Mike SkaggsSenior Vice President,Watts Bar Operations & Construction

December 2, 2014

Serving the 9 million people of the Tennessee Valley region through – Energy that is safe, clean,

reliable – Environmental stewardship

of natural resources– Economic development that

brings good jobs to the region and keeps them here

TVA: Serving the People

Fiscal Year 2014 Fuel Costs

0

10

20

30

40

50

60

70

80

06

31

43

58

68

Fuel Source

$/M

Wh

Watts Bar Unit 2 – Late 2011 Determined project would not meet in-service date of

October 2012 or budgeted cost estimate

Causes of schedule delays and cost overruns‒ Leadership‒ Estimate‒ Execution‒ Oversight

Revised estimate and schedule developed based on detailed analysis and lessons learned

Key Learnings – Leadership

Establish a staffing strategy that employs a highly experienced core leadership team with capabilities aligned with unique project characteristics

Put right people in right jobs

Use appropriate staffing approach

Engage the workforce

Key Learnings – Estimate

Understand work to be done

Develop estimate based on detailed analysis and lessons learned

Incorporate an independent assessment of external project risks into estimate

Ensure buy-in of cost and schedule

Key Learnings – Execution

Develop clear execution strategy at the start

Establish and use independent, integrated schedule and cost monitoring tools

Establish a process to effectively control scope changes

Measure what needs to be achieved

Key Learnings – Oversight

Provide for independent verification of performance data

Implement cross-functional oversight to track critical key performance indicators and risks

Assure active risk management processes are in place and continually assess risk exposure and mitigation effectiveness

Safe and high quality

Design basis fidelity with Watts BarUnit 1 – the unit currently in operation

Watts Bar Unit 2

Watts Bar Unit 2 Systems, structures, and

components made like new

Watts Bar Unit 2

Over 30 million work-hours without a lost-time incident

Greater than 97% Quality Control Acceptance Rate

Meeting cost and schedule expectations

On Target

Testing Milestone Status Open vessel testing successfully

completed

Cold and steam generator hydrostatic testing successfully completed

Hot functional testing and fuel load preparations in progress

Fukushima Response Pilot for industry

Designs for modifications complete

New Flexible Equipment Storage Building constructed

New water storage tank built

Required equipment onsite

Fukushima Response

Challenges and Risks Protect safe, reliable operation

of Watts Bar Unit 1

Upcoming testing milestones

Emergent work during testing

Dual-unit operational readiness

Regulatory issues

Staffing and training

Demobilization plan

Outreach initiatives

Preparing for Project Completion

Watts Bar Unit 2 Safety, quality, cost, and schedule

targets being met

Completing and readying systems, preparing for dual-unit operations

Complex work and challenges remain

On track to be nation’s first new nuclear generation of 21st century

Moving forward with diligence and using lessons learned

Responsibility to complete the project the right way – safely and with quality