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Is The Tva Breeding A Nuclear Power Comeback?

Is The Tva Breeding A Nuclear Power Comeback?

It has been a long, long time since a U. S. utility executive was sufficiently brave--or foolhardy--to say he's going to buy a new nuclear power plant. None has been ordered since 1978. In fact, all orders placed since 1973 have been canceled. The reasons: cost overruns, shoddy construction, and endless regulatory delays--all in the shadow of the 1979 Three Mile Island accident.

But now, the Tennessee Valley Authority's iconoclastic chairman, Marvin T. Runyon, is looking to break the logjam. The TVA will need new generating capacity over the next 12 years, and he thinks a nuclear plant makes the most sense. "It looks like we'll be the first" utility to order a plant, he says.

The first and likely the only for a while. Before following suit, other utilities will probably wait to see if the TVA can succeed. Despite growing concerns over emissions from coal- and oil-fired plants, utilities remain shy of nuclear power because of the lobbying strength of environmentalists. Even supporters agree there's no good plan for permanent disposal of spent nuclear fuel.

In any case, an actual TVA order remains perhaps two years off. But the nuclear industry is welcoming the news from the TVA, which is uniquely positioned to reconsider nuclear power. Since it's owned by the feds, the utility sports a AAA credit rating, making it easy to fund nuclear construction. Nor does the TVA have stockholders to spook. More important, it doesn't report to a public utilities commission, so it can hike rates at will to fund new plants.

But before proceeding, Runyon says he'll wait to make sure regulations are clear. In 1989, the Nuclear Regulatory Commission (NRC) adopted a one-step plan, in which it would grant construction and operating permits before ground is broken. Parts of the rule are under challenge, and until it's final, no one is likely to enter the bureaucratic labyrinth.

Runyon also wants to see the major domestic suppliers--Westinghouse Electric Co. and General Electric Co.--agree with the NRC on a single, standardized plant design. That way, he won't have to retrain operators if the TVA ever changes vendors. Trouble is, GE and Westinghouse each have second-generation nuclear plants in the works. And while both are 600-megawatt designs--half the size of many of the 112 U. S. plants now with operating licenses--they aren't about to be molded into one. Instead, the companies want the NRC to preapprove both designs. John B. Yasinsky, executive vice-president of Westinghouse's power-systems group, says that would let contractors set up assembly lines and make new units cheaper.

That could help them compete more closely with new coal-fired plants. The amended Clean Air Act will force new coal units to use more efficient emission controls, which could raise costs. Moreover, if the NRC's single-step approval overcomes challenges, nuclear power could gain further. The one-step process could halve the average time to build a nuclear plant to six years. "Most of the regulatory hurdles are out of the way," NRC Chairman Kenneth M. Carr asserts.

HEADACHES. Edward J. Tirello Jr., a managing director at Smith Barney, Harris Upham & Co., says if the TVA shows that one-stop licensing works, it would "spur the industry on dramatically." Others demur. Dayton Power & Light Chairman Peter H. Forster saw his Ohio utility and its partners spend 16 years and $1.7 billion on the Zimmer nuclear plant, now being converted to burn coal. He won't go nuclear again soon. "I don't see it within 20 years," he says.

The TVA has had its own nuclear-powered headaches. It once had 17 nuclear units under construction. When Runyon took over in 1988, he trimmed those plans to help check escalating costs. Now, the TVA's only operating plant is the two-unit Sequoyah near Chattanooga (map), though Runyon is confident that three other long-delayed plants will be in business by 1999.

Runyon joined the TVA just as it appeared headed for disaster. By slashing costs and refinancing debt, he has held rates steady for three years. He vows that he won't jeopardize that accomplishment with a bad call on new capacity. But it looks as though the TVA will be leading the industry back down the road to nuclear power.