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Institute for Public Service Reporting – Memphis


millionaire friend of Trump wants to plug Memphis into mothballed Alabama Nuke Plant

SPECIAL REPORT: Inside a long-shot plan to buy a never-opened nuclear plant and sell its power to a single customer: MLGW

Millionaire developer Franklin Haney stands in front of the Bellefonte Nuclear Plant in Hollywood, Ala. Haney purchased the plant at auction in 2016 for $111 million. His plan to make Bellefonte operational again and sell power to Memphis hinges on raising billions of dollars and overcoming stiff opposition. (Houston Cofield/Daily Memphian) 

As Franklin Haney tells it, his trouble started when President Donald Trump passed him a business tip. It came on an otherwise delightful night last spring as they dined at adjacent tables in Florida’s exclusive Mar-a-Lago resort.

“He comes over,’’ Haney said, recalling how the President, an old friend, introduced him to a prospective investor – an official with the oil-rich Middle Eastern nation of Qatar who seemed interested in Haney’s plan to buy an obscure nuclear plant and sell power to the city of Memphis.

For Haney, 78, a personable but hard-nosed East Tennessee businessman who made a fortune in real estate, the story of that fateful meeting and how he landed in the middle of a federal investigation after hiring the president’s now-convicted attorney, Michael Cohen, is a touchy one.

Haney already faces an uphill fight as he presses Memphis leaders to embrace his long-shot plan to buy the never-opened Bellefonte Nuclear Plant nestled in Northeast Alabama’s rolling Appalachian foothills and sell its power to a single customer 260 miles to the west – Memphis Light, Gas & Water Division.

You don’t have to be a nuclear scientist to understand Haney’s business model. He’s recruiting MLGW, the Tennessee Valley Authority’s single largest power customer, to a 30-year deal. He’ll use that deal to leverage nearly $5 billion in federal loans to buy the plant from TVA for pennies on the dollar and refurbish it. Then he’ll hire a manager to produce the power. He’s the ultimate middle man. He’s a matchmaker.

Despite opposition from a range of environmentalists, nuclear energy opponents and utility industry skeptics, Haney is gaining halting traction.

Begrudgingly, MLGW has hired a consultant to study Haney’s plan, which appeals to supporters who say Memphis electric bills, though cheap compared to many cities, are still too steep for many of its impoverished citizens.

Haney has lined up support from a battery of state and federal lawmakers in Alabama and Tennessee and got a personal audience last week with Memphis Mayor Jim Strickland. He has also assembled an impressive team of engineering and cost consultants who insist – to great pushback from TVA – his plan could cut Memphis electricity rates by nearly half and save the city billions of dollars over 30 years.

Yet, of the many questions swirling around Bellefonte, none may be greater than those aimed directly at Haney, a one-time Bible salesman, Tennessee gubernatorial candidate and self-proclaimed billionaire who sails a $35 million yacht and lives in a 52-room mansion once owned by the Vanderbilt family.

Though he once stood trial for campaign finance fraud, he beat every one of the 42 counts federal prosecutors lodged against him. Along the way, he navigated loopholes in the law to earn millions by leasing office space to the same federal government that once tried to put him in prison.

More recently, his path winds through Trump, Mar-a-Lago and Cohen, the president’s lawyer and “fixer’’ hired by Haney last spring in an unsuccessful effort to secure funding for Bellefonte.

“That’s very unimportant,’’ Haney said, dismissing Cohen as a “crook’’ and a “con man.’’

The New York lawyer has become as radioactive as a lit-up Bellefonte since he pleaded guilty in August to eight felonies spinning out of revelations he paid $130,000 in hush money during the 2016 campaign to porn actress Stormy Daniels, who claims she had an affair with Trump.

Days after Haney hired Cohen to pursue possible Qatari investment for Bellefonte, federal agents raided the lawyer’s office. Haney’s relationship with Cohen was exposed in national media reports in May, yet the businessman has previously refused to talk to reporters.

“We decided, what the heck. Let’s see what he (Cohen) brings,’’ Haney told the Institute for Public Service Reporting at the University of Memphis. “Of course, he didn’t bring anything. Because it was just all lies.’’

Over a series of interviews this fall, Haney told the Institute he signed a three-month contract with Cohen and paid him about $200,000 before severing the arrangement after the lawyer’s dealings became public in April.

Sen. Tammy Duckworth, D-Illinois, has now called for an investigation, alleging that Haney’s arrangement with Cohen may amount to a “pay to play’’ scheme. Duckworth is seeking records from the Department of Energy (DOE), contending Haney hired Cohen to help wrest federal incentives for Bellefonte. Haney says that’s untrue, claiming he hired Cohen strictly to pursue the Qataris.

“He (Cohen) was not allowed under our contract to lobby or talk to DOE or the administration or anybody else. Because he’s not a registered lobbyist. Of course, that’d be his problem not ours. We didn’t do anything wrong,’’ Haney said.

Haney said he’s talking now because he has nothing to hide. Plus, he said, he wants to strip away the myths and inaccuracies surrounding Bellefonte. And if anyone can finally bring Bellefonte on line – TVA spent more than $5 billion over 40 years and failed – Haney is convinced it’s him.

“I don’t touch just any project,’’ he said in his confident but folksy East Tennessee twang. “I only touch projects that I know will work.’’

Rags to riches

Haney likes to talk about his humble roots – he was raised in a two-room house in rural McMinn County, Tennessee – and his rise to wealth in business. Working his way through college selling Bibles, he got into real estate construction and development in Chattanooga. He got his first big break 320 miles away – in Memphis – in 1970 when he was 30 years old. Haney won a lucrative bid to build the IRS’s massive computer center on 50 acres near Memphis International Airport.

Employing a business model he would replicate to enormous success throughout the South, Haney convinced the government to finance his construction with tax-free bonds. As the owner of the office complex, he rented it back to the government at an enormous profit.

“That’s where I really became rich. Memphis is responsible for that,’’ Haney said, offering the story to explain part of the motive for his Bellefonte pitch – returning savings to a city to which he is indebted.

The businessman snickers as he recalls how the IRS eventually amended its rules to terminate the use of tax-free financing for private buildings leased to the government – the “Haney Rule,’’ he calls it. He remains unapologetic about his uncanny vision to find profit in government work.   

“If you’re not rich when you’re born you’ve got to either steal it, marry it or get a government lease,’’ he quipped.

Just as he remains fond of Memphis, Haney offers similar sentiment for TVA, the government-owned power giant.

“I don’t want to run TVA down, because I really love TVA. I really do. It’s meant a lot to me,’’ he said.

“Once, I owned every TVA building that existed. I owned the Knoxville buildings. I owned the Chattanooga buildings. I owned the Muscle Shoals (Ala.) buildings. So, TVA’s been very good to me. And I have no intention of hurting TVA. But this won’t hurt TVA. TVA could easily manage this plant and make a big fee.’’

Buying a nuclear plant

Haney first offered to buy the plant and lease it back to TVA in 2001, when it seemed likely to be completed.

But following expensive construction of the Watts Bar and Sequoyah nuclear plants in East Tennessee and the Browns Ferry plant in North Alabama, TVA’s debt was soaring. And there simply wasn’t the demand for Bellefonte’s power.

So, in 2015, TVA opted to terminate the plant.

For the people in struggling Jackson County, Ala., where the plant is located, the decision hit hard. Thousands of workers populated Bellefonte’s 1,400-acre site along the picturesque Tennessee River after TVA started construction in 1974. Anticipation rose along with the silo-shaped reactors and two iconic, 45-story hyperbolic cooling towers. But hopes toppled after decades of inactivity.

“I’ve seen the jobs here. And I’ve seen them go,’’ said Alabama State Sen. Steve Livingston, who’s backing Haney’s plan. “This is a real boon for our economy here locally.’’

Haney has received endorsements from Alabama Congressional members Mo Brooks, Martha Roby and Bradley Byrne as well as East Tennessee Congressman Chuck Fleischmann, energized by the prospect of thousands of jobs that region could realize.

Memphis Democrat Steve Cohen, who served as Shelby County chairman of Haney’s 1974 gubernatorial campaign, helped arrange a meeting last week between Haney’s team and Mayor Strickland.

“Memphis is one of the nation’s poorest cities and accordingly its residents have a very high energy burden as measured by the percentage of their incomes they pay for electricity. Therefore any opportunity to save on this basic necessity is of the utmost importance to my constituents,’’ Rep. Cohen said in a statement to the Institute. The congressman is not related to Trump attorney Michael Cohen. “…This is an evolving and continually improving proposal that should benefit all our citizens, particularly our poorest.”

Political enthusiasm grew after Haney raised his hand at a TVA surplus auction in November 2016 and secured a winning, $111 million bid to buy Bellefonte.

He put down $22 million in earnest money and must produce the remaining $89 million to close the deal. He had faced a Nov. 14 deadline, but that’s been extended to Nov. 30.

Ultimately, his plan to make Bellefonte operational depends on raising billions of dollars.

Haney’s firm, Nuclear Development LLC, has obtained $2.3 billion in production tax credits under the Energy Policy Act of 2005. That money will be split between Bellefonte’s two reactors. The first reactor, called Unit 1 – the one Haney says would supply power for Memphis – would also benefit from $4.7 billion in Department of Energy loans Nuclear Development is seeking. Haney said he’s raised another $1 billion in private investment and is hopeful Alabama will deliver an additional $1 billion in economic development incentives.

Altogether, he hopes to raise nearly $8 billion for Unit 1, though his team estimates it can be opened for about $3.5 billion. The extra money is for contingencies and possible cost overruns.

“I like 2-to-1 coverages when I do it. I don’t get involved in things that, particularly nuclear, that you don’t have enough money,’’ he said.

Battling critics

Still, he faces intense opposition. Scott Banbury, conservation coordinator for the anti-nuclear Tennessee Sierra Club, calls the Bellefonte plan “pie in the sky,’’ and “a financing scheme promoted by a self-interested investor.’’ Opponents also point to the plant’s age and the “cannibalization’’ or removal of parts over the years.

In a statement released to the Institute by spokesman Jim Hopson, TVA said parts ranging from pumps and motors to condenser cooling tubing have been removed through the years while remaining materials such as wiring will require “significant refurbishment’’ or outright replacement. Though TVA still holds valid construction permits from the Nuclear Regulatory Commission, Haney’s team must apply to transfer those licenses, the TVA statement said.

TVA’s chief executive Bill Johnson offered a blistering criticism.

“The Bellefonte deal is the riskiest you can imagine,’’ Johnson told a Memphis City Council committee recently, suggesting Haney’s plan was a “too good to be true’’ proposal.

“No one in the 60 years of the commercial nuclear industry in the U.S. has ever done anything like this.’’

Johnson also skewered former TVA chief operating officer Bill McCollum, now the chief executive of Haney’s Nuclear Development, who said in a recent opinion column the Bellefonte plan offered “perhaps the greatest financial opportunity in Memphis history.’’ Johnson said McCollum has miscalculated nuclear construction costs before. He cited an August 2011 estimate overseen by McCollum that contended it would cost to $2.5 billion to complete the second unit at Watts Bar.

“So what actually happened? The plant cost $4.7 billion – not 2.5. Almost twice as much,’’ Johnson told city council members.

However, Haney’s consultants say Bellefonte can be made operational without cost overruns.

“We’re confident,’’ said Marie Gillman, former general manager over TVA’s nuclear projects and now senior project director for Montreal-based SNC-Lavalin, a leading nuclear engineering and construction firm working for Haney on Bellefonte. “We’re spending a lot of time planning it and doing proper risk assessment.’’

Gillman said only 10-15 percent of Bellefonte was cannibalized and the unused stainless-steel reactor is in pristine condition. Kevin Jones, SNC-Lavalin vice president for engineering, said many of Bellefonte’s missing parts would have had to be replaced anyway.

“Almost every one of the big motors is going to be taken out and totally rebuilt,’’ he said, dismissing claims the plant is too old to be modernized. “The equipment is not going to be 40 years old when we’re done.’’

Critics of the declining nuclear energy industry point to examples like Georgia’s Vogtle Plant, plagued by years of delay and massive cost overruns. Gillman dismisses such concerns, laying pictures of Bellefonte and Vogtle side by side.

“All these buildings are all the nuclear buildings: the containment, the cooling towers, second containment, turbine building. It’s complete,’’ she said, tapping the Bellefonte photo. Then pointing to a photo of a largely unfinished reactor, she said, “This is what Vogtle looks like.’’

Though Haney says he would find customers for Bellefonte’s second reactor, Unit 1 would be dedicated to Memphis. In fact, the unit could provide only 80 percent of Memphis’s power needs, his team says.

To realize the huge savings they predict – $487 million a year or as much as $14 billion over 30 years – Memphis would have to look west of the Mississippi River to get additional power from the Midcontinent Independent System Operator or MISO, a nonprofit regional power transmission organization operating in all or parts of 15 states in the West, Midwest and South, including Arkansas.

Haney said that’s an advantage because Memphis lies on the western edge of TVA’s power supply, within easy reach of MISO.

Haney said he’s so confident Bellefonte will work, he’s willing to return ownership of the plant to TVA and also possibly make MLGW a co-owner once it’s operable. Already, legitimate utilities have expressed interest in running the plant, he said. Or, if MLGW prefers, Bellefonte could transmit its power to MISO, which, in turn, could sell power to Memphis for the same guaranteed low price, he said.

“I don’t know how to run no utility company. I’m an investor.’’

His Bellefonte plan works only for Memphis, Haney said, because MLGW’s power contract allows it to sever its now 84-year relationship with TVA with just a 5-year notice. Other TVA cities such as Nashville and Huntsville require a 10-year notice, he said.

To keep talks going, Haney’s firm is seeking a nonbinding letter of interest similar to one MLGW’s now-retired CEO Jerry Collins signed in January.

Still, perceptions of the project are starkly different.

Though Haney’s Nuclear Development says it could drastically cut the price MLGW pays for power (Haney’s team estimates that price at $75 per megawatt hour and says they could cut it to $39) TVA disputes that. Johnson told council members its price is really $60 per megawatt hour. However, MLGW later conceded that when certain credits are considered the price reaches $71.

MLGW President and CEO J. T. Young said even if Nuclear Development could cut costs to $39, he’s doubtful it could be sustained.

“I’m not inclined to pursue an agreement with an entity who has not only never generated electricity but never run a nuclear plant,’’ said Young, adding that severing MLGW’s 84-year relationship with TVA is a daunting prospect. Young prefers to study the proposal slowly and methodically, saying his top priorities when buying power for the city’s 421,000 electrical customers are reliability and a proven track record.

Yet, Haney insists Memphis can realize savings through a combination of power from Bellefonte and sources west of the Mississippi River, where electricity often is cheaper.

Indeed, MLGW’s own 2018 survey of typical residential winter electric bills found while Memphis’s price of $97.38 was cheaper than 38 of 40 comparative cities, two cities west of the river had them beat – Springfield, Mo., at $95.74 and St. Louis at $93.57. 

“It’s a simple question: Who’s got the cheapest price?’’ Haney asked.

Michael Cohen concerns

Despite the back and forth, Haney wants to make one thing clear: Trump had no role in his hiring of Michael Cohen to seek funding for Bellefonte. A longtime Democrat, Haney acknowledged giving $1 million for Trump’s inauguration. But he said Cohen did not act as a proxy or a go-between between him and the president.

He said the lawyer simply caught wind of his plans to pursue Qatari investment and opportunistically inserted himself into them. It happened, he said, after Trump introduced the two of them at Mar-a-Lago, the exclusive Palm Beach, Fla., resort and golf club Trump developed years ago and now frequents as president.

“He’s been there with the president numerous times,’’ said Haney, a longtime Mar-a-Lago member.

As best as Haney recalls, he and Cohen were introduced in March. A couple weeks later, the president introduced Haney to a Qatari official whose name Haney said he doesn’t recall.

“He (Trump) says, ‘I know you’re working on this nuclear plant. They (the Qataris) are going to invest $45 billion (in the U.S.) and they’ll loan money for nuclear plants.’’’

Though federal law prohibits a nuclear plant from being “owned, controlled or dominated’’ by a foreign corporation or government, Haney said it’s unclear to him what percent a foreign entity can own.

The White House did not respond to a request by the Institute for comment.

Yet on April 5, around the time Haney says Trump introduced him to the Qatari official, a Qatari delegation was hosting a conference in Miami Beach promoting international investment. And on April 10, Trump hosted Amir Tamim Bin Hamad Al Thani of the State of Qatar at the White House to discuss relations between the two countries, according to a White House press briefing.

Haney said he doesn’t know how Cohen learned of his plans to pursue Qatari investment. But the businessman said when he sailed his 167-foot yacht, the Emelina, down from Palm Beach and moored it on a pier in Miami Beach, Cohen showed up and invited himself onboard.

“Well, he’s the president’s lawyer,” said Haney who invited Cohen to come aboard. “And he ended up spending the night.’’

Haney said he signed Cohen to a three-month consulting contract after seeing the Qataris reaction to the assertive attorney.

“He was treated like royalty with the Qataris because he was the president’s lawyer. They treated him like we had went to dinner with a prince and all that sort of stuff.’’

Haney said he made two payments of about $100,000 each to Cohen before severing the deal. He said he was prepared to pay Cohen as much as $5 million if he succeeded in securing an investment.

 “We were having to raise $2 billion of equity at that time, which we don’t have to now. We had a ways to go,’’ he said.  “…That is a cheap-ass fee for $2 billion.’’

Cohen’s attorney, Lanny Davis, declined comment as did the U.S. Attorney’s Office for the Southern District of New York, which is prosecuting Cohen.

An Aug. 28 letter from Sen. Duckworth to Energy Secretary Rick Perry seeks a range of records aimed at determining if Cohen might have attempted to influence Haney’s application for DOE loans for Bellefonte. Sean Savett, Duckworth’s spokesperson, said in an email Wednesday the senator has not yet received any of the requested information.

Citing a Wall Street Journal article, Duckworth alluded in her letter to “an unseemly pay-to-play arrangement.’’

But Haney insists Cohen was not hired to lobby DOE or the Trump administration.

“That’s flat-out wrong,’’ he said. “I see Donald Trump every time he comes to Florida. I don’t need him (Cohen) to introduce me to Donald Trump.’’

Multimillionaire Franklin Haney placed a winning bid two years ago at a surplus auction to buy the Tennessee Valley Authority’s never-opened $5 billion Bellefonte Nuclear Plant in northeastern Alabama for $111 million. He put down $22 million in earnest money, and has until Nov. 30 to produce the remaining $89 million and close the deal. He hopes to hire a professional manager and sell Bellefonte’s power to Memphis Light, Gas & Water Division at discount rates. But his plan faces challenges:

  • The plan depends on $4.7 billion in U.S. Department of Energy loans Haney’s firm is seeking to refurbish the plant and make it operational.
  • Bellefonte’s Unit 1 reactor would supply only 80 percent of Memphis’s power needs.
  • Memphis likely would have to look west of the Mississippi River to get additional power from the Midcontinent Independent System Operator or MISO, a nonprofit regional power transmission organization operating in all or parts of 15 states in the West, Midwest and South, including Arkansas.
  • Although Haney has assembled an impressive team of engineering and cost consultants who vouch for his plan, he faces stiff opposition.
  • “The Bellefonte deal is the riskiest you can imagine,’’ said outgoing TVA chief executive Bill Johnson. Scott Banbury, conservation coordinator for the anti-nuclear Tennessee Sierra Club, called the plan “pie in the sky,’’ and “a financing scheme promoted by a self-interested investor.’’

This story first appeared at under exclusive use agreement with The Institute. Photos reprinted with permission of The Daily Memphian.

Written By

Marc Perrusquia is the director of the Institute for Public Service Reporting at the University of Memphis, where graduate students learn investigative and explanatory journalism skills working alongside professionals. He has won numerous state and national awards for government watchdog, social justice and political reporting.

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