Friday, March 01, 2013

Vogtle and the Truth of Another Year

The two reactors at Georgia’s Plant Vogtle will be delayed about a year and cost $381 million more than originally planned.

Is this disappointing? A bit – I’m eager to see these up and running, but the years, they do speed by, don’t they? 2017 will be here soon enough.

Certainly, though, another year of work means ratepayers are on the hook, right? No, it doesn’t seem so. The truth of another year is that it does not represent a major issue for the ratepayers.

But the company’s analysis continues to show that adding more nuclear energy to Georgia Power’s portfolio would be a better deal for customers by $4 billion over the life of the plant than any other available energy source, said Buzz Miller, Georgia Power’s executive vice president for nuclear development. “We have a very good project for our goals of building it right with quality and compliance ,” he said.

And happily, Georgia Power has some options.

Miller said the additional costs will be offset by federal production tax credits Congress passed in 2005 to incentivize the nuclear industry, potential federal loan guarantees, and less-than-anticipated financing costs due to low interest rates.

These elements count for a lot – Southern Co. (Georgia Power’s parent) accepted the loan guarantee provisionally awhile ago, but has not fully negotiated terms for it with the government. I wouldn’t see this Miller’s statement as hinting at a resolution on the loan guarantee (or not) – he is just laying out the possibilities.

Ann Daiss, Georgia Power vice president and comptroller, said ratepayers also will see savings because scheduling delays mean the utility isn’t spending as much in the project’s early years as originally anticipated.

The end result will be stable costs over many years.

In the meantime, the project is a boon to Georgia.

Approximately 2,300 people are now on site at Vogtle units 3 and 4 near Waynesboro. At peak construction, the project is expected to create 5,000 onsite jobs, making it the largest job-producing project in Georgia. There will be 800 permanent jobs when the facility is operational.

Georgia is pretty forward looking when it comes to providing a stable business market, which means its encourages large infrastructure projects to support new business, but this still surprised me. “Largest job-producing project in Georgia?” That’s really saying something, particularly in the current economic climate.

So, in terms of fretting about another year, meh.

I know this story will pick up some exercises in concern trolling, especially from people who never wanted the reactors in the first place, but it looks to me as though Georgia Power has explained the situation well enough to quell major concerns if not necessarily trolling. Time will tell on that one.

But - if you need something to worry about, look elsewhere. This isn’t it.


jimwg said...

If only new plants moved away from the Twilight Zone stigma of cooling towers! Plants like Vermont Yankee look more serene and inconspicuous and people friendly without their intimidating appearance. I hope more studies are made for alternatives.

James Greenidge
Queens NY

Atomikrabbit said...

Just as low natural gas prices will not last forever, so it is with low interest rates.

Ten years from now, as both of those numbers climb dramatically, the decision-makers at Southern Company and SCANA will look like nuclear Nostradamus.

Robert Hargraves said...

WHY has the Vogtle schedule slipped one whole year?

Anonymous said...

Good question. That is not an insignificant slippage. If we're going to revive this industry, we can't treat these kinds of things with an air of nonchalance. I'm not saying to run amok the sky is falling, either, but someone needs to make sure that we propose a reasonable schedule and then do the things necessary to stick to it. A year slipped here, another there, and pretty soon you at at the tipping point of cancelling your project. I saw that happen too often in the '70s and '80s. We can't afford to go down that road again.

Anonymous said...

@Robert Hargraves
The reason that the schedule has slipped is because the NRC has delayed the pouring of safety related concrete for the last 9 months due to extremely strict interpretations of the design documents and still has not approved the official start of construction. This is the sort of issue that wouldn't happen in a place like China or Russia and if these plants were being built there they would be well out of the ground by now.

As I have stated in the past, people should not get their hopes up about Vogtle and VC Summer. These projects are facing massive hurdles on all fronts and the probability is that they will end up FAR over budget and behind schedule. I am as big a proponent of nuclear energy as you can find, but the fact of the matter is that the economics are against it right now. The current political and regulatory climate in the USA along with other issues such as high union wages and decreasing worker productivity mean that nuclear projects in this country have a price tag double that of many other nations. Combine that with the fact that the USA has massive coal and natural gas reserves and it is difficult to see where nuclear can be the low cost option. Nuclear has it's place as part of a balanced approach to electrical generation and could well be made economical with increased standardization and more sensible regulation, but the current projects will not be financial successes. The current price increase and delay is just one of several more that will come up during construction. Right now it is the issues with the concrete, but there will be a dozen more unforseen issues which will further push the budget and schedule. These issues would likely be resolved in a second generation of AP1000 plants, but it will be difficult to get them approved at this point.

Anonymous said...

NRC "still has not approved the official start of construction."

Not true. The agency has approved amendments allowing first nuclear concrete to be poured any time.

Anonymous said...

"extremely strict interpretations of the design documents"

If you consider NRC requiring that the units be built to match their approved design documents, rather than varying from the design on an ad hoc basis at the site without review or approval, then yes, the agency has been "extremely strict."

Mr. Rational said...

A newer version of a specification (whose version is unspecified on the plans) is hardly "ad hoc".