Operation of Watts Bar Nuclear Plant Unit 1

TENNESSEE VALLEY AUTHORITY

Operation of Watts Bar Nuclear Plant Unit 1

AGENCY: Tennessee Valley Authority.

ACTION: Issuance of record of decision.

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SUMMARY: This notice is provided in accordance with TVA's procedures

implementing the National Environmental Policy Act. TVA has determined

that to meet the increasing need for electric power in the TVA region,

it should continue with its plans to operate its Watts Bar Nuclear

Plant (WBN) Unit 1 in 1996. On July 10, 1995, TVA announced that it had

decided to adopt a Final Supplemental Environmental Impact Statement

(FSEIS) on operation of WBN. 60 FR 35,577. This FSEIS was issued by the

Nuclear Regulatory Commission in April 1995. Notice of the availability

of the adopted FSEIS was announced by the Environmental Protection

Agency at 60 FR 35393.

FOR FURTHER INFORMATION CONTACT: Jon M. Loney, Manager, Environmental

Management Staff, Tennessee Valley Authority, 400 West Summit Hill

Drive, WT 8C-K, Knoxville, Tennessee 37902, (615) 632-2201.

SUPPLEMENTARY INFORMATION: TVA is the electric supplier to an 80,000-

square mile area containing parts of seven States. It and the

distributors of energy, which TVA generates, serve about 7.5 million

people. TVA currently has 25,600 megawatts of generating capacity on

its power system. This includes coal-fired units, nuclear units,

hydroelectric units, combustion turbines, and pumped storage hydro

units.

TVA's WBN is located in Rhea County, Tennessee, approximately 80

kilometers (50 miles) northeast of Chattanooga, Tennessee. The site is

located adjacent to TVA's Watts Bar Dam Reservation at Tennessee River

Mile 528. WBN is a two unit pressurized water reactor nuclear plant.

Each of its units has a net electrical output 1,160 megawatts. In

August 1970, TVA proposed to construct and operate WBN. After

completing an environmental impact statement, TVA decided to proceed

with the plant in 1973.

Completing and licensing of the plant has been delayed. The delay

was due in part to installation of modifications that NRC ordered for

nuclear plants following the 1979 incident at the Three Mile Island

nuclear plant. In addition, the need for power in the TVA region and

elsewhere in the country dramatically changed from the need forecasted

in the early 1970s. Plant licensing was further delayed in the mid-

1980s while TVA resolved a number of WBN-specific safety concerns. To

respond to these concerns, TVA implemented a series of corrective

actions and plant modifications to prepare WBN Unit 1 for operation.

Fuel is now scheduled to be loaded in WBN Unit 1 in late 1995 with

commercial operation expected in Spring 1996. TVA has determined that

Unit 1's generation is needed in 1996 and has decided not to change its

earlier decision to proceed with the unit.

Under TVA's Load Forecasts, WBN Unit 1 is Needed

The determination that WBN Unit 1 is needed in 1996 is based on

TVA's forecasts of future power needs in the region that it serves.

These forecasts rely on national and regional economic data and are

produced through the use of state-of-the-art computer models. TVA

prepares three types of forecasts of future power demands--a low-,

medium-, and high-load forecast. There is substantial uncertainty in

forecasting future power needs. Using a range of forecasts helps

address this uncertainty.

The high-load forecast is designed to project a level of future

energy demand that has 90-percent probability of not being exceeded

(there is only a 10-percent chance that the forecast would be too low

and that the demand would be greater). The medium-load forecast has a

50-percent probability. The probability for the low-load forecast is 10

percent--there is a 90-percent chance that the demand for energy in the

TVA region would be greater than this estimated level.

Under all of TVA's current load forecasts, there is a need for

additional energy resources in the immediate future to meet the demand

for energy in the TVA region. Under TVA's medium-load forecast, there

is a need in 1996 for the capacity of WBN Unit 1, as well as an

additional 850 megawatts. Under TVA's high-load forecast, there is a

need for 1,500 megawatts plus WBN Unit's capacity. Only under the low-

load

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forecast is there a slight surplus of capacity in 1996 of 300 megawatts

with WBN Unit 1 operating.

TVA has received comments that its load forecasts are too high and

the need for WBN Unit 1 has been questioned. TVA acknowledges that load

forecasting is inherently uncertain and that future demand in the TVA

region may be less than TVA's forecasts. However, since 1985, TVA's

forecasting methodology has produced forecasts that have been within

plus or minus 5 percent of actual demand. This is better than the

utility industry standard of plus or minus 8-percent accuracy.

Because of concern about the accuracy of its forecasts, TVA asked

Barakat & Chamberlin, Inc., a nationally-recognized expert in energy

resource planning, to review TVA's forecasting approach in 1991.

Barakat & Chamberlin concluded: ``on a comparative basis, TVA's

forecasting procedures compare very favorably with the best-practice

procedures in the United States utility industry.''

More recently, in connection with the preparation of its integrated

resource plan and programmatic environmental impact statement, Energy

Vision 2020, TVA asked George McCollister with Spectrum Economics,

Inc., to review TVA's 1994 load forecast. Dr. McCollister is a load

forecasting expert and was retained to provide independent advice to

members of an outside stakeholders review group who oversaw preparation

of Energy Vision 2020. Dr. McCollister suggested some improvements to

TVA's load forecasting methodology but concluded: ``TVA uses state-of-

the art models to forecast electric sales to residential and commercial

customers in its power service area. TVA has acquired vast amounts of

data and conducted many studies to support these models. TVA produces

excellent documentation for its economic forecast, and perhaps does the

best job of any utility in the country in forecasting the range of

uncertainty in both its economic and electric load forecasts. TVA is

highly commended for its achievements.''

It takes many years to plan, permit, and construct new energy

sources or to plan and deploy energy conservation measures (demand-side

management programs). Years before the demand for energy arises,

electric utilities must make decisions about how to meet forecasted

demands. If no decisions are made or if the utility's forecasts are too

low, those needing electric service in the future may not get it. TVA

decided years ago that WBN would be needed to meet future demands on

its system. Its current forecasts show that WBN Unit 1 is needed next

year, and TVA chooses to rely on these forecasts and its experts. Even

under the forecasts produced by those questioning TVA's forecasts,

there is still a need for additional energy resources to meet energy

demands in the TVA region. WBN Unit 1 would meet those needs while

offseting generation from the existing coal-fired system, thus reducing

environmental effects.

Alternatives Considered

TVA considered a number of alternatives to constructing and

completing WBN in its 1972 final environmental impact statement (FEIS).

Among those alternatives were construction of coal-fired units,

hydroelectric units, gas-fired units, and oil-fired units. These

alternatives were deemed not feasible, more costly, and/or more

environmentally detrimental than construction and operation of WBN. TVA

also considered purchasing firm power from neighboring utilities but

concluded that its neighbors would not be able to supply sufficient

firm power to meet TVA's needs and that the environmental impacts of a

neighboring utility generating that power would like be similar to or

greater than the impacts associated with operating WBN.

WBN Unit 1 is not essentially complete and the alternatives

available to TVA in light of the status of the unit and need for it are

limited. TVA considered continuing with the unit (the No-Action

Alternative because it involves not changing TVA's current course of

action), delaying completing the unit and purchasing power, or

canceling the unit and purchasing power. TVA concluded that continuing

with WBN Unit 1 was the most cost effective and environmentally

preferable alternative among the viable alternatives remaining to it.

TVA has invested approximately $6.4 billion in Unit 1 and the

facilities it shares with Unit 2. Since these costs have already been

incurred, changing TVA's course of action and deciding not to operate

the plant would not avoid the costs. TVA would still have to recover

these costs in the rates it charges for its electricity. If TVA does

not complete the unit, it would have to write off approximately $200

million to $600 million in costs annually, depending on the period for

the write-off. Operating the unit would allow TVA to begin earning a

return on the agency's investment in the form of generation from the

unit and allow TVA to recover the costs of building the facility over a

longer period of time (40 years versus the traditional write-off period

of 10 years).

Compared to purchasing power or meeting future demand with coal-

fired generation or combustion turbine units, operation of WBN Unit 1

will be more economical. WBN Unit 1's operating costs are projected to

be approximately 1.7 cents/kwh. The operating costs of alternative

generating sources range from 2.0 to 6.0 cents/kwh.

It is difficult to project the potential environmental impacts

associated with purchasing power because there are a number of

different kinds of sources that could provide this power. If it comes

from a neighboring utility system, TVA's analyses indicate that the

power is likely to be produced by coal-fired units because these are

the units that are economically marginal to operate (the utility will

be operating other, lower-cost generation to meet its own needs). As

explained in TVA's 1972 FEIS, coal-fired units result in substantially

larger amounts of air pollution than would operation of WBN Unit 1.

Gas-fired units would also produce more air emissions pollution. As a

closed-cycle plant, WBN Unit 1 is also likely to produce fewer water

emissions than a coal-fired unit or another nuclear unit which is open

cycle.

The environmental consequences of completing and operating WBN Unit

1 are set out in TVA's 1972 FEIS and its adopted 1995 FSEIS. Most of

the impacts associated with Unit 1 result from constructing the unit

and have already been experienced. The impacts associated with actually

operating the unit are relatively minimal. They include: (1) Releases

of small quantities of radioactivty to the air and water; (2) release

of minor quantities of heat and nonradioactive waste waters to

Chickamauga Reservoir; and (3) release of significant quantities of

heat and water vapor from the plant's cooling towers to the atmosphere.

Conversion of the site from agricultural use to an industrial use has

largely occurred with the construction of the plant.

TVA also considered as a possible, but nonviable, alternative the

deployment of energy conservation programs to reduce the demand that

WBN Unit 1 would serve. There are a large number of these programs that

could be deployed in the TVA region. However, it takes three to five

years to put such programs in place and to begin to achieve noticeable

energy savings. The combination of sufficient programs to offset Unit

1's capacity is estimated to cost approximately 7.0 cents/kwh, well

above Unit 1's operating costs. It is, therefore, not feasible to

deploy sufficient energy conservation programs in time to meet the need

in 1996; and,

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even if such programs could be deployed in time, they would cost much

more than operating WBN Unit 1.

Mitigation and Monitoring Measures

The 1972 FEIS and the 1995 FSEIS identify a number of mitigation

and monitoring requirements. These have either been incorporated in the

plant's construction permit or National Pollutant Discharge Elimination

System (NPDES) permit and, as appropriate, are expected to appear as

conditions in the operating license issued by NRC for the unit.

Dated: August 11, 1995.

Mark O. Medford,

Vice President, Engineering and Technical Services.

[FR Doc. 95-20860 Filed 8-22-95; 8:45 am]

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