow a lot more money or raise rates and either of those, we think, would make it hard to continue our basic mission," Johnson said.
TVA directors voted Thursday to change the plant's status because it is no longer under active development. The utility has spent more than $6 billion on the plant since 1974.
About $1.5 billion of that cost not already amortized will be paid down over the next six or seven years from an annual $236 million charge to income.
Johnson said Bottorff's and Haney's proposal just wasn't realistic. The lower cost completion numbers were based upon the same faulty assumptions TVA made in projecting a $2.5 billion, five-year completion of the Unit 2 reactor at Watts Bar near Spring City, Tenn., Johnson said. TVA now estimates completion will take eight years at a cost of $4 billion to $4.2 billion.
"The lessons of our own experience at Watts Bar Unit 2, and the experience of other construction of new reactors at Plant Vogtle (in Georgia) and Virgil Summer (in South Carolina) give a better estimate," Johnson said. "Projecting a need for Bellefonte today is difficult because there is no short-term demand for its power. We're more in the retiring mode than the building mode right now."
But TVA wants to keep the plant as a future energy option.
"It continues to be a valuable asset and who knows what the future holds," Johnson said. "If we get a couple of big auto plants or other industry and we need the power, we could have a different discussion."
E-mail Dave Flessner at firstname.lastname@example.org or 757-6340.