TVA Is Justified in Deferring the Yellow Creek Unit 1 Nuclear Powerplant

EMD-82-114: Published: Jul 30, 1982. Publicly Released: Aug 30, 1982.

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Pursuant to a congressional request, GAO reviewed the demand forecast and benefit/cost analysis used by the Tennessee Valley Authority (TVA) as a basis for deferring construction on the Yellow Creek Unit 1 nuclear powerplant.

GAO stated that, although certain portions of the TVA demand forecast, particularly those dealing with economic growth projections, appear out of line with projections made by other organizations, it is for the most part based on sound data. The disparities do not significantly affect the credibility of the forecast results; if anything, the differing projections appear to indicate that TVA may be slightly overstating projected demand. Consequently, GAO believes that the TVA conclusion concerning the timing and need for the Yellow Creek plant is reasonable. Additionally, the benefit/cost analysis supports the agency's decision to defer the powerplant construction, since the ratios showed a savings to TVA ratepayers under all circumstances. The methodologies used by the agency to compute values of factors for which the benefit/cost ratios are sensitive appear to be reasonable when compared with similar data from independent sources. GAO concluded that, in addition to providing savings, the deferral decision was also prudent because it gives TVA at least 5 additional years to determine when and if the plant's capacity will be needed.

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