TVA Extends Deadline for Bellefonte Nuclear Plant Deal

A Tennessee businessman now has until the end of November to finalize a two-year-old purchase agreement for the unfinished Bellefonte nuclear power plant in Alabama.

The Tennessee Valley Authority (TVA), which began building the plant in 1974 but ended construction in 1988 amid a downturn in the nuclear power industry, on November 9 said it has extended the deadline in its agreement with Franklin Haney's Nuclear Development LLC (NDLLC) from November 14 to November 30. Haney now has another 16 days to complete the agreement to buy the plant's assets.

Haney last week said legal and regulatory issues have delayed the sale's closure. The project also has been dogged by allegations of payments to secure federal government support. And one of the project's potential electricity customers recently signaled it may back away from a deal to purchase power from the plant.

Haney, a real estate developer who grew his business by buying and building properties that he then leases to local, state, and federal government interests, was the highest bidder for Bellefonte's assets in an auction in November 2016. Haney at that time made a down payment of $22 million toward his $111 million bid for Bellefonte, and was given two years to complete the purchase. The plant's assets include two unfinished Babcock & Wilcox pressurized water reactors, along with cooling towers, switchyards, and offices at the site.

Reports in recent years have said TVA has spent $6 billion to $11 billion on the Bellefonte plant since its design was first discussed in 1968.

Reports of Payments to Secure Federal Loan

Local business and government leaders met in July near the plant in Hollywood, Alabama, to discuss Haney's plans to finish construction. The Wall Street Journal in August reported that Haney had been a major donor to President Donald Trump. The Journal said Haney in April agreed to pay $10 million to then-Trump attorney Michael Cohen if Cohen could help Haney obtain funding for the Bellefonte project, including a $5 billion government loan. The report also said Haney, through a business entity, paid $1 million to help fund Trump's inauguration.

Larry Blust, an attorney for Haney, told the Journal that "Neither Mr. Haney nor Nuclear Development LLC ever entered into a contract with Michael Cohen or his affiliate for lobbying services related to the Bellefonte project."

The Washington Examiner in August reported that Cohen was offered a $10 million "success fee" if he could secure the loan. It also said Cohen was paid a monthly retainer and "had made calls in the spring to the Energy Department to see if there was any way to speed up the approval process." The Examiner said the agreement between Haney and Cohen was later withdrawn, and that "Cohen never registered as a federal lobbyist."

Judicial Watch, which calls itself "an American conservative activist group " that files Freedom of Information Act [FOIA] lawsuits to investigate claimed misconduct by government officials," in September filed a FOIA lawsuit against the U.S. Department of Energy (DOE) for all communications related to Cohen and the application for the $5 billion loan guarantee for the Bellefonte plant.

Tom Fitton, president of Judicial Watch, in a statement said, "Mr. Cohen may have broken basic lobbying disclosure and other laws in setting up a deal to advocate for a loan guarantee from the Energy Department. It is disappointing the Energy Department is giving us the run around on this request, forcing Judicial Watch to go to federal court."

Completion Plans

TVA in 2010 announced it planned to complete one reactor at Bellefonte, with the utility at the time saying it would invest $248 million to keep an option to complete the 1,260-MW Unit 1 reactor. TVA then officially indefinitely delayed the project in 2013, and in May 2016 announced it would look for a buyer for the site. The Haney-led NDLLC was the highest bidder, with Haney saying he had wanted to purchase the site from TVA for several years, with a goal of finishing the plant.

Haney on Friday said legal and regulatory issues have kept his group from completing the deal.

"The money is in the bank, but the lawyers need to still work out some of the [legal, regulatory and licensing] issues," Haney told the Chattanooga Times Free Press.

Haney said he has paid more than $30 million to TVA to maintain the Bellefonte site over the past two years. That includes money paid to consultants and engineers working on plans to complete the two reactors. Haney's group hired Preston Swafford, TVA's former head of nuclear operations, along with Bill McCollum, former TVA chief operating officer, to lead the effort to develop a plan to complete construction and market the plant's power.

NDLLC also brought Montreal, Canada-based SNC-Lavalin on board to work on the completion plan. Haney's group also has a letter of intent with SNC-Lavalin Nuclear USA, a newly created subsidiary, to provide engineering, procurement, and construction services to complete Unit 1 at the plant.

"We've been working day and night on this project for two years because it has such a great potential for thousands of jobs in the [Tennessee] Valley and power that could be generated for an attractive price," Haney said. "We have been working well with TVA and we appreciate their willingness to extend this for a few more days."

Haney said his group is working on a financing plan to finish construction and trying to ensure it has buyers for the plant's power. The plant would have generation capacity of 2,400 MW if both reactors are finished. Haney secured $2.3 billion of federal tax credits for the project, allocated for new nuclear power plants, in 2014.

TVA at one point said it estimated Unit 1 at Bellefonte was about 90% finished. It said the Unit 2 reactor was more than 50% complete. TVA has maintained the construction permits for the reactors, though the Nuclear Regulatory Commission would need to approve transfer of the permits to NDLLC.

Haney has said that resuming construction on the two reactors would create 8,000 to 10,000 temporary jobs in the region in northeast Alabama. Congressional representatives in both Alabama and Tennessee have written letters to the DOE in support of NDLLC's request for a federal loan guarantee.

Power Purchase Agreements

NDLLC still is looking for customers that would buy power from the nuclear plant. NDLLC has said its current timetable calls for the plant to begin commercial operation in 2024.

"We have a lot of people talking with us and I think there are a lot of parties that will sign up as soon as we close [on the purchase and financing]," Haney said. "Our rates should be $30 to $40 [per megawatt] cheaper than anybody else."

One potential customer-Memphis Light, Gas and Water (MLGW)-in late October said it was "premature" to negotiate a power purchase agreement (PPA) with Bellefonte. The utility had in January signed a non-binding letter of intent to purchase power from the plant.

The utility's leadership on October 22 released a four-page document at a Memphis, Tennessee, city council meeting. The document stated the utility's concerns for entering business with the unfinished plant.

"Since [MLGW] has not completed its due diligence with respect to the Bellefonte proposal and has not yet received independent feedback on a multitude of concerns, management believes that it is premature to negotiate and commit to the terms of a [PPA]," the document said.

McCollum, the former TVA executive who serves as CEO of NDLLC, in a recent column in the Memphis Commercial Appeal, said a deal with the Memphis utility was key to his group receiving the DOE loan. "While Nuclear Development already has given TVA $22 million in earnest money for the Bellefonte plant, Nuclear Development may walk away from the deal if the DOE's loan requirements aren't satisfied by that time," McCollum wrote. He also, in speaking to the Memphis city council earlier, said the utility would save $487 million annually by buying power from NDLLC instead of TVA.

MLGW, in its document to the city council, said: "It is not possible at this time to confirm any claims of savings for the Bellefonte transaction. However, MLGW customers would not receive a savings on their power costs until the Bellefonte plant is completed and becomes operational. The amount of that savings will depend on a number of factors including NDLLC's actual costs in completing the plant and the additional capital, administrative and operational costs that MLGW will incur in order to access power from NDLLC and acquire the remainder of the power needed to meet our customers' needs."

The document also said NDLLC's estimates for annual cost increases from TVA were more than twice what Memphis Light has experienced over the past several years.

-Darrell Proctor is a POWER associate editor.

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