Dang it, one expected special guest wasn't able to attend the press conference but maybe he/she will have a statement. I was looking forward to it.
Regardless, my colleagues and I are pleased as punch that Dominion is maintaining a leadership position in the nuclear industry by submitting a full COL application for a third unit at the North Anna site. (Lisa's 401k watch--at last check D stock was up $0.63.)
And while Dominion's CEO Tom Farrell said that getting the licenses does not obligate the company to build NAPS 3 it is clear from many of his other statements that he believes that it is likely that all of the variables will come together in such a way that it will make sense for the company and its customers to go ahead and build.
For instance, he mentioned that in the next decade demand in Virginia will increase by at least 4000 MW and that the need must be supplied by a combination of conservation and efficiency, advanced technologies and reliable baseload. He also said that EIA data shows that Virginia imports more power than any other state except California. I really didn't know that and would like to find a link...
He also mentioned the steps that Virginia's governor and legislature have taken to ensure a secure energy future for our state--steps that include nuclear as an important part of an energy strategy.
But of course, there are hurdles to overcome. Farrell mentioned that before making the decision to build, not only does the company need to have confidence that the NRC will issue a COL for NAPS 3 and a Design Certification for the ESBWR, other government agencies must weigh-in including the state corporation commissions of Virginia and North Carolina.
Another hurdle is the cost. Farrell said that the company is negotiating now with vendors, mainly GE-Hitachi, to nail down a price. I personally believe (meaning that Farrell nor anyone else at Dominion has said this, it is simply The World According to Lisa, and I rarely sign multi-billion dollar contracts) that it is less about the absolute dollar figure that GE-Hitachi proposes (as long as the $/installed kW-hr is within reason!) but the confidence Dominion has in that number and also in the schedule. That the cost of commodities is going up is a given and those same commodities will be bought no matter what kind of baseload generation is built. But with nuclear being more upfront-capital-intensive, the promising but still unproven license process, the need to substantiate a rate case, and the amount of time between saying "go" and sending electrons through power lines, I think the company is most concerned about getting a price and schedule with minimal uncertainties.
Should that dampen our enthusiasm? Absolutely not. Tom Farrell himself said he believes that the company can get to the point where the price is cost-competitive and a benefit to customers. If that happens, and licensing proceeds as scheduled, construction on NAPS 3 could begin in 2010 with commercial operation in 2015.
So I've got a little over two years to find just the right shovel...
Regardless, my colleagues and I are pleased as punch that Dominion is maintaining a leadership position in the nuclear industry by submitting a full COL application for a third unit at the North Anna site. (Lisa's 401k watch--at last check D stock was up $0.63.)
And while Dominion's CEO Tom Farrell said that getting the licenses does not obligate the company to build NAPS 3 it is clear from many of his other statements that he believes that it is likely that all of the variables will come together in such a way that it will make sense for the company and its customers to go ahead and build.
For instance, he mentioned that in the next decade demand in Virginia will increase by at least 4000 MW and that the need must be supplied by a combination of conservation and efficiency, advanced technologies and reliable baseload. He also said that EIA data shows that Virginia imports more power than any other state except California. I really didn't know that and would like to find a link...
He also mentioned the steps that Virginia's governor and legislature have taken to ensure a secure energy future for our state--steps that include nuclear as an important part of an energy strategy.
But of course, there are hurdles to overcome. Farrell mentioned that before making the decision to build, not only does the company need to have confidence that the NRC will issue a COL for NAPS 3 and a Design Certification for the ESBWR, other government agencies must weigh-in including the state corporation commissions of Virginia and North Carolina.
Another hurdle is the cost. Farrell said that the company is negotiating now with vendors, mainly GE-Hitachi, to nail down a price. I personally believe (meaning that Farrell nor anyone else at Dominion has said this, it is simply The World According to Lisa, and I rarely sign multi-billion dollar contracts) that it is less about the absolute dollar figure that GE-Hitachi proposes (as long as the $/installed kW-hr is within reason!) but the confidence Dominion has in that number and also in the schedule. That the cost of commodities is going up is a given and those same commodities will be bought no matter what kind of baseload generation is built. But with nuclear being more upfront-capital-intensive, the promising but still unproven license process, the need to substantiate a rate case, and the amount of time between saying "go" and sending electrons through power lines, I think the company is most concerned about getting a price and schedule with minimal uncertainties.
Should that dampen our enthusiasm? Absolutely not. Tom Farrell himself said he believes that the company can get to the point where the price is cost-competitive and a benefit to customers. If that happens, and licensing proceeds as scheduled, construction on NAPS 3 could begin in 2010 with commercial operation in 2015.
So I've got a little over two years to find just the right shovel...
Comments
But you should re-read the Standard & Poors, Fitch and Moody's Special Reports(as recent as October 2007)---it is the commencement of construction, namely the commitment of uncertain billions and an uncertain completion that results in the downgrading of credit ratings---not the application process--at least here you still have the NRC in cahoots.
Its the construction phase that the financial community is now longer your willing dupes. You burned that bridge.
For the middle one, commodities cost is a weird variable, because it does not affect the cost-competitiveness of nuclear. While the cost of the materials increases for 1500 MW of nuclear electricity, the cost of materials is also increasing for 1500 MW of coal electricity - every baseline power source will suffer the same increasing construction expenses.
However, scope control should be within GE/Hitachi's grasp - after all, they've built the ABWR in Japan many times. The ESBWR is the next generation design, and should be simpler, although still first-of-a-kind. Also, it will be the first-of-a-kind the US regulators have certified and seen built (when it happens, which it will somewhere). So the inspection/testing/regulation aspect is another scope measure of uncertainty.
But it still comes down to basics: what's the price? GE/Hitachi should want to make an attractive deal - they're building a model home with plans to sell more. And the Dominion leadership and Board have a reputation for risk management, not risk-taking. They are still a fully integrate utility paying dividends, after all (remember? those used to be our parent's boring, safe, investments? Heard of 'em?) They're not looking to commit unreasonable amounts of stockholders' and ratepayers' monies.
I'm eager for the environmental benefits of new nuclear. And I'd love to see Virginia get it. Today's announcement is very exciting! But I know it's still not a done deal. With volatility in fuel prices, I'm convinced it will happen. But I'm not sold on the when... I hope it's sooner, rather than later.
So at the point that Dominion has to make a decision, to me an acceptable price is a given and the biggest deciding factors are confidence in the price and schedule.
Lisa
ps--Miss you around here!
Doesn't it get tiresome to continue to make predictions that never come true?
You preached 30 years ago that nuclear power plants would bring massive death and destruction to our country, if not the end of civilization as we know it.
You've alternated between announcing and forecasting the death of the nuclear industry in the same period that nuclear plants increased their contribution to the grid.
For years you've predicted that IOUs stock prices would plummet and Wall Street would downgrade their ratings if they planned to build new plants.
And even in the face of Dominion's stock and rating gains through the ESP, parts order, COL application and Tom Farrell's clear statement yesterday that he believes it is likely the company will build sooner rather than later, you still have the courage to come here and yet again amend your predictions of doom and gloom.
Call me crazy, but I think people are on to you.
Lisa
Don't forget that Paul gets paid whether or not his predictions come true. Thus, he has no incentive to be accurate. On the contrary, his job is misinformation and scaring people with "factoids." Truth is a foreign, difficult concept for him.
He's a pro. Personally, I consider him to be a professional comic (or maybe a clown), because he makes me laugh and laugh every time he pipes up to make one of his silly predictions.
Like Jackson Browne, Graham Nash, and Bonnie Raitt, the Musicians United for ... well for ensuring plenty of Coal-fired energy, Paul hasn't had a hit in years. So he's still spinning the same old material, hoping that a few old-timers remember his songs from the good-old days (do you remember the 70's? I don't) and perhaps might sing along.
Meanwhile, the rest of the world goes on, and America's nuclear power plants generated 61.4 billion kilowatt-hours last month. That's over three times what solar and wind combined generated in the US during the entire year of 2005, according to the EIA. It would take only two reactors like the one proposed at North Anna to outproduce all of the US's wind and solar.
I don't make predictions, particularly about nuclear accidents. But I am aware of the bathtub curve for failure rates and I would be particularly careful if I were you given all the uncertainty and degradation mechanisms out there.
Having been around this business for some time, I can remember quite well that 4 utilities went bankrupt building the Seabrook nuke alone---$6.7 billion for Unit 1 and nearly $1 billion in sunk costs for the cancelled Unit 2.
As a fesult, its Wall Street's that is reading those tea leaves that can downgrade a company credit rating at the commencement of construction.
And while we are at it, you missed today's news---given the current continued absense of any market confidence in new nuclear power, Constellation announced that it will not commence construction at Calvert Cliffs without billions of dollars more in loan guarantees from US taxpayers despite a risk of a greater than 50% anticipated default rate and BTW that prediction comes from the Congressional Budget Office, not me.
No, Lisa, I won't call you crazy and yes I am happy to talk with everbody about what I am on to.
Even here.