HOLLYWOOD, Ala. – TVA effectively pulled the plug Friday on a deal to sell the Bellefonte Nuclear plant in Jackson County, and the proposed buyer responded by filing a lawsuit to try and complete the deal, or get its money back.
The lawsuit filed late Friday afternoon by Nuclear Development LLC seeks to have a federal judge compel TVA to complete the $111 million sale of the unfinished plant. The developers have also filed an injunction asking a court to block TVA from looking for new buyers or doing anything else with the property until the lawsuit can be heard.
And, they want an expedited hearing for a court to address the claims.
TVA estimates it has spent about $5 billion on Bellefonte since it began construction on the plant in 1974 in Hollywood. The plant’s had a number of stops and starts, but TVA finally gave up and decided to auction off the plant in 2016. Nuclear Development was the high bidder in the auction.
Now, the parties fundamentally disagree on TVA’s stated reason for opposing the sale.
TVA argued in a letter to the development group led by Chattanooga-based developer Franklin Haney, that the group failed to acquire the construction permits from the Nuclear Regulatory Commission needed to complete the nuclear plant. TVA said it would be violating the federal Atomic Energy Act if it sold the plant under those circumstances.
But Nuclear Development disputed the claim, saying the issue was only raised last month before the original mid-November closing date.
They argue in the lawsuit:
“TVA has known of the provisions of the Atomic Energy Act for decades, and until six days before the originally scheduled closing date never once contended that the act required the NRC to approve the transfer of the NRC permits to Nuclear Development before the closing of the sale of the Bellefonte site could occur.”
TVA wouldn’t comment on the lawsuit, except to say the claims lack merit.
A spokesman for the Nuclear Regulatory Commission told WHNT News 19 Monday the permits are needed for construction, but since the current plant lacks radioactive material, it could be sold without NRC involvement.
Nuclear Development also claims it offered to extend the closing deadline until May 2019, but TVA declined.
The deal is complicated by Nuclear Development’s efforts to pay for the plant’s completion. TVA has estimated completing one reactor would cost about $8 billion, while Haney’s group says it can complete both reactors for that figure.
They have been seeking a federal government loan of up to $8.5 billion to complete the project, according to Nuclear Development’s CEO Bill McCollum. But they also need a big customer to show there is a need for the new electricity generation.
That’s where they’ve run into conflict with TVA.
Memphis Light, Gas and Water is TVA’s biggest customer, worth about $1 billion annually. Nuclear Development has been courting the utility, arguing it can provide it with power at a much cheaper rate.
The Memphis utility hadn’t made any decisions about future power purchases, but TVA had warned Memphis going with Bellefonte would be risky.
Then, at the close of business Friday the deal for Bellefonte formally fell through.
The lawsuit argues that if the deal is not allowed to be completed, Nuclear Development wants return of $30 million, which includes its $22 million down payment, more than $7 million its paid TVA for security on the site and about $750,000 for related costs.
The proposed completion of Bellefonte generated political support in Alabama, and economic development officials estimated it would generate thousands of construction jobs for several years and more than 1,000 full-time jobs if both reactors were completed.
Critics of the deal said the Bellefonte reactor technology has never been licensed in the U.S. and is woefully outdated.