TVA releases cost estimates for Watts Bar Nuclear Unit 2 - | Chattanooga News, Weather & Sports

TVA releases cost estimates for Watts Bar Nuclear Unit 2

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SPRING CITY, TN (WRCB) -- The Tennessee Valley Authority released on Thursday the findings of a seven-month construction review at Watts Bar Nuclear Plant Unit 2, detailing cost and time estimates to complete the facility.

"Based on the findings to date, we will be asking the TVA board of directors to approve the continued funding and the extended construction time for Unit 2 at Watts Bar Nuclear Plant," said Tom Kilgore, president and CEO.

"Watts Bar Unit 2 remains a cost-effective solution for meeting the region's base load power needs with clean energy at a competitive rate," Kilgore said. "Even with the estimated added cost, Unit 2 at Watts Bar will still be a competitive, reliable generation source for the people of the Tennessee Valley."

Mike Skaggs, TVA senior vice president for Nuclear Construction, said, "The emerging estimate to complete Watts Bar Unit 2 will require additional funding of $1.5 billion to $2 billion, putting the total estimated cost of completion in the range of $4 billion to $4.5 billion. The estimated time to complete is between September and December of 2015."

Skaggs, who started the construction review in October 2011, said corrective actions would address "the root cause findings and help deliver on the cost and time estimates."

During an announcement at Watts Bar Nuclear Plant, Kilgore said the initial detailed scoping, estimating and planning study (DSEP) done on the unit in 2007 and approved by the TVA board appeared "aggressive but doable" at that time.

"Our estimates on time and cost were wrong," he said. "While our intentions were well founded, our execution and progress reviews were not."

Skaggs said the construction review has shown "walk downs to support the initial estimate were not completed. Management was misaligned, and planning was poor."

New management is in place at the site, and a more direct line-of-sight to top management has been established.

"We now have a high-confidence cost estimate and milestone schedule," Skaggs said. "The safe and quality cost-effective completion of Watts Bar Unit 2 is an integral part of achieving TVA's energy goals as set out in the Integrated Resource Plan. And, we have added contingency and an allowance for addressing Fukushima impacts."

Kilgore said Watts Bar Unit 2 remains a cost-effective solution to supply TVA's base load requirements with clean energy at a competitive rate. "When Watts Bar Unit 2 comes online, it will produce more than 1,100 megawatts of energy at competitive prices and be another major source of emission-free electricity."

Kilgore said he would follow the "trust but verify" approach going forward at Watts Bar Unit 2. "There is a measure of trust that Mike and his team have earned," he said. "At the same time, we will verify that the decisions being made, the money being spent, and the unfettered flow of information are accurate as part of how we ensure transparency and conduct our business."

The TVA board instructed management to conduct the review of the construction project at Watts Bar Unit 2. The DSEP approved by the board in 2007 projected a 60-month construction schedule and a cost of $2.49 billion.

Skaggs briefed the board in February on the review's preliminary findings; his new assessment of the unit's cost and schedule will be considered by the board in April. His assessment was confirmed by two outside, independent reviews.

In addition to Watts Bar Unit 1, TVA operates three nuclear units at Browns Ferry Nuclear Plant in Alabama and two at Sequoyah Nuclear Plant near Chattanooga. The nuclear units generate about a third of TVA's total power supply for the Tennessee Valley region.

TVA is moving toward a cleaner and more balanced mix of energy sources, including more nuclear energy, renewables, natural gas and energy efficiency, in addition to the traditional coal and hydropower.

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