During fiscal year 2024, the Tennessee Valley Authority (TVA) communicated its intent to invest approximately $7 billion over the next 20 years to ensure safe and reliable operations of its three nuclear sites. This investment is to extend and preserve the life of its nuclear units and will be accomplished through nuclear life extension (NLE) projects. Moisture separator reheaters (MSRs) are a major plant asset that will be included in the NLE focus. Sequoyah Nuclear Plant’s (SQN) Unit 1 includes six MSRs located at the SQN Turbine Building. These MSRs have been in place since SQN Unit 1 entered commercial operation in 1981. Because of the operational and financial impact to SQN, we performed an evaluation to determine the reasons for cost increases and schedule delays of the MSR Replacement Project.
We determined the primary reason for the cost increases and schedule delays for the MSR Replacement Project was the initial estimate and schedule did not fully consider the scope of the structural modifications necessary to support the increased size and weight of the new MSRs. As a result, TVA spent more than three years evaluating options without an identified solution, and the project’s forecasted cost increased from $43.6 million in February 2021 to $93.9 million in September 2024. With the cost estimate increasing and over $55 million spent, TVA deferred the MSR Replacement Project. To address MSR degradation, TVA planned a partial refurbishment project. As of December 2025, the partial refurbishment project was complete and in‑service with a spend of approximately $37 million. TVA continues to evaluate the feasibility of utilizing the six purchased MSRs, which cost $25.4 million, on future projects. We also identified other cost increases related to storage costs resulting from project delays, the initial installation estimate being understated, and contractor costs that could have potentially been avoided.
In addition, we determined the MSRs were not purchased as quality‑related components in accordance with TVA’s Nuclear Regulatory Commission approved Nuclear Quality Assurance Plan (NQAP). The NQAP details the steps necessary for properly overseeing the manufacture of quality-related nuclear plant components. Since the MSRs were not manufactured in accordance with the NQAP, they may require additional evaluation to determine if they can be used at Sequoyah Nuclear Plant or another site in the future. Additionally, we found that the MSR quality-related identification and purchasing issues were not properly documented in TVA’s Corrective Action Program, as required.
Lastly, we identified actions that increased risk to TVA, including the (1) original equipment manufacturer (OEM) being absolved of liability related to the study of improvement options for the MSRs, (2) contracting officer not being included in some contract changes, and (3) OEM not being held accountable for procuring components from unapproved sources.
