Tennessee Valley Authority Can Improve Estimates and Should Reassess Reserve Requirements for Nuclear Power Plants

PSAD-79-49: Published: Mar 22, 1979. Publicly Released: Mar 22, 1979.

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The policies and procedures used by the Tennessee Valley Authority (TVA) in the development of cost and schedule estimates for the construction of nuclear powerplants at Hartsville (Tennessee), Phipps Bend (Tennessee), and Yellow Creek (Mississippi) were reviewed. In September, 1978, TVA was operating one nuclear plant and constructing six more. TVA developed estimates of completion time without taking into account such factors as inclement weather, labor shortages, scheduling difficulties, regulatory changes, design changes, or delays in receiving supplies. Generating capacity requirements based on demand forecasts include a reserve factor of about 30 percent, which is equal to about one-third to one-half of the generating capability to be provided by TVA's seven nuclear plants.

Current estimates for each plant are understated by at least several hundred million dollars. The problem is partly attributable to the use of construction schedules which depend on optimum conditions for success and are probably unachievable. The understatements are not of sufficient magnitude, however, to offset the cost advantages calculated for nuclear facilities. Although the most recent TVA estimates indicate that electricity requirements during the 1980's may be less than previously expected, there is a need for a greater operating capacity than will be available from plants now operating or under construction.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: TVA should base estimates for powerplants on likely cost and schedule conditions. The cost and schedule estimates for Hartsville, Phipps Bend, and Yellow Creek should be adjusted to reflect the best assessment of what actual results will be. In addition, TVA should base future cost-effectiveness evaluations of nuclear and coal-fired powerplants on cost and schedule estimates which, to the best of its knowledge and ability, reflect the results and trends of its own experience and analyses, as well as that of private utility companies.

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