Monday, September 26, 2011

Mandatory Meetings

wyomingLater this week, The Nuclear Energy Commission will host what it calls a mandatory meeting between the commissioners and the NRC staff on the combined license for Southern Co.’s two reactors at its Vogtle site in Georgia. This is important as it is the first time this type of meeting has been held under NRC’s more streamlined process for licensing nuclear reactors.

So what is it?  The Atlanta Journal-Constitutions Kristy Swartz offers a preview:

Meanwhile, Tuesday’s mandatory hearing will review, among other things, emergency planning, cybersecurity and how nuclear waste will be stored at the reactor site. The NRC will not issue a ruling until perhaps early next year; with that ruling comes the construction license for the units.

Nathan Ives, a senior manager with Ernst & Young, said his initial review of documents didn’t turn up any red flags. But Ives, a consultant in the energy and nuclear industry, said regulators likely will scrutinize heavily Southern Nuclear’s plans to handle disasters, including floods and earthquakes.

Although Southern Co. will speak, the meeting will focus on the commissioners questioning of the staff – this isn’t the place to try to make the case that the project should go forward because that’s essentially settled but whether the NRC staff has done a good enough job of vetting the license application and all the issues associated with it and through it, the project.

How will it go? I couldn’t even begin to say – except – that it will probably go differently than if it had occurred before the accident in Japan. Not necessarily in tenor, but likely in focus. Even the NRC’s meeting announcement suggests its current interests:

The hearing will begin at 9 a.m. on Sept. 27 in the Commissioner’s Conference Room at NRC Headquarters, 11555 Rockville Pike, Rockville, Md. The Commission expects to discuss the staff’s Final Safety Evaluation Report (FSER) on the first day, with discussion of the staff’s Final Supplemental Environmental Impact Statement (FSEIS) starting on Sept. 28. The hearing will be open to public observation and will be webcast. A detailed agenda and presentation slides will be available in advance on the Commission’s meeting transcript page.

It’ll be interesting to see how much hardened vents, flooding and used fuel pools come up in the discussion. You can pick up the slides here and the webcast can be followed here.

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“Let’s play this scenario out,” Crane said in a morning-long session with the committee. “This thing’s going to take five years before you know even whether you have NRC [Nuclear Regulatory Commission] approval. It’s going to cost $100 million to get to that mark, that’s what nuclear costs, and you’ve got a five-year window of massive uncertainty to even know whether you’re going to get the approval.

“These are very capital-intensive,” she went on to explain. “They take many, many years, have a huge amount of uncertainty for the first five years, and then you have your typical construction risks.”

If you’re going to undertake a nuclear energy plant, then you’d better know the risks. That’s what Cindy Crane, vice president of PacifiCorp Energy’s Interwest Mining told the Task Force on Nuclear Energy Production convened by the state legislature to explore the possibility of a plant in – wait for it – Wyoming.

Wyoming has about 560,000 people in it, though outside Cheyenne, you could spend a lot of time trying to locate them. In as much as there is a plan, it is to share the cost of the facility and the electricity itself with five other states – that is, the service area of PacifiCorp.

Casper Journal writer Greg Fladager does a good job of covering the discussion between Crane and the task force. Here is Crane on CWIP or Construction Work in Progress, which might be considered as a funding mechanism. It works by charging a modest uprate to customers while a project is ongoing

“I think ‘construction work in progress’ is advantageous for the regulated utilities. I think whether it fully covers your $100 million outlay risk ... anything and everything that can help cover that risk will be very important,” Crane said. “It could take different flavors, but I think that’s the single biggest hurdle, certainly for a multi-state, regulated utility like PacifiCorp.”

That led into a discussion of the complexity of applying CWIP to a regulated utility that averages its rates among several states (six states for Rocky Mountain Power and Pacific Power). That means Wyoming rate payers wouldn’t pay for a new power plant alone, it would be spread among six states.

Fladager doesn’t mention it, but the value of CWIP to the ratepayer is that it can forestall, lessen or eliminate interest payments to a bank, saving a lot of money on a project and thus a more onerous rate increase later on. (This isn’t just a nuclear energy thing – most large plants cost more than an American private company could pay comfortably.)

But he does show the task force really working through the issues. Hard to say from one article, but the Wyoming project does seem to be well-shepherded. Worth a read.

Well, no one said a task force meeting in Wyoming was going to be a barrel of laughs. The Task Force on Nuclear Energy Production meets in Casper.

2 comments:

Anonymous said...

Congratulations to Southern Company on reaching this latest milestone toward the construction of the first new nuclear plants in the U.S. in 30 years.

With its modular construction technology, and the new module factory in Lake Charles, Westinghouse is well positioned to bring down its construction costs rapidly for subsequent AP1000 units.

The AP-1000 module factory in Lake Charles is likely sized similar to the factories in China, with the capacity to provide modules for 2 AP1000 units per year.

The experience in Japan and Korea is that construction costs drop by 25 to 30% after the first 4-5 units are built. It's reasonable to bet that beyond the engineering, procurement, and construction (EPC) contracts Westinghouse has already signed for 4 new AP1000 units at Vogtle and Summer, Westinghouse will sign more and will be able to keep the Lake Charles plant running full time going forward.

At this point it's difficult to see any other vendors being able to compete effectively with Westinghouse in the U.S. market. Areva's EPR has proven to be much more expensive and time consuming to build that originally hoped. None of the other vendors have designs that have significant construction experience or obvious ability to compete with the AP1000. The entry barriers to demonstrate a new large ALWR design are very large, because a large amount of capital must be put at risk in building the first unit.

This leaves SMRs as the wild-card technology, since the much lower construction cost of each module greatly reduces the entry barriers for demonstrating how a new design works. So watch SMRs as the most interesting alternative to the AP1000 in the U.S..

SteveK9 said...

Might be early to count out the EPR. The project in China is going well. They may build 6 units there and 6 at the Indian site in Jaitapur. Won't happen overnight of course. And, 1650 MWe is a lot of power.