CWIP, or Construction Work in Progress, is a law, fortunately existent only in a handful of U.S. states, that allows a utility to charge ratepayers higher rates to cover future costs of a yet-to-be-constructed reactor, even if that reactor is never built.



"Gas deal could signal Southern’s drift from new nuclear projects"

As reported by the Atlanta Journal Constitution, a $12 billion deal merging Southern Co. and the AGL natural gas utility could mark the end of the "nuclear renaissance" for Southern.

The article reports:

This deal signals that “the nuclear renaissance is over for Southern,” said Robert “Bobby” Brown, a regulatory lawyer and former member of Georgia’s utility regulator, the Public Service Commission.

The article goes on:

The Atlanta company is building two new nuclear power units at its Vogtle site in Georgia and an advanced-technology coal-fired plant in Mississippi. Both those projects are years behind schedule and have resulted in billions of dollars of cost overruns that will be born by Southern’s shareholders or customers, or both. (emphasis added)

The Obama administration awarded Southern and its partners at Vogtle 3 & 4 a whopping $8.3 billion in federal taxpayer-back loans and loan guarantees. If the project defaults on its loan repayment, federal taxpayers would be left holding the bag.

That's 15 times more money than was lost to the U.S. Treasury by the Solyndra solar loan guarantee default. And Vogtle 3 & 4's risk of default is higher than Solyndra's was determined to be when the solar loan guarantee was awarded.

In addition to taxpayer subsidies, Vogtle 3 & 4 has been financed by "Construction Work in Progress" -- surcharges on ratepayers' electricity bills that are illegal in most states.


"Duke Energy spending on Lee nuclear plant remains slow"

As reported by John Downey in Charlotte Business Journal, Duke Nuclear's spending on "pre-construction" activities at its proposed new Lee nuclear power plant in Gaffney, SC, has been relatively low in the past couple years -- if $3-4 million per month can be regarded as "low." After all, significant energy efficiency, and even renewable energy projects, such as wind power and solar photo-voltaics, could be built for that kind of money!

Duke Nuclear had originally proposed firing up Lee Unit 1 in 2017. But now initial start up has been postponed till 2024 at the earliest.

Duke proposes to build two Toshiba-Westinghouse AP1000 reactors, just as is happening at Vogtle 3 & 4 in GA, and at Summer 2 & 3 in SC. Both the Vogtle and the Summer new reactor construction projects are billions of dollars over-budget, and years behind schedule.

Duke has not yet charged its $450 million in "pre-construction" activities to its SC rate-base, but it could under SC's generous "Construction Work in Progress" (CWIP) law.

Already, South Carolina Electric & Gas and SCANA have charged their SC ratepayers more than half a dozen rate increases, entirely devoted to CWIP costs on building Summer 2 & 3, with the SC public service commission's blessing. SCE&G and SCANA have not applied for federal nuclear loan guarantees, however.

Vogtle 3 & 4 has slogged ahead, thanks not only to CWIP surcharges on GA ratepayer electricity bills, but also compliments of an $8.3 billion federal taxpayer-backed loan guarantee, and loan. President Obama and Energy Secretary Moniz have provided that massive loan guarantee, and loan, without charging Southern Nuclear and its partners a single penny of credit subsidy fee, to protect federal taxpayers at least to some small extent, should Southern default on its loan repayment.

$8.3 billion is 15 times more federal taxpayer funding than was lost to the U.S. Treasury at Solyndra, when that solar loan guarantee repayment defaulted. But Vogtle 3 & 4 are at a significantly higher risk of defaulting, than was Solyndra when the solar loan guarantee was awarded.

More than $10 billion in nuclear loan guarantee funding remains available, for projects like Lee 1 & 2, or Fermi 3 in MI, to apply for. Lee 1 & 2 still needs COLA (combined Construction and Operating License Application) approval by NRC, something that Fermi 3 already won on May 1, 2015. However, Beyond Nuclear and allies continue to challenge the Fermi 3 license, now by appealing to the federal courts. One of the appeals by the environmental coalition is a challenge to NRC's Orwellian permission to grant the go ahead for "pre-construction" activities at new reactor construction sites, in violation of the National Environmental Policy Act.


"Prefab Nuclear Plants Prove Just as Expensive"

"Burning money" graphic by Gene Case, Avenging AngelsRebecca Smith has reported in the Wall Street Journal that the "[m]odular method has run into costly delays and concerns about who will bear the brunt of the expense."

Joseph "Buzz" Miller, Georgia Power's executive vice president for nuclear development, is quoted as saying "The promise of modular construction has yet to be seen."

The two proposed new Toshiba-Westinghouse AP1000 reactors, Vogtle Units 3 & 4, that Georgia Power is building are years behind schedule, and billions of dollars over budget. $8.3 billion in federal nuclear loan guarantees, awarded by the Obama administration at no cost to the nuclear utilities, would leave taxpayers holding the bag if the project defaults on its loan repayment.

That's 15 times the amount of taxpayer money at risk than was lost to the U.S. Treasury with the Solyndra solar loan guarantee default several years ago.

The article also reports: "Stephen Byrne, president of South Carolina Electric & Gas [SCE&G], recently told investors his company is in discussions with Westinghouse and CB&I [Chicago Bridge & Iron] about the cost overruns and who will bear the burden. Utilities want those added costs to be shared, getting vendors to pay for some of the added expense but vendors are examining the claims. 'We feel that there’s an opportunity for a settlement in the future,' he said."

The two AP1000s under construction at Summer nuclear power plant in SC have been financed by repeated "Construction Work in Progress" (CWIP) surcharges on ratepayer electricity bills over the past many years. Such a "nuclear tax" is illegal in most states.

These cost overruns and schedule delays were to be expected, based on the previous history of nuclear power in the U.S. and overseas.

In 1985, Forbes wrote "The failure of the U.S. nuclear power program ranks as the largest managerial disaster in business history, a disaster on a monumental scale."

In fact, ironically enough, Vogtle Units 1 & 2 were the poster children for cost overruns, coming in at 1,300% their originally estimated price tag.

And the Watts Bar Units 1 & 2 are the case studies in atomic reactor schedule delays. Watts Bar took from 1973 to 1996 to become operational. Watts Bar 2 began construction in 1972, and is still struggling to begin generating electricity, 23 years later!

Such problems extend overseas, as well. A decade-long delay, and huge cost overruns, at the Olkiluoto new reactor construction site in Finland have led to major lawsuits between the nuclear utility, TVO, and the bankrupt French reactor vendor, Areva, to determine who is liable.


"Experts warned of nuke work overruns"

The Vogtle Unit 3 reactor pressure vessel, parked in front the Vogtle Unit 4 containment vessell bottom head, May 2013. Photo credit: Georgia Power.As reported by Matt Kempner in the Atlanta Journal Constitution, the two new atomic reactors under construction at the Vogtle nuclear power plant in Waynesboro, Georgia are "more than three years behind schedule," and costs for just one partner, Georgia Power (a subsidiary of Southern Nuclear) "is at least $1.4 billion, or 23 percent, over original projections."

The Vogtle 3 & 4 construction project (see photo, left) is being financed through "Construction Work in Progress" (CWIP), or "advanced cost recovery" -- that is, simply surcharging ratepayer electricity bills. This practice is illegal in most states, but has been made legal in Georgia, as well as South Carolina -- where two more new reactors at Summer nuclear power plant are also under construction (and also suffering schedule delays and massive cost overruns).

Highly controversial CWIP resulted in the loss to ratepayers of $3 billion, for a cancelled new nuclear power plant. Somehow that massive amount of money was spent, even though ground was not even broken on the failed project.

The Georgia Public Service Commission, the same agency that approved ratepayer CWIP surcharges in the first place, will now decide on whether or not ratepayers will eat the cost overruns at Vogtle 3 & 4.

In addition to gouging ratepayers, Georgia Power/Southern Nuclear is also gouging federal taxpayers, compliments of the Obama administration. In Feb. 2010, President Obama himself made the announcement that his U.S. Department of Energy was awarding $8.3 billion in federal loan guarantees to the Vogtle 3 & 4 project. In addition to the loan guarantees, the actual loan is coming from U.S. taxpayers as well -- from the taxpayer-funded U.S. Finance Bank. In that regard, the federal nuclear loan guarantee is already a failure -- it was supposed to entice private investors to actually loan the money to the project.

Incredibly, the DOE didn't even charge a penny in credit subsidy fee. This means Southern Nuclear/Georgia Power has no skin in the game. If the loan repayment is defaulted upon, taxpayers will be left holding the bag, entirely.

Vogtle 3 & 4 have put at risk 15 times more money than was lost in the Solyndra solar loan guarantee default. And Vogtle 3 & 4's risk of default is actually significantly higher than Solyndra's risk ever was.

(Re: the RPV in the photo above, it actually was involved in a transport accident at the Port of Savannah in Jan. 2013, when its transport train carriage collapsed under its massive weight. It then limped back to the Port, where it was exposed to the elements for an extended period, covered only partially by run of the mill tarps.)


One-year construction delay at Vogtle 3 & 4 means $730 million in cost overruns for GA ratepayers!

The Vogtle 3 & 4 construction site (aka money pit) as it appeared in July 2013.As reported by the Augusta Chronicle, construction schedule delays at the Vogtle 3 and 4 new reactor project in Georgia will add to the price tag at a whopping rate of $2 million per day! State ratepayer advocates now estimate a one-year delay in reactor start up, which amounts to a $730 million add-on to the already multi-billion dollar cost.

Under Georgia's Construction Work in Progress (CWIP) law, ratepayers are forced to pay for the constructions costs with a surcharge on their electricity bills. This practice is illegal in most other states.

In addition to gouging ratepayers, Vogtle 3 & 4 is also gouging federal taxpayers. The Obama administration awarded an $8.3 billion loan, and loan guarantee, to the project -- Southern Co. and its partners have not one cent of skin in the game. Talk about a financial "moral hazard," with a radiological twist! Let's hope the scheme doesn't "meltdown," and the investment turn "radioactive"!

In fact, the Vogtle 3 & 4 federal loan guarantee amounts to 15 times more federal taxpayer money than was lost in the Solyndra solar scandal. And, Vogtle 3 & 4 are actually more at risk of defaulting on their loan repayment than was Solyndra!