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Financial History

The U.S. nuclear power industry has a chequered financial history that involves huge cost over-runs and vast financial subsidies - some estimates run as high as $500 billion over its 50-year history.

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Thursday
Aug012013

Cooper: Duke abandonment of Levy reactors fits into 2013 pattern of "rapid-fire downsizing" of nuclear power in U.S.

Mark Cooper of Vermont Law School's Institute for Energy and the EnvironmentEnergy economist Mark Cooper at Vermont Law School's Institute for Energy and the Environment has issued a media statement in response to Duke/Progess's announced abandonment of its proposal to build two new atomic reactors at Levy County, Florida.

Cooper's statement begins:

"The announcement by Duke that it is abandoning the Levy reactor project in Florida is the second such announcement by that utility in the space of just a few weeks. The Duke decision to pull the plug on Levy follows by just one day the announcement that the French-subsidized nuclear giant EDF is pulling out of the U.S. nuclear power market due to the inability of nuclear power to compete with alternatives and the dramatic reduction in demand growth caused by increasing efficiency of electricity consuming devices. Exelon, with the largest U.S. nuclear fleet, recently purchased the nuclear assets of Constellation in an effort to achieve synergies (i.e. lower the operating costs) of its nuclear assets. Entergy, the second largest nuclear operator, has reorganized its nuclear assets and is slashing staffing..."

On July 17th, Cooper published a report, "Renaissance in Reverse," documenting the likelihood that up to 38 atomic reactors nationwide would "retire early," before the expiration of their operating licenses, including a dozen at risk of near-term permanent shutdown, due to an array of economic, operational, and safety factors.

Thursday
Aug012013

Another one bites the dust: Duke to cancel proposed new atomic reactors at Levy County, FL

MAURICE RIVENBARK | Times The crippled nuclear power plant in Crystal River [photo, above] will not be replaced with a new nuclear facility in Levy County, state Rep. Mike Fasano said Thursday.---Tampa Bay TimesAs reported by the Tampa Bay Times, Florida State Representative Mike Fasano (R-New Port Richey) has stated: "It's my understanding from a very good source that Duke Energy will announce after the close of the markets today that they will not be building the nuclear power plants in Levy County."

The article reports: 'Duke spokesman Sterling Ivey told the Tampa Bay Times the utility is issuing a press release about an announcement at 4:15 this afternoon.'

The proposed new nuclear power plant was supposed to have cost $4-6 billion, and to have been completed by 2016, when first proposed by Progress Energy in 2006. Recently, the price tag had risen to nearly $25 billion, and the estimated completion date had been delayed to 2024.

Florida's controversial "Construction Work in Progress" (CWIP) law, also known as the "advance fee law," has allowed Progress, and then Duke (which took over Progress) to charge ratepayers on their electricity bills for the construction of Levy County nuclear power plant. After intially supporting nuclear CWIP, Fasano has become an outspoken national opponent of the scheme. Even the Florida Tea Party has joined the chorus, including AARP and municipalities, in opposing risky CWIP subsidies to the nuclear industry at the expense of ratepayers.

In addition to Levy County, Progress/Duke has been able to charge ratepayers for senseless repairs and supposed upgrades at its doomed old atomic reactor, Crystal River. The nuclear utility managed to fatally crack Crystal River's containment in 2009, during a botched steam generator replacement, and earlier this year announced its permanent shutdown.

The Tampa Bay Times reports that Florida ratepayers could be on the hook for $3 billion in wasted expenditures at Levy County and Crystal River, collected via CWIP.

The article concludes:

'"Shame on Duke Energy, Progress Energy for taking the public on this ride knowing that they were never going to build the nuclear plants,'' Fasano said. "Shame on them."

Fasano called for the state Public Service Commission and the Legislature to conduct a full investigation into Duke's failed nuclear projects.'

Thursday
May092013

"Worst Week Since Fukushima: 4 Setbacks in 3 Days are Latest Stumbles for Nuclear Power Industry"

In a repeat of the previous financial history of the commercial nuclear power industry in the United States, the trumpeted "Nuclear Renaissance" of 2001 is now in headlong retreat, with "economic reasons" having a lot to do with it.

Former NRC Commissioner Peter Bradford, and energy economist Mark Cooper, both of the Vermont Law School, as well as Dan Hirsch of the Committee to Bridge the Gap, held a telephone press conference yesterday on the subject of "WORST WEEK SINCE FUKUSHIMA: 4 MAJOR SETBACKS IN 3 DAYS ARE LATEST STUMBLES FOR U.S. NUCLEAR POWER INDUSTRY." An audio recording of the news conference has been posted online.

The four setbacks in three days include: 1) the cancellation of two proposed new reactors at South Texas Project, because they violate U.S. law against foreign ownership of nuclear power plants; 2) Southern California Edison's threat that if NRC does not allow it to restart operations at its crippled San Onofre nuclear power plant, it will permanently shutdown both reactors there; 3) Duke Energy's cancellation of two proposed new atomic reactors at its Shearon Harris nuclear power plant in North Carolina; and 4) Florida's amendment to its previously highly permissive "advance cost recovery" or "Construction Work in Progress" law, via which ratepayers have been gouged to pay for proposed new reactors, when there is no guarantee the proposed new reactors will ever actually get built or generate electricity.

Peter Bradford also added the May 7th shutdown of Dominion's Kewaunee atomic reactor in WI -- despite the 20 years of operating license still left to it -- as another example of the "worst week since Fukushima" for the U.S. nuclear power industry.

Sunday
Mar032013

Nuclear Relapse? Canceled! Nuclear power? Game over!

Peter BradfordLest history repeat itself, warns Peter Bradford in the Bulletin of Atomic Scientists...

As reported by ScienceDaily in an article entitled "U.S. May Face Inevitable Nuclear Power Exit,"  the Bulletin of Atomic Scientists (BAS) has concluded its three part "Nuclear Exit" series with a look at the United States. The previous two installments examined the nuclear power phase-out in Germany, and the nuclear power status quo in France.

The BAS U.S. coverage features former U.S. Nuclear Regulatory Commission Commissioner, Union of Concerned Scientists board member, and Vermont Law School professor Peter Bradford's "How to close the U.S. nuclear industry: Do nothing," which concludes that, without massive taxpayer or ratepayer infusions, almost all proposed new reactors will not happen, and currently operating reactors will permanently shutdown by mid-century, unless the NRC rubber-stamps 80 years of operations (as opposed to the current, already risky 60).

In a section entitled "Picturing a U.S. phase-out," Bradford writes:

"The countries that have recently decided to phase out nuclear energy have done so by governmental fiat, complete with statutory deadlines both for individual reactors and for nuclear power in general. But no such sweeping action is really necessary in countries that have chosen to procure power generation through market mechanisms. The US experience demonstrates that absence of governmental intervention will create a glide path, determined in part by how long a country is prepared to allow its oldest reactors to operate, but in fact by the interplay between gas-driven electricity prices and the point in time at which older plants must make significant capital investments." (emphasis added)

Bradford points out that "By this standard, units at Crystal River and San Onofre--currently closed by major equipment failures--appear to be serious shutdown candidates, though they may survive, because they are located in Florida and California, respectively, states in which regulators can override market verdicts and impose their repair costs on customers."

In fact, Duke/Progress has thrown in the towel on Crystal River, announcing that it is now permanently shutdown. And Friends of the Earth, along with a groundswell of grassroots anti-nuclear activism in southern California, is doing all it can to keep San Onofre Units 2 and 3 shutdown for good, as well.

A spokesman for Dominion Nuclear admitted that the "purely economic reasons" which led to the utility's decison to close its Kewaunee atomic reactor on the Lake Michigan shoreline in Wisconsin -- the first atomic reactor shutdown announcement in 15 years in the U.S. -- was the inability to make needed, major safety repairs andturn a profit, given the competitive electricity market.

And Entergy Nuclear's brand new CEO, Leo Denault, admitted to Reuters that numerous of his "dirty dozen" atomic reactors -- especially the merchant plants (those in deregulated, competitive electricity markets) -- face tough economic challenges, due to costly upkeep (a.k.a., essential safety-significant repairs and component replacements).

Reuters reported: "[Denault] said some plants are in the more challenging economic situations for a variety of reasons, including 'the market for both energy and capacity, their size, their contracting positions and the investment required to maintain the safety and integrity of the plants.'" (emphasis added)

At its Palisades atomic reactor on the Lake Michigan shore in southwest Michigan, Entergy has chosen to foregonumerous major, needed repairs (such as replacing the badly corroded reactor lid; replacing the deteriorated steam generators, for the second time in the plant's history; dealing with the worst embrittled reactor pressure vessel in the U.S.; making needed fire protection upgrades, etc.) for six long years now, apparently in order to "balance the books" -- that is, to prioritize profits (and executive salaries, and shareholder returns) over public safety.

Thursday
Jan172013

Forbes: "the nuclear renaissance may be largely over before it started" 

"Burning Money" image by Gene Case, Avenging AngelsPeter Kelly-Detwiler, Contributor to Forbes, has published an op-ed entitled "New Centralized Nuclear Plants: Still an Investment Worth Making?" In it, he concludes that "the nuclear renaissance may be largely over before it started," with not only the vast majority of proposed new reactors in the U.S. being cancelled, but even paid-off old reactors like Kewaunee in Wisconsin being permanently shutdown due to crushing economics -- such as the expense of major, vitally needed safety repairs at the 40-year old reactor.

Kelly-Detwiler cites the "takes too long," "costs too much," and "bet-the-farm" nature of nuclear power for the "failure to launch" of the nuclear relapse.

Regarding that last point, Kelly-Detwiler writes:

'So it appears that the nuclear renaissance may be largely over before it started.  And yet, many projects have not yet been canceled, with utilities and ratepayers accepting ever more risk in order to rescue sunk costs. In many cases, these costs have soared or will soar into the billions. As risk management expert Russell Walker of the Kellogg School of Management is quoted as saying in the Tampa Bay Times “When the stakes get higher, it gets harder for organizations to walk away…this happens a lot.  It’s the same problem a gambler has: If I play a little longer, it’ll come around.” '

However, he points out that the only proposed new reactors that seem to be moving ahead are those privileged by Construction Work in Progress (CWIP) funding. He writes:

'In Georgia, Vogtle Units 3 and 4 (owned jointly by a number of utilities, including Georgia Power) appear in somewhat better shape, but issues have cropped up there as well.  Customers currently pay $10 per month in advance to cover financing associated with the two 1,117 MW units.  Georgia Power is allowed by legislation to recover $1.7 bn in financing costs of its estimated $6.1 bn portion of the $14 bn plant during the construction period.  However, there have already been some cost problems, and Georgia Power is disputing its responsibility to pay $425 million of overruns resulting from delays in licensing approvals.  Total cost excesses to all partners total $875 mn.  The two units were expected to come online in 2016 and 2017, but in a Georgia PSC meeting in December, an independent monitor noted that expected delays of fifteen months are largely as a result of poor paperwork related to stringent design rules and quality assurance.  Those delays will likely continue to cost more money...

With low natural gas prices, efficient combined cycled turbines, more efficient renewables and a host of more efficient end-use technologies, that’s a bet fewer and fewer seem wiling to take.  Unfortunately for ratepayers at some utilities, they are at the table whether they like it or not…' (emphasis added)

If the op-ed's title is meant to imply that so-called small modular reactors might still save the day for the retreating nuclear power industry, it must be pointed out that the supposed justification for giant-sized proposed new reactors (such as the AP1000, at 1,100 MWe; the ESBWR at 1,500 MWe; the EPR at 1,600 MWe; etc.) was "economies of scale." Since small modular reactors represent the opposite end of the spectrum, it stands to reason these would be even more expensive than their super-sized, failed siblings.

In a classic February 14, 1985 piece entitled “Nuclear Follies,” 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. The utility industry has already invested $125 billion in nuclear power, with an additional $140 billion to come before the decade is out, and only the blind, or the biased, can now think that the money has been well spent. It is a defeat for the U.S. consumer and for the competitiveness of U.S. industry, for the utilities that undertook the program and for the private enterprise system that made it possible.”