(Reuters) - The Tennessee Valley Authority, the biggest U.S.-owned electric generator, expects natural gas prices to remain low over the next 20 years as the company expands its gas-fired power plant fleet and retires coal units.

"We made a bet when we started closing coal plants that gas prices would continue to be low and I think we are surprised at how low they have remained and now expect them to be low for 20 years," TVA Chief Executive Officer Bill Johnson said in an interview on Wednesday.

U.S. gas prices at the Henry Hub benchmark in Louisiana averaged $2.61 per million British thermal units (mmBtu) in 2015 as producers pulled record amounts of fuel out of the ground and storage levels hit all-time highs. Over the prior 10 years (2005-2014), gas prices averaged $5.49.

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Since the start of 2016, gas has traded at just $1.94 per mmBtu, with most analysts projecting prices will average around $2.28 for the full year, putting it just above the 1999 low of $2.27, before rising to around $3 in 2017.

"There is a lot of gas out there. If prices remain under $4 until sometime between 2025 and 2030 and under $6 after 2030, we will be well in the money in the generation space," Johnson said, noting TVA went from burning almost no gas 10 years ago to using about 600 million-700 million cubic feet per day now.

TVA expects to use even more gas when it finishes construction of two combined-cycle gas-fired plants in 2018. The plants, of about 1,100-megawatts (MW) each, will replace retiring coal units at the Allen power plant near Memphis, Tennessee, and at the Paradise plant in Kentucky.

In addition, Johnson said TVA hopes to connect to the grid its new 1,150-MW Unit 2 at the Watts Bar nuclear station in Tennessee on Wednesday. Watts Bar 2 will be the first new reactor to enter service in the United States since the first unit at Watts Bar entered service in 1996.

"While other nuclear reactors are facing a retirement crisis, we expect to add about 1,700 MW of new nuclear to our fleet by the end of the decade with the new unit at Watts Bar and uprates at our Browns Ferry plant in Alabama," Johnson said, referring to planned upgrades at Browns Ferry that will increase the facility's output.

Other nuclear operators have threatened to shut reactors in part because low gas and power prices have hurt their ability to make money at some nuclear plants.

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(Reporting by Scott DiSavino in New York; Editing by Matthew Lewis)