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TVA Pulling Out of a Nuclear Plant Sale Raises Green Issues

image credit: Credit: Tennesee Valley Authority
Llewellyn King's picture
Executive Producer and Host White House Media, LLC

Llewellyn King is the creator, executive producer and host of “White House Chronicle,” a weekly news and public affairs program, airing nationwide on PBS and public, educational and government...

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  • Jun 8, 2021
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Normally, a trial involving a nuclear power plant would garner national attention.

But there has been a significant struggle underway over an unfinished nuclear power plant in Hollywood, Ala., and nary a word of it has caught national media attention. Even in the area affected by this trial, served by the giant Tennessee Valley Authority (TVA), coverage has been modest. The importance of new green energy hasn’t been raised, which is the back story here.

The bench trial (before a single judge) which opened in Huntsville, Ala. on May 16 and concluded three days later involves the two units of TVA’s Bellefonte nuclear plant.

TVA started construction on the plant in 1975, then suspended it. Later TVA revived construction, and finally mothballed the plant in 2015.

A year later, TVA declared the plant surplus to its needs and put it up for sale. This attracted just three bidders and a purpose-specific company, Nuclear Development LLC, won. It was the high bidder at just $111 million. Two lower bidders both planned to cannibalize the plant and ship parts to other plants, some abroad.

TVA accepted the Nuclear Development bid without reservation, or none was expressed. According to Nuclear Development, the company went ahead inventorying the plant and doing customary due diligence prior to the deal closing after two years.

When the deal was to close in November 2018, TVA asked first for a two-week extension and then scrapped the deal, claiming the purchaser had failed to get the necessary licenses transferred from the Nuclear Regulatory Commission, as required by the Atomic Energy Act. The judge has already affirmed this much in a pre-trial opinion.

TVA told me in a statement, “Nuclear Development had two years to obtain the necessary Nuclear Regulatory Commission approval to transfer Bellefonte’s NRC-issued construction permits. Nuclear Development failed to obtain NRC approval before closing, making it illegal for TVA to close the sale.”

Bill McCollum, president of Nuclear Development, told me that the license issue wasn’t raised in the time from the sale in 2016 to the abrupt change of heart on the verge of signing in November 2018. NRC hasn’t been a party to the trial and neither has any other federal agency. After the cancellation, Nuclear Development immediately sued for breach of contract.

The dispute is important in the national context with the Biden administration straining to end carbon emissions from electricity generation and the two units of Bellefonte representing between them 2,700 megawatts of clean green power.

There is some controversy over the state of completion of the plant, but Unit 1 is put at 88 percent by the purchaser and Unit 2 at around 58 percent.

McCollum knows the plant: A career nuclear engineer, he was the chief operating officer at TVA until he retired in 2011. Previously, he served for 33 years in the highly respected Duke Energy nuclear program.

Nuclear Development is owned by Franklin Haney of Chattanooga and his family, who have amassed a fortune in real estate development in Tennessee and around Washington, D.C.

Creative financing has been Haney’s specialty, and he had devised a plan to finish the Bellefonte plant using private funding and federal tax credits and loan guarantees. He first shared this possible plan with TVA in 2013 -- so it has been long-germinating.

Haney had worked with TVA on creative financing for another nuclear project. He was a known quantity to TVA.

Purchaser sources believe that TVA pulled back when it realized that Nuclear Development wanted to sell its electricity output from Bellefonte to the City of Memphis, TVA’s largest customer, at a discount. Otherwise, it could have made the sale contingent on the license transfers. 

At a time when clean air is a national priority, it seems the litigation in Alabama is more than a commercial dispute. It is an environmental one. After all TVA is a federal independent agency, and the NRC is a federal independent commission. Couldn’t they have worked out the licensing problem before it came to legal fisticuffs?

In my years of writing about TVA, it has always been a nuclear champion and keenly aware of its social responsibility, having been born in the New Deal.

 

 

 

 

 

 

 

 

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Matt Chester's picture
Matt Chester on Jun 8, 2021

The dispute is important in the national context with the Biden administration straining to end carbon emissions from electricity generation and the two units of Bellefonte representing between them 2,700 megawatts of clean green power.

With the long construction lifetime, shutdown timelines, etc. of nuclear plants, how relevant is the opinion of one administration with a decidedly shorter term? That is, whether a Biden administration supported nuclear or was opposed to it, what sort of finality could there be behind actions that couldn't be undone by a different administration coming in as soon as 4 years later? Or is there real power for the top of the chain to put to brakes on it all and not have successors really able to look back (at least on a project-by-project basis)?

Bob Meinetz's picture
Bob Meinetz on Jun 8, 2021

Llewellyn, I suspect there are factors at play other than the transfer of Nuclear Development's COL (Combined Construction and Operating License). If it hadn't been authorized, obtaining another one can take years. Needless to say, years of downtime, even for a mostly-finished nuclear plant that "only" cost $111 million, could have made the deal considerably less attractive for TVA.

But the primary hitch was likely the Biden administration's waffling over it's commitment to existing nuclear plants. As of six months ago, Biden had made promises to keep existing plants open. Pending legislation would support existing plants with a federal zero-emission credit as part of his infrastructure plan. But Biden has been mute on the issue, and my sources in DC believe powerful anti-nuclear forces with funding from the American Petroleum Institute are pushing back.

If so, it's the same old story - nuclear energy, the cheapest, cleanest, most powerful source of energy, goes up against the world's biggest business: fossil fuels. It's the battle of economy vs. consumption, of self-preservation vs. greed, writ large.

Jim Stack's picture
Jim Stack on Jun 9, 2021

Please never call a Nuclear power plant "Green and Clean". It may not produce carbon emissions but it is not green as in Renewable. It evaporates water like crazy. The uranium comes from Russia . The deadly spent waste is all stored on site. It can no ramp up and down to match the customer loads so it over produces all night. 

   Building a Nuclear plant takes about 10 years. Running it safely is very hard. It is a large terrorist target not to mention earth quakes and other disasters. Decommissioning it is almost impossible. 

    As we can see trying to built it fails often. Trying to sell it for scrape cost everyone. 

 

Michael Keller's picture
Michael Keller on Jun 14, 2021

Nuclear energy is, in fact, superior to wind and solar because it is reliable with no greenhouse gas emissions. 
If some investors want to risk their money attempting to finish the plant, why should you or TVA care? Afraid of competition?

Michael Keller's picture
Michael Keller on Jun 14, 2021

TVA can make some money for the rate payers by selling off the unused asset, so why won’t they? Strikes me that TVA may be in league with the green energy mafia by helping strangle the competition (reliable nuclear energy, in this case) that is superior to green energy.

Joe Deely's picture
Joe Deely on Jun 14, 2021

Sure go ahead and sell of that asset if they can get something for it.

 

TVA could also make some money for rate payers by closing these 7GW of barely used assets and replacing them with solar/storage.

Michael Keller's picture
Michael Keller on Jun 15, 2021

An advantage of a coal plant is several months of fuel is stored right next to the plant, and that is a major plus from a reliability standpoint. That advantage is not shared by gas and green energy.

Old farmer philosophy: better to have and not need than need and not have.

Joe Deely's picture
Joe Deely on Jun 18, 2021

Old farmer philosophy: better to have and not need than need and not have.

Just wondering - do you guys in Kansas keep around all those telegraph poles as well?  Plus, of course, you have to keep 100s of telegraph operators around and pay them $70,000+ a year to twiddle their thumbs.  Yep, yep - "better to have and not need than need and not have".

 

Strikes me that the Koch coal mafia in Kansas must really be be worried. 

 

 

Michael Keller's picture
Michael Keller on Jun 18, 2021

The Koch brothers have nothing to do with the coal power plants in Kansas.

You appear to be the classical example of an ill-informed green energy zealot completely decoupled from science, economics. and reality.

Try using logic and reason instead of making irrational statements.

As I pointed out earlier, we are not running out of power in Kansas because a balanced portfolio of energy resources is used.

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