TVA ups Watts Bar reactor cost to $4.5 billion

Thu Apr 5, 2012 1:18pm EDT

* Reactor cost up from $2.5 billion estimate 
* Project was expected to start in 2012 
* Bellefonte's new reactor likely also to be delayed   

By Scott DiSavino  
April 5 (Reuters) - U.S. government-owned Tennessee Valley Authority
(TVA) said on Thursday it now sees the new reactor at the Watts Bar 2
nuclear power plant in Tennessee online between September and December
2015 at a higher estimated cost of $4 billion to $4.5 billion.  

In February, TVA said the 1,180-megawatt Watts Bar 2 project was
running over budget and behind schedule.

Watts Bar is one of five new reactors the industry expects to
complete by 2020 as part of a slow-moving nuclear renaissance in
the United States.  

The others are the two reactors Southern Co is building at Vogtle
in Georgia and the two that Scana Corp  is constructing at Summer
in South Carolina.  

"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," Tom Kilgore, TVA president and CEO, said in a
release.   

"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," Kilgore said.   

TVA decided in 2007 to complete the second reactor at Watts Bar to
help meet the region's growing demand for power. The unit was
expected to enter service in 2012 at a cost of about $2.5 billion.    

"Our estimates on time and cost were wrong," Kilgore said.

"While our intentions were well founded, our execution and progress
reviews were not."   

After TVA loads the fuel into Watts Bar 2, the company has said in
the past that it plans to start work to complete another reactor at
the Bellefonte nuclear site in Alabama.   

TVA decided in August that it would complete the 1,260-MW Bellefonte
1 reactor. In the past, TVA said the project would cost about
$4.9 billion and could enter service by 2020.   

The company has said it would take about six years of construction
time to finish Bellefonte 1, which was already about 55 percent
complete.    

But the ultimate cost and timing for Bellefonte depends on work at
Watts Bar 2.    

TVA started work on the Watts Bar and Bellefonte reactors in the 1970s
but put both projects on hold in the next decade due in part to a
projected decrease in power demand.    

TVA has blamed the Watts Bar 2 delays in part on expected changes to
safety and other rules by the U.S. Nuclear Regulatory Commission
following last year's Fukushima nuclear accident in Japan.    

Last month, TVA said that of the 900 contractors supporting the
Bellefonte project, it would cut 430 positions.    

TVA said the contractors worked primarily for engineering firms,
including French nuclear conglomerate Areva SA , one of the main
companies involved in the project.    

TVA did not disclose financial details about the job reductions.