Supporting Tennessee’s Future Energy Needs… Nuclear Generation Development & Construction Dan Pratt Manager, Pre-Construction Planning March 10, 2009.

Supporting Tennessee’s Future Energy Needs…Supporting Tennessee’s Future Energy Needs…Nuclear Generation Development & ConstructionNuclear Generation Development & Construction

Dan PrattManager, Pre-Construction Planning

March 10, 2009

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159 power distributors 62 direct serve industries Over 8.5 million people in an 80,000 sq mile service area Public users of land and recreational facilities Communities with economic development assistance

TVA Serves…TVA Serves…

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Fossil Plants

CombustionTurbines

Nuclear Plants

Hydroelectric Dams

Pumped-Storage Green Power

Fossil/Coal64%(45%)

Hydro6%(15%)

Nuclear30%(21%)

Combustion turbine and green power

1%(19%)

TVA’s Diversified Generation TVA’s Diversified Generation PortfolioPortfolio

Generation(Capacity)

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TVA Generating FacilitiesTVA Generating Facilities

11 fossil sites (59 units)

3 nuclear sites (6 units)

29 hydro sites (109 units)

11 combustion turbine sites (72 units)

1 pumped storage station

1 wind energy site

17,000 miles of transmission line

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Use TVA resources to meet demand.

Increase energy conservation and demand reductions.

Provide cleaner, reliable, and still-affordable energy.

Fifty percent of generation from zero or low carbon emitting resources by 2020

For current planning horizon, when large amounts of newgeneration are required, this means nuclear for base load and natural gas for peaking

Elements of TVA Generation StrategyElements of TVA Generation Strategy

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Sequoyah Nuclear PlantWatts Bar Nuclear Plant

Browns Ferry Nuclear Plant Bellefonte Site

TVA Nuclear PlantsTVA Nuclear Plants

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TVA Has Option That Others Do Not TVA Has Option That Others Do Not Watts Bar Unit 2 CompletionWatts Bar Unit 2 Completion

Five-year project began October 2007

Identical to the operating Unit 1

Unit approximately 60 percent complete

1180 MWe Net

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TVA Nuclear – Industry Leader in TVA Nuclear – Industry Leader in Nuclear Generation DevelopmentNuclear Generation Development

Browns Ferry 1 Watts Bar 2 Bellefonte 2 Units

2007 2012 2017 - 2019

Actual Planned...

Units 6 7 9Megawatts 6,800 8,280 10,5 – 10,9

Under Construction

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Bellefonte Option

Identified Power Planning Need2017 – 2019

Bellefonte Site(Alabama)

Developing Next Option for Baseload Developing Next Option for Baseload

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Option A - Units 3 & 4 (AP1000)

Option B – Units 1 & 2 (original units)

Technology Decision For BellefonteTechnology Decision For Bellefonte

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U1 License

BLN 1&2 /// BLN 3&4BLN 1&2 /// BLN 3&4

Long Lead Procurement (2 Units)

Site Preparation

U1 Completion to Fuel Load

U1 Startup

CP’s Reinstated

Detailed Engineering

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

CFR Part 50 Licensing Process

U2 Completion to Fuel Load

U2 Startup

Long Lead Procurement (2 Units)

Site Excavation

U3 First Concrete to Fuel Load

U3 Startup

COL IssuedLicense

ApplicationSubmitted

Detailed Engineering

CFR Part 52 Licensing Process

U4 First Concrete to Fuel Load

U4 Startup

AP1000BLN 3&4

Existing UnitsBLN 1&2

TVARequest

U2 License

DSEP

BOD Decision

BOD Decision

ITAAC Closure

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Key Insights… So FarKey Insights… So Far

Competition for talent

Value of existing plant infrastructure has increased over last few years as other options have increased in price.

Local communities supportive, but worried about short term cost and services impacts to communities (ex. schools).

Identify or recruit core team early, it takes longer to build this than you think.

Changing NRC leadership

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CompetitiveNon-VolatileElectric Price

Clean Air Value

ReliableEnergySupply

Zero Air Emissions

Protection against CO2 risk

Long-TermCosts

Attractive

Less Dependence

on Oil and Gas

High Capacity Factors

~67%of

Total Cost Fixed

The Benefits of New Nuclear

EconomicDevelopment

~$1 Local Benefitsfor

every $1 Spent

Up to 2000Jobs During Construction

and ~500 Per UnitDuring Operation

Nuclear Options Being Developed Because…Nuclear Options Being Developed Because…

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0 10 20 30 40 50

Cost of CO2, $/Metric Ton

Levelized Cost of Electricity, $/MWh

30

40

50

60

70

80

90

100

110

120

Wind (32.5% capacity factor)

New Nuclear

Pulverized Coal

IGCCBiomass

NGCC ($10/MMBtu)

NGCC ($8/MMBtu)

Rev. October 200895% confidence level

The Carbon FactorThe Carbon FactorEPRI Comparative Costs in 2015EPRI Comparative Costs in 2015

NGCC ($6/MMBtu)

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Nuclear Energy Nuclear Energy Emission Free GenerationEmission Free Generation

Nuclear Energy Is On Par with Renewables

1041

622

17 46 14 39 15180

200

400

600

800

1000

1200

NaturalGas

Hydro Wind Geo-thermal

Tons

CO

2-equ

iv/G

Weh

Life Cycle COLife Cycle CO22 Emissions Analyses Emissions Analyses

Coal Nuclear Biomass SolarPV

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U.S. New Nuclear - Sites With License U.S. New Nuclear - Sites With License Application Projects and Contracts Application Projects and Contracts

ConstellationCalvert Cliffs

SouthernVogtle

DominionNorth Anna

TVABellefonte

EntergyGrand Gulf

EntergyRiver Bend

Progress Levy County

DukeW. Lee

SCE&GV.C. Summer

Progress Harris

NRGSouth Texas

TXU Comanche Peak

Amarillo

AmerenUECallaway

DTE EnergyFermi

ExelonVictoria County

PP&LBell Bend

FP&LTurkey Point

ConstellationNine Mile Point

EPC Signed

COLAAnnounced

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Key Project Siting IssuesKey Project Siting Issues

Geologic and Seismic

Water Availability and Usage

Transmission

Population/Emergency Planning

Other Environmental (Meteorological Data)

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New Nuclear Design AlternativesNew Nuclear Design Alternatives

WestinghouseAP1000

1120 MWe

Hitachi-GE or ToshibaABWR

1320 MWe

AREVAEPR

1600 MWe

GE- HitachiESBWR

1550 MWe

MitsubishiUS APWR

1700 MWe

Current Status ofAnnounced Intentions

Technology Units

AP1000 12

TBD 8

ESBWR 3

EPR 3

ABWR 2

APWR 2

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Simplification Eliminates Components and Simplification Eliminates Components and Reduces Cost to Construct & OperateReduces Cost to Construct & Operate

**

50% FewerValves

35% FewerSafety Grade

Pumps

80% LessPipe

45% LessSeismic Building

Volume

85% LessCable

Passive Benefit

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Pump/Valve Module

Raceway Module Structural ModuleDepressurization Module

Module Type

Structural

Piping

Mechanical Equipment

Electrical Equipment

TOTAL

Number

122

154

55

11 342

Designed to Be Built Faster Through Modular Designed to Be Built Faster Through Modular ConstructionConstruction

AP1000

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Cost of New Nuclear QuizCost of New Nuclear Quiz

Vendor Says….

Cost of plant is:

$3200/kw

Utility Says…

Cost of plant is:

$4300/kw

Which is Correct?

Wall Street Says…

Cost of plant is:

$5500/kw

All are the same… and for the same project!

Overnight Plus Owners Cost EPC Only Escalated to 2017

EverythingIncluding Interest

During Construction

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Major Hurdles for New Plant ConstructionMajor Hurdles for New Plant Construction

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New Nuclear Development Approach New Nuclear Development Approach Incremental Levels of Increased CertaintyIncremental Levels of Increased Certainty

Uncertainty Today Future Uncertainty

Technology Certainty (Final Design Engineering)

NRC Regulatory Certainty (COL Issuance)

Time

Manage the uncertainty in a planned deliberate manner

Project Development Certainty

Financial Certainty

WorkingIn

Parallel

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Once Through Versus Once Through Versus Closed Fuel CycleClosed Fuel Cycle

OperatingReactors

Used Fuel

Yucca MountainGeologic

Repository

AdvancedRecycleReactor

Recycle FuelFabrication

SeparationsByproducts

WasteManagement

MOX Recycle

Once Through

Used FuelThrown Away

ClosedRecycle

ResidualWaste

OperatingReactors

Used Fuel

Yucca MountainGeologic

Repository

AdvancedRecycleReactor

Recycle FuelFabrication

SeparationsByproducts

WasteManagement

Mixed Oxide Fuel Recycle

Once Through

Used FuelThrown Away

ClosedRecycle

ResidualWaste

OperatingReactors

Used Fuel

Yucca MountainGeologic

Repository

AdvancedRecycleReactor

Recycle FuelFabrication

SeparationsByproducts

WasteManagement

MOX Recycle

Once Through

Used FuelThrown Away

ClosedRecycle

ResidualWaste

OperatingReactors

Used Fuel

Yucca MountainGeologic

Repository

AdvancedRecycleReactor

Recycle FuelFabrication

SeparationsByproducts

WasteManagement

Mixed Oxide Fuel Recycle

Once Through

Used FuelThrown Away

ClosedRecycle

ResidualWaste

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Where are We Headed Over Next Decade Where are We Headed Over Next Decade

Energy Efficiency Technologies

Grid of the Future

Nuclear Sustainability and Expansion

Cleaner Coal

Plug-in Hybrid Vehicles

Accelerating Solutions

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Summary MessagesSummary Messages

Nuclear will provide clean competitively priced power– Provided risk can be managed in such a way as to keep cost of capital

at reasonable levels.

Re-establishing the infrastructure to build plants will likely result in longer planning horizons (with extended timelines for cash flows) for the initial wave of new reactors.

Nuclear will remain a key generation source and expand as part of the energy mix for the foreseeable future.