TVA debt plan halts nuclear construction

TVA debt plan halts nuclear construction

By Tom Charlier
The Commercial Appeal

TVA will shelve $6.3 billion worth of nuclear construction and impose a new ceiling on borrowing as part of a policy shift that repudiates the "outdated" ways of old, the agency's chairman said Monday.

Craven Crowell said the Tennessee Valley Authority will not, by itself, complete the two reactors at the Bellefonte nuclear plant near Hollywood Ala., and the second unit of the Watts Bar plant near Spring City, Tenn. The agency also will soon stop adding to a debt burden that already gobbles up 30 cents of every dollar sent in by ratepayers.

Speaking on behalf of the three-member TVA board, Crowell made the announcement as work continues on a comprehensive study aimed at making the agency more competitive in an increasingly deregulated environment. The study has focused on TVA's $25.7 billion debt and the nuclear program that is responsible for much of it.

The policy change outlined Monday, which will not result in layoffs and will not have an immediate impact on electrical rates, came after TVA concluded that completing the units is not the most cost-effective way of increasing its generating capacity. The moves will leave the agency free to pursue conservation, new technologies and other alternatives, officials said.

"It's time to take decisive, responsible action to leave these outdated policies behind," Crowell said. "By setting aside our unconditional commitment to nuclear power construction, we are opening the doors to new possibilities and greatly expanding our options."

With its coal-fired plants, dams and nuclear units, TVA generates the electricity used by about 8 million people in seven states. It has three nuclear units operating and six in varying degrees of completion. A decade ago, the agency canceled eight nuclear units in Tennessee and Mississippi.

Under the policy changes announced Monday, TVA will halt work at three of the six unfinished reactors, although some of the shelved units could be converted to another fuel or completed with the aid of a partner.

TVA has spent $4.6 billion on Bellefonte, while $1.7 billion has been invested at the Watts Bar reactor. However, the agency estimates it could cost $8.8 billion to finish the three units.

Crowell also said TVA will impose a debt ceiling of its own that will be $2 billion to $3 billion under the $30 billion ceiling set by Congress. By October 1997, the utility will quit adding to its total debt, he said.

The policies announced Monday drew praise from TVA distributors, including Memphis Light, Gas & Water Division, and from financial analysts and agency critics.

"This decision should've been made before he (Crowell) was even appointed," said Stephen Smith, executive director of the Tennessee Valley Energy Reform Coalition, which has long criticized TVA's nuclear program and other policies.

LG&W president Bill Crawford said halting the nuclear work appears to be the best way for TVA to control its debt and keep customers from looking elsewhere for power. "We've said all along we want to see TVA get in a position where it could be competitive in the deregulated environment," he said.

Bill Cox, director of infrastructure finance for Standard & Poor's bond-rating agency in New York, said the policy change gives TVA a chance to find a longer-term solution to its debt troubles, instead of simply refinancing its existing burden. "This keeps the situation from worsening dramatically," Cox said.