TVA to Produce More of Its Own Power As Electricity Deregulation Wave Slows

By Dave Flessner, Chattanooga Times/Free Press, Tenn.

Aug. 1–Directors of the Tennessee Valley Authority are expected today to authorize the completion of America’s first new nuclear reactor in more than a decade and the purchase of the agency’s fifth gas-fired generator in less than two years.

TVA officials insist the agency needs the extra generation to meet the rising demand for electricity in the utility’s seven-state region. Completing the unfinished Unit 2 reactor at the Watts Bar Nuclear Plant and buying another gas-fired turbine offer the least expensive sources of additional power, according to TVA studies to be presented to the agency’s board today.

But advocates for other power producers and environmental groups question why TVA is not soliciting competitive bids for alternative power supplies or doing more to promote conservation and renewable energy.

“A government agency normally can’t go out and buy a load of paper without putting the purchase out for bids or request for proposals,” said Andrea Spring, senior manager of governmental affairs for the Electric Power Supply Association, a Washington, D.C.-based trade group that represents independent power producers. “But in this instance, (TVA officials) seem to be going out and making a multi-billion-dollar decision about a power plant totally on their own.”

Stephen Smith, executive director of the Southern Alliance for Clean Energy, an anti-nuclear group, questioned why TVA officials did not look at different energy options as regulators require of utilities in some other states.

“There is very little transparency to what TVA does and no public service commission to review their actions,” he said. “This is the same kind of approach that got TVA in so much trouble before when they starting building plants they didn’t need and couldn’t afford.”

TVA officials say today’s decisions will be guided by a new business plan the TVA board adopted in May. The strategic plan concluded that wholesale and retail electricity deregulation had slowed in most of the United States since TVA adopted its last business blueprint.

With some of the lowest electricity rates in the nation, TVA customers would not necessarily benefit by opening up the Tennessee Valley to outside power suppliers, according to Anda Ray, vice president of enterprise performance and analysis.

The newest strategic plan calls for TVA to continue to own most of the electricity generation needed to meet the region’s rising power demands.

“We want to avoid being so dependent on the short-term market (for buying electricity) because it is so volatile, and you can’t guarantee that the power is going to be there when you need it,” Ms. Ray said.

Last year, TVA bought more than $1 billion in electricity from outside suppliers, often at premium prices during peak demand periods.

Ashok Bhatnagar, senior vice president of new nuclear generation, development and construction, said finishing the Unit 2 reactor at the Watts Bar Nuclear Plant will provide the least-expensive source of additional power.

“I walked the plant down to personally get an idea of what the plant looked like,” he said, noting the unit is about 60 percent complete. “The material condition looks good.”

Mr. Bhatnagar said he will describe to the board today how much and how long he projects it will take to complete the 1,180-megawatt reactor. The Unit 1 reactor began power generation in 1996 and was the last reactor to be licensed in the United States.

TVA also is looking to produce more power by buying a combined-cycle, gas-fired turbine. A year ago, TVA authorized $90 million to buy four gas-fired turbines that previously were idle in the region.

E-mail Dave Flessner at dflessner@timesfreepress.com

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