TVA board updated on Watts Bar progress

Source: Tennessee Valley Authority

The Tennessee Valley Authority board considered a change in the small manufacturing credit program and received an update on the comprehensive review under way at Watts Bar Nuclear Plant Unit 2.

The board approved on Thursday, Feb. 16, a modification to the small manufacturing credit program, which gives qualifying manufacturers a credit for power demands of more than 1 megawatt. With the change, qualifying manufacturers will still be eligible for the credit if their power demand falls below that level because they have invested in energy efficiency improvements.

TVA President and CEO Tom Kilgore reported to the board that with "the comprehensive cost and construction review under way at Watts Bar Unit 2, TVA remains confident that the unit will be a cost-effective source of new base load power, compared to other available sources."

Kilgore expects the Watts Bar Unit 2 review to be complete by the end of the second quarter. The project will not be finished by 2013 as expected in the construction schedule approved by the board in 2007 and will exceed the estimated $2.49 billion cost.

"We could spend significantly more than $2.49 billion on Watts Bar Unit 2 and it would still be a cost-effective plant," Kilgore said. "We don’t yet know what the new estimates will be. But we do know Watts Bar 2 will be an important part of a balanced portfolio."

“There should be no doubt about TVA’s commitment to nuclear energy as part of our Vision to provide clean, reliable power at low, competitive rates,” he said.

Kilgore pointed to the leaders of nuclear generation and nuclear construction reporting directly to the CEO as another signal of TVA’s support of nuclear energy.

“With the retirement of Bill McCollum as chief operating officer, we created operational teams focused on nuclear generation and construction and energy generation and transmission.” Kilgore said. “We are aligning our organization to manage costs with a focus on performance and business priorities.”

The new experienced leadership at Watts Bar 2 and Bellefonte Unit 1 is an example of aligning resources to achieve quality performance, Kilgore said.

Mike Skaggs, TVA senior vice president for Nuclear Construction, said two new senior level managers hired at Watts Bar 2 and TVA’s Bellefonte Nuclear Plant Unit 1 “will increase experience levels and improve the span of control. These actions create a more direct line-of-sight to top management.”

Skaggs also provided the board with an update on Watts Bar 2, stating that when the review is completed, the result will be a high-confidence cost estimate and milestone schedule.

“This review is a rigorous process that will help provide efficiency, productivity and high-quality work as we move toward completion of Watts Bar,” Skaggs said. “We are also developing independent assessments to improve our level of confidence.”

Other reports at the meeting included:

•TVA’s long-term energy efficiency plans are within the range of potential energy savings for the region. The study by Global Energy Partners and commissioned by TVA found that the region could reduce energy use over five years by 2.2 percent to 5 percent by taking advantage of energy efficiency programs offered by TVA and local distributors, such as compact fluorescent lighting and heat pump heating and cooling systems.
•The financial report shows TVA revenues so far this year are down because of milder weather, and a mild second quarter also is expected.
•Milder temperatures and lower prices for purchased power meant TVA used less generation from coal in the first quarter. Coal accounted for 31 percent of generation, with nuclear at 32 percent. Natural gas, hydro, purchased power, renewables and energy efficiency were the balance. TVA announced earlier this month it is idling four coal units at Johnsonville Fossil Plant ahead of schedule.

The Tennessee Valley Authority, a corporation owned by the U.S. government, provides electricity for business customers and distribution utilities that serve 9 million people in parts of seven southeastern states at prices below the national average. TVA, which receives no taxpayer money and makes no profits, also provides flood control, navigation and land management for the Tennessee River system and assists utilities and state and local governments with economic development.

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