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Browns Ferry Restart Would Needlessly Gouge Consumers

May 15, 2002

Browns Ferry Restart Would Needlessly Gouge Consumers

$1.8 Billion Restart Highlights Economic Folly of Bush Nuclear Energy Policy

WASHINGTON, D.C. ? Consumers likely will be gouged if the Tennessee Valley Authority (TVA) proceeds with a plan to restart a long-idled reactor at the Browns Ferry nuclear power plant, Public Citizen said today.

The three-member TVA board is scheduled to vote Thursday on whether to spend an estimated $1.8 billion to restart Unit 1. That reactor was shut down in 1985 due to lingering concerns about a fire years earlier and the TVA?s inability to convince the Nuclear Regulatory Commission (NRC) that the reactor could be operated safely.

In approving the restart, the presidentially appointed TVA board would be supporting the Bush administration?s energy goals but would be making a terrible economic decision, said Wenonah Hauter, director of Public Citizen?s Critical Mass Energy and Environment Program, in a letter to the TVA board. Two of the three board members were appointed by President Bush, who has pushed for expanded use of nuclear power.

At $1.8 billion, the estimated cost of restarting Browns Ferry Unit 1 exceeds by more than $100 million the U.S. Department of Energy (DOE)?s highest cost estimate for building a new reactor. The only way for such expensive power generation facilities to survive economically, according to the DOE?s analysis, is if the plant operator can convince state or regional regulators to saddle consumers with long-term power purchase agreements at “above market prices.” In other words, for nuclear power plant investment to be economically feasible, consumers must pay unnaturally high prices and be deprived of lower-cost alternatives.

“There is no readily apparent rational explanation for the desire to restart the reactor,” said Hugh Jackson, policy analyst with Public Citizen?s Critical Mass Energy and Environment Program. “But there may be an irrational one: the Bush administration?s obsession with new nuclear power plants.”

The TVA?s desire to incur such staggering costs to restart a troubled nuclear reactor is particularly perplexing given that in March, the TVA walked away from a $360 million gas-fired power plant project after spending $150 million on its development. TVA cited, in part, insufficient market demand to justify continued development of the gas plant. The Browns Ferry reactor would put twice as much power into the market as the gas plant that TVA already said was unnecessary ? but at five times the price.

With a $25 billion debt load, TVA is already pushing its congressionally mandated $30 billion debt limit. TVA board members have suggested that the Browns Ferry unit could be restarted without additional debt. TVA reported total revenues in fiscal 2001 of $7 billion and $610 million in debt reduction. But 23 cents of every dollar paid by TVA?s customers continues to go to debt service. Even if TVA can finance the Browns Ferry restart without incurring additional debt ? a doubtful proposition given the dicey economics of nuclear power investment ? the authority?s captive ratepayers would be better served by a lighter debt load than an exorbitantly expensive and inefficient monument to 20th century energy technology.

If anybody is familiar with the way lofty economic promises associated with nuclear power can fall flat, it should be TVA. In 2001, the authority finally acknowledged that three never-completed reactors, one at Watts Bar in Tennessee and two at Bellefonte in Alabama, would never generate revenue. Incorporating that admission in their balance sheets, they finally counted the reactors as a $2.2 billion loss, rather than an asset.

In addition to restarting the Browns Ferry reactor, the TVA also proposes boosting Unit 1?s generating capacity from 1,050 megawatts to nearly 1,300 megawatts and extending the reactor?s operating license, currently scheduled to expire in 2013, for an additional 20 years. These actions would threaten public health and safety because aging nuclear plants are more likely to experience mechanical problems that the NRC downplays or ignores. (For instance, a reactor vessel head recently was seriously eroded at FirstEnergy?s Davis Besse reactor in Ohio. The NRC was aware of signs of degredation at the reactor but caved to a request from FirstEnergy to allow the plant to continue operating until a scheduled maintenance shutdown. It was a situation that one former NRC commissioner later deemed “the closest brush with disaster since the 1979 Three Mile Island accident.”)

Instead of needlessly gouging consumers and adding to the nation?s stockpile of deadly nuclear waste, the TVA should be in the forefront of developing energy solutions that stress conservation and clean, affordable energy sources, Jackson said.

“The TVA board should put its ratepayers first and keep Browns Ferry Unit 1 in mothballs where it belongs,” he said. “If the board determines that it must accede to political pressures to promote nuclear power, then Congress should take steps to curtail the board?s action as allowed under the Tennessee Valley Authority Act.”