Video: Cost of completing reactor at Watts Bar Nuclear Plant rises by up to $2 billion

photo Preston D. Swafford, TVA chief nuclear officer and executive vice president for nuclear generation, left, looks on from behind as Tom Kilgore, president and CEO of TVA, speaks during a news conference at the Watts Bar Nuclear Plant in Spring City, Tenn., Thursday announcing the Watts Bar 2 reactor is running $1.5 billion-$2 billion over budget and will not be completed until December 2015.

Hall looking toward the future under Stinson

In his first season as head coach, Rod Stinson guided Little Rock Hall to wins in its first two games before eight straight losses. Those are results the second-year head man is hoping for less of in 2012.

In his first season as head coach, Rod Stinson guided Little Rock Hall to wins in its first two games before eight straight losses. Those are results the second-year head man is hoping for less of in 2012.

SPRING CITY, Tenn. -- TVA's acknowledgment Thursday that finishing the Watts Bar Nuclear Plant's Unit 2 reactor will take three more years and up to $2 billion in added costs has critics calling for the TVA board to rethink its emphasis on nuclear energy.

"TVA's decision in August, 2007, to restart construction on Watts Bar's second reactor was flawed from the very beginning," said Dr. Stephen A. Smith, executive director of Southern Alliance for Clean Energy.

But Tennessee Valley Authority President and CEO Tom Kilgore called the failure a new opportunity.

In announcing the new reactor completion date of December 2015 and its new and nearly doubled estimated cost of as much as $4.5 billion, Kilgore told several hundred plant workers and the media that TVA "has unfinished business" to complete the plant and renew TVA's reputation.

"We're going to make national news tomorrow," he said of his announcement. "And I guarantee you there will be some critics out there saying, 'Why are you still doing nuclear power?'

"Well, I guarantee you it's still the most cost effective [way of making electric power]," he said.

WATTS BAR UNIT 2 HIGHLIGHTS1973 -- TVA begins work on Watts Bar Nuclear Plant and five other nuclear plants.1979 -- Three Mile Island makes headlines with a nuclear accident. TVA cites projections for slower load growth and begins deferring nuclear construction.1985 -- Watts Bar construction stops completely to address regulatory concerns.1996 -- Watts Bar Unit 1 goes online after 23 years and starts and deferrals.2007 -- TVA renews construction on its Unit 2 reactor -- the first to be licensed for construction by federal regulators since Pennsylvania's 1979 Three Mile Island partial meltdown.2011 -- TVA announces the $2.5 billion reactor's 2012 planned completion will be delayed until 2013 and the costs will be higher. TVA does not disclose how much higher.2011 -- Two contractors are charged with falsifying cable inspection records, and in December, TVA discloses that the NRC had raised a white safety flag over security. Neither TVA nor NRC will say what the security problem is, or if the falsifications played into NRC's heightened concerns. TVA replaced the head of the Watts Bar Unit 2 construction project, Ashok Bhatnagar, with Mike Skaggs.2012 -- In January, TVA ordered a safety "stand down" for about 1,000 contract workers at the new reactor after finding that some of those workers in December had erroneously removed cables from Unit 1 -- the operating reactor that was completed in 1996.Source: TVA, NRC

Kilgore did later acknowledge to reporters that with natural gas prices being what they are today, TVA could build a natural gas plant that would "come in cheaper."

"But our vision is to have a balanced portfolio," of 30 percent power produced by nuclear power, 30 percent gas and coal plants and 30 percent hydro and other renewable energy plants.

TVA's six reactors in 2010 already supplied 36 percent of the federal utility's power, according to TVA's Integrated Resource Plan, which included its "recommended direction" that was adopted by the TVA board a year ago this month.

Smith, in his criticism of Thursday's announcement, lived up to Kilgore's prediction.

"TVA's board must now re-evaluate the decision to rush forward on this troubled project and question whether it is a sound financial decision to approve additional funds to complete construction, especially given we are now in a post-Fukushima world," Smith said.

He said there are less financially risky options available, including natural gas and renewable energy.


Kilgore ticked down what he called management planning errors Thursday.

"We were too aggressive. We started construction before all the engineering walk-downs were completed. ... Our work orders [plans and directions] were too complex."

But the most egregious error was in picking the model for their planning.

Kilgore and Skaggs said that TVA had based its estimates and plans on its most recent big project, Browns Ferry Unit 1, which was completed in 2007, rather than the Watts Bar Unit 1 -- the twin of the new unit that had been completed in 1996.

"It's not the same kind of work. It's not even the same kind of space. We didn't take that into consideration," said Kilgore.

"We didn't do a good job of leading, but that doesn't mean we're going to quit," he said.

Now, seven months later and with a scaled-down construction force of about 2,400 contractors, TVA's new completion plans more closely resemble those for Watts Bar 1, and construction is moving more quickly, Skaggs said.


Despite the rising cost and a delayed timetable, Kilgore told reporters that ratepayers will not be immediately impacted and ultimately will benefit from the plant's construction.

The plant still is needed and is the most cost-effective solution for meeting the region's power needs, he said.

But Watts Bar's delay also delays a planned completion of TVA's fourth nuclear plant, the half-finished Bellefonte, which has been idled for more 20 years.

TVA's board last year approved Bellefonte's renewed construction -- but not until fuel is loaded at the completed Watts Bar Unit 2 reactor.

Kilgore said pre-construction work at Bellefonte will not completely stop.

"We will continue walkdowns," Kilgore said. But he hedged.

"Probably what could be the biggest impact for Bellefonte is going to be the economy," he said.

Sen. Lamar Alexander, R-Tenn., a staunch advocate of nuclear power and TVA, indicated in a statement Thursday that he is disappointed.

"I don't like to see TVA miss a budget target or a construction schedule, but it's more important to get it right," Alexander said.

"If TVA meets the new budget and schedule, the second Watts Bar reactor still will provide clean electricity at a cheaper average cost than TVA pays today for electricity. And the cost of finishing Watts Bar II still will be much cheaper than the cost of building a new reactor," he said.