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Construction Costs

Construction costs for new reactors are unpredictable, extreme and continue to rise. Current estimates run as high as $12 billion per reactor but threaten to further sky-rocket, prompting the nuclear industry either to cancel plans for new plants or look to taxpayer-funded federal loan guarantees to cover the cost.

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Sunday
Mar082015

"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.)

Tuesday
Dec162014

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!

Thursday
Aug142014

Cost overruns and schedule delays at proposed new reactors in GA, SC, and TN

Aerial image of Vogtle nuclear power plant in GA, showing the operational Units 1 and 2, as well as the construction site for the proposed Units 3 and 4. Photo credit: High Flyer.We told them so. As the environmental movement warned 14 years ago, when the nuclear relapse was hatched by the Bush/Cheney administration, proposed new reactors at Vogtle 3 & 4 in Georgia, Summer 2 & 3 in South Carolina, and Watts Bar 2 in Tennessee are suffering major cost overruns and construction schedule delays.

Southern Alliance for Clean Energy (SACE) has published an update on Vogtle 3 & 4, which currently are suffering a 21-month schedule delay, and $1.4 billion cost overrun. The delays could well get worse, at a staggering cost increase of $2 million per day of delay!

Similarly, as reported by SRS Watch, delays of up to three years, and cost overruns topping $500 million, are afflicting the Summer 2 & 3 proposed new reactors in SC.

Note that those April 1st projected opening dates for the new reactors at Voglte and Summer, listed in the updates above, are no April Fool's joke. GA and SC ratepayers are already being gouged for the new reactors' troubled contstruction, on their electricity bills.

Vogtle 3 & 4's financial risks also now implicate federal taxpayers, in the form of a $6.5 billion loan guarantee, likely to soon grow to an $8.3 billion loan guarantee. This is compliments of the Obama administration. So, if Vogtle 3 & 4 default on their loan repayment, federal taxpayers will be left holding the bag. This is 15 times more taxpayer money at risk than was lost in the Solyndra solar loan guarantee scandal. And that risk, of Vogtle 3 & 4 defaulting on its loan repayment, was judged, years ago, by the likes of the Congressional Budget Office and Government Accountability Office, as a much greater risk than Solyndra defaulting on its loan repayment.

Vogtle 3 & 4, as well as Summer 2 & 3, are Toshiba-Westinghouse AP-1000 reactors. They are experimental, never having been built before anywhere in the world, although AP-1000s are also under construction in China.

The proposed new reactor in Tennessee, that is also suffering cost overruns and schedule delays, is the Tennessee Valley Authority's long-mothballed Watts Bar Unit 2.

To add to the irony, the existing reactors at Vogtle, Units 1 & 2, were the poster child for cost overruns in the last generation of reactor construction, coming in at 1,300% their originally estimated cost!

And the operational Watts Bar Unit 1 took 23 years to build, from 1973 to 1996!

Friday
Apr252014

Radioactive "Moral Hazard": DOE loans, and guarantees, $6.5 billion for two new reactors for a 0%, $0.00 credit subsidy fee!

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.Southern Alliance for Clean Energy reports in a press release entitled "New Documents Confirm Utility Giant Southern Company Gets Sweetheart Deal from Energy Department for Multi-Billion Nuclear Loan Guarantees for Vogtle Reactors":

"As revealed today in an Energy & Environment News story by Hannah Northey, the credit subsidy fee for utility giant Southern Company and its utility partner, Oglethorpe Power, for billions of dollars in taxpayer-backed federal loan guarantees, is nothing, $0. This shocking information was disclosed two months after the Department of Energy (DOE) finalized terms of $6.5 billion worth of loan guarantees that were offered as part of an $8.3 billion package to build two new nuclear reactors at Plant Vogtle in Georgia. A third partner in the project, MEAG, has yet to have their $1.8 billion loan guarantee finalized."

Please register your disapproval of this nuclear sweetheart deal, at taxpayer expense and risk, to President Obama, your two U.S. Senators, and your U.S. Representative! You can be patched through to your Members of Congress via the Capitol Switchboard at (202) 224-3121.

Despite construction cost overruns, as well as schedule delays, that further risk a default on Vogtle 3 & 4 loan repayments, the credit subsidy fee that was supposed to be around $300 million, to provide some meager protection to federal taxpayers for a loan guarantee of many billions of dollars, was haggled down by nuclear lobbyists to a big fat ZERO. More.

Thursday
Feb202014

DOE signs $6.5 billion federal nuclear loan guarantee for Vogtle 3 & 4

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.U.S. Secretary of Energy Ernest Moniz has announced that the Department of Energy (DOE) will sign an agreement with Southern Co. and Oglethorpe Power for a $6.5 billion loan guarantee that puts federal taxpayers on the hook if the Vogtle 3 & 4 new reactor project defaults on its loan repayments. This, despite the fact that the project is seriously over budget and behind schedule, as has been so common in the history of nuclear power. Energy Secretary Ernest Moniz will speak at the proposed new reactor construction site at 2 PM Eastern today, Thursday, Feb. 20th (you can listen to his address by calling 1-800-282-1696).

President Obama gave the Vogtle 3 & 4 federal loan guarantee offer (for a total of $8.3 billion) the highest profile possible, by announcing it himself at a press event in Feb. 2010. Despite this, it has taken over four years for the project proponents to sign on the dotted line, given their reluctance to put any of their own "skin in the game," in the form of credit subsidy fees. The nuclear loan guarantee program was authorized in the 2005 Energy Policy Act, and $22.5 billion was approved by Congress and George W. Bush for new nuclear facilities on Dec. 23, 2007 ($18.5 billion for new reactors, $4 billion for new uranium enrichment).

The $8.3 billion Vogtle 3 & 4 federal loan guarantee is 15 times bigger than the infamous Solyndra solar loan guarantee, which defaulted on its loan repayment, a $585 million loss to the U.S. Treasury. But the Vogtle 3 & 4 loan guarantee is at much higher financial risk of default than was the Solyndra solar project!

Beyond Nuclear's Paul Gunter blasted the deal in a Common Dreams interview. Southern Alliance for Clean Energy (SACE) also blasted the deal in a press release. Harvey Wasserman has penned an essay entitled "Obama's Nuke-Powered Drone Strike on America's Energy Future."

Please contact President Obama and Energy Secretary Moniz, registering your disapproval of this $6.5 billion nuclear loan guarantee, and urging them not to grant the remaining $1.8 billion nuclear loan guarantee to project partner MEAG for Vogtle 3 & 4. Also urge them to withdraw any further nuclear loan guarantee offers, with the remaining $10.2 billion authorized for new reactors, and $4 billion authorized for new uranium enrichment.

But the federal nuclear loan guarantees, and even the CWIP charges which are gouging Georgia ratepayers, are not the only subsidies benefitting this proposed new reactor project. If Vogtle 3 & 4 do get built and operated, the George W. Bush DOE also obligated U.S. taxpayers to ultimate liability for the risks and costs of the high-level radioactive waste they would generate. DOE hastily signed the contract in the last days of the Bush administration, despite the fact that federal courts are awarding $500 million per year in damages to nuclear utilities for DOE's breach of contract for failing to begin taking title to irradiated nuclear fuel in 1998 under the contractual agreements signed in the mid-1980s. The hastily signed contacts were exposed by D.C. attorney Diane Curran, IEER President Arjun Makhijani, and Beyond Nuclear's Kevin Kamps in a March 24, 2010 press conference based on a FOIA Request.