The multibillion-dollar completion of a nuclear unit at the Tennessee Valley Authority’s unfinished 1,260-MW Bellefonte plant in Alabama is in limbo after the federal power producer refused to complete its sale to Nuclear Development LLC, which has since filed a breach of contract complaint in federal district court.
At issue is the transfer by the U.S. Nuclear Regulatory Commission (NRC) of deferred construction permits. One unit at the site was about 90% complete, the other 58% finished when construction was stopped in 1988. In 2016, TVA declared the property surplus and put it up for sale. Nuclear Development was the highest bidder.
The company had two years after the $111-million sales agreement in November 2016 to complete its due diligence, including the transfer of the permits, to further develop the site as a nuclear facility, says Jim Hopson, a TVA spokesman. “Completing the sale without the transfer would have been a violation of the Atomic Energy Act,” he says.
According to a complaint filed Nov. 30 in federal district court in Huntsville, the sales agreement says TVA can execute the sale without consent or approval of any other government agency, and the transfer of the permits is not a prerequisite to closing the sale. TVA raised the permit transfer issue just six days before the Nov. 14 closing date, Larry Blust, an attorney for Nuclear Development told ENR.
Although it took issue with the requirement, the company filed an application to transfer the deferred construction permits for Bellefonte’s two units on Nov. 13. Approval is expected to take about six months, but TVA refused to extend the closing date.
“The absurdity of your position is illustrated by your attempt to blame Nuclear Development for this situation,” Blust wrote in a letter to TVA. According to Blust, not only was the permits’ transfer not required, but the agreement makes TVA responsible for their transfer. TVA also has refused to provide the company with “essential transaction documents” required under the sales agreement, the letter said.
Scott Burnell, an NRC spokesman, said he could not comment on the specifics of the Bellefonte issue, but said that if “any entity” were to purchase an incomplete nuclear project, the property could be transferred without NRC approval. However, transfer of the deferred construction permits would have to be done before the sale is completed or the developer would have to start the application for a construction and license permit from the beginning. “It would be subject to a full suite of regulatory issues and it could be challenged. It would take years,” Burnell says.
Nuclear Development asked the court to compel TVA to complete the transaction and also asked for a preliminary injunction requiring the power producer to continue to maintain the site at NRC requirements. The company has paid TVA more than $7 million to maintain the site.
Earlier this year, Nuclear Development hired SNC-Lavalin as the EPC contractor to refurbish one of the two Babcock & Wilcox pressurized water reactors at the site. About 70% to 80% of the work would be completed under a lump sum contract, said Preston Swafford, SNC Lavalin’s chief nuclear officer and former TVA chief nuclear officer. The remainder, which reflects new construction, would be completed under a time and materials contract.
Franklin Haney, Nuclear Development’s owner, said in June that a host of suppliers and contractors had been brought on board.
Sargent & Lundy confirmed it had reached an agreement with SNC-Lavalin to support the project as needed, including completion of engineering and design for various plant systems to replace missing, obsolete and degraded equipment. It was also set to provide procurement and licensing support.
Haney planned to invest up to $13 million to complete construction of the two units, with the cost to complete the first unit to range from $3.5 billion to $6 billion. The company has applied for tax credits and $4.5 billion in loan guarantees from the U.S. Dept. of Energy.