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The Associated Press August 20, 2010, 5:04PM ET

TVA to spend $250M at Alabama nuclear plant

The board of directors for the Tennessee Valley Authority on Friday approved nearly $250 million toward the possible reopening of one of its nuclear reactors in Alabama.

The board, meeting in Knoxville, Tenn., approved the fiscal year 2011 budget that included $248 million to fund the initial engineering design and site preparation for Unit 1 at the Bellefonte Nuclear Plant. Final approval for the project is not expected until next year.

Construction at the plant in northeast Alabama was started in 1974 but was stopped in 1988. The Nuclear Regulatory Commission in 2009 approved TVA's request to reinstate Bellefonte's original construction permits while the utility evaluated its two reactor sites.

The projected cost to complete the unit is between $4.3 billion and $4.7 billion. TVA staff has recommended building a 1,260-megawatt Babcock and Wilcox-designed reactor, instead of an advanced Westinghouse AP1000 design.

TVA CEO Tom Kilgore also presented an overview of TVA's strategic plan for the future, which includes idling old coal-burning units and increasing production of natural gas and nuclear energy.

"We want to be one of the nation's leading providers of low-cost and clean energy by 2020," he said.

A draft of the Integrated Resource Plan will be released in September, and the final decision on the Bellefonte project is tied to that plan, which is expected to be completed in spring 2011.

Kilgore said the plan would also call for the reduction of emissions like sulfur dioxide and nitrogen oxide and would require idling 1,000 megawatts of coal-fired units.

In another move toward that plan, the board also approved change in the wholesale rate structure that TVA hopes can reduce demand during peak power times.

The plan to be implemented in April 2011 will include options for a time-of-use rate that varies both on the season and during different times of the day.

Kilgore said officials have set a goal of 3.5 percent energy efficiency by 2015.

The fiscal year budget, which starts Oct. 1, includes no base rate increase for the fiscal year and provides $9.6 billion for operating expenses and $2.9 billion in capital projects.

The other capital projects include $635 million for Unit 2 at Watts Bar Nuclear Plant near Spring City, which is expected to be completed in fiscal year 2013, and $314 million for the 2012 completion of the John Sevier Combined Cycle Plant. The budget also includes $351 million for environmental improvements to TVA's coal-fired power plants.

Knoxville-based TVA, the nation's largest public utility, serves about 9 million consumers in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

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