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New economic study predicts more nuclear cost overruns

Thursday, March 14, 2013 1:45 PM
Last updated 10:10 PM
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Ratepayers across the South could be saddled with billions of dollars in excess nuclear plant construction costs, according to an economic study released Thursday.

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Construction continues on part of the containment vessel for a new nuclear reactor at Plant Vogtle.   JOHN BAZEMORE/ASSOCIATED PRESS
JOHN BAZEMORE/ASSOCIATED PRESS
Construction continues on part of the containment vessel for a new nuclear reactor at Plant Vogtle.

The 86-page report, written by analyst Mark Cooper of the Vermont Law School Institute for Energy and the Environment, predicted that nuclear cost overruns and other factors will continue to inflate the costs of projects such as Plant Vogtle in Burke County and SCANA’s V.C. Summer expansion in South Carolina.

“While the economic case against nuclear reactor construction was strong in 2008 when these engineering, procurement and construction contracts were signed and the construction approved, a dramatic change in material conditions was evident by 2009-2010 and the reactors should have been cancelled,” the study said.

Advance cost recovery guarantees, Cooper wrote, shifted the risks from stockholders to ratepayers, who will bear the price of cost overruns.

The study focused on the V.C. Summer project, which Cooper concluded will cost that state’s ratepayers $10 billion in excess costs. Other states would likely face larger excessive costs.

“The exact amount (of the excess costs) will vary depending on the assumptions made about the construction costs, the discount rate (cost of capital), the projected cost of gas, and the cost and availability of other alternatives,” he said.

In Georgia, the price of the Vogtle expansion recently rose from $14 billion to more than $14.7 billion, based on data provided to the Georgia Public Service Commission.

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Little Lamb
47029
Points
Little Lamb 03/14/13 - 01:59 pm
2
0
Hate Group

An advocacy group is a group that tries to persuade people to be for their idea. What would you call a group that works only against an idea? Hate group is the only term that comes to mind.

I'm still trying to figure out how this group supports the notion that the projected cost of natural gas has anything in connection with the cost of building a nuclear plant.

Sweet son
10753
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Sweet son 03/14/13 - 03:52 pm
0
2
@Little Lamb

All of this just sounds bad for we who are currently consumers of electrical power. I have been watching this theatrical drama as it has unfolded regarding cost over runs and am becoming like you suggested a "hate group" all by myself. I think the estimators for the Vogtle project and others had their heads up their [filtered word]es when they proposed the costs. Change orders usually inflate the cost of projects but I don't believe these guys even had a clue. They just assumed that the public would put up with their ineptness and pay! The Southern Company and other power brokers should bear most of the costs for the overruns and mismanagement of budgets.

burninater
9690
Points
burninater 03/14/13 - 05:49 pm
2
0
LL, advocating that a

LL, advocating that a facility not be built is advocating for an idea, especially when that advocacy is backed with an evidenciary basis of confirmable or refutable data. A hate group opposes specific identity or ideology without evidenciary basis.

On another point, this is the reason projected natural gas cost matters:

Whether or not to pay to increase capacity is not the available choice; energy demand necessitates it, so we must pay to increase capacity. The available choice, rather, is what power generation technology do we use, and a primary consideration in that choice is relative cost. Where a choice exists between nuclear-generated vs natural gas-generated power, cost/kWH is an integral part of this decision, and projected cost of natural gas matters.

If nuclear was the ONLY option, then I would agree, the projected cost of natural gas is neither here nor there.

Bodhisattva
6474
Points
Bodhisattva 03/14/13 - 05:47 pm
0
1
Ratepayers need lobbyists too
Unpublished

Why are the stockholders shielded from all risk and guaranteed a ridiculous rate of return?

SCEagle Eye
921
Points
SCEagle Eye 03/14/13 - 06:32 pm
2
2
Based on the "logic" above, I

Based on the "logic" above, I can only conclude that Georgia Power and SCE&G are hate groups as they continually advocate AGAINST any risk being assumed by the companies or share holders in pursuit of the costly nuclear projects which rate payers are already paying for. But they LOVE profits that are continually guaranteed to them as semi-regulated monopolies! (OK, it's really a form of socialism so I must further conclude that they HATE capitalism and competition.)

Fiat_Lux
15913
Points
Fiat_Lux 03/15/13 - 10:54 am
1
0
This is just shocking information!

Cost overruns that will be passed onto Mr. and Mrs. American?

Say it ain't so.

ColdBeerBoiledPeanuts
9175
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ColdBeerBoiledPeanuts 03/15/13 - 10:57 am
1
0
OK, it's really a form of socialism so I must further conclude t

Wow! Conclusions! Let's say that utilities don't build Nuclear Power. Currently they are shutting down and dismantling coal plants because regulations require so much pollution control that costs Billions of dollars. That leaves us with wind, of which the only abundant source is on here, water, which cannot produce enough to supply needs. That leaves good old natural gas. Livestock methane production unaccounted for, without nuclear in the mix, gas becomes the monopoly. At that point, what do you see happening with natural gas prices? It doesn't take a degree or a rocket scientist to understand that.

nukewriter
5
Points
nukewriter 03/19/13 - 01:33 pm
0
0
Advocacy studies

Studies like this are common and they are written to either bolster a point of view, influence decision makers or create a negative perception in the minds of the public.

Mark Cooper has been advocating for the consumer, for the ratepayer, for the interests of the poor, the little guy, the under-served consumers for 30+ years, targetting the "unfair" practices of utilities and other public service groups. This is his latest testament.

If you look at the report, you might notice that his assumptions are biased toward alternate forms of energy and against nuclear generated energy. The assumptions that jumped out at me included the assumption that natural gas prices will continue to perform at today's unsustainable cost levels. His assumption about wind generated enregy costs are flawed in that he does not include maintenance costs in line with historical costs.

His premis that Nuclear is uneconomical is at odds with the historical record, the cost projections of neutral observers, and the opinions of the financial backers of the industry. The argument that nuclear power is uneconomical is a favorite, and unsupported, agument of the anti-nuclear crowd that try to shout out all reasoned arguments that do not support their allegations.

The numbers that Dr. Cooper projects are bogus. They are ephemeral manifestations of his antipathy, not firm calculations based on experience, observation or calculation.

The arguments against advance cost recovery are based on an incomplete understanding of the financial mechanism. The capital costs of these units are very high, so high that many utilities cannot afford to pay for them and get their expenses returned when the units are producing electricity, as the old model required. However, suggesting that the public is paying for power plants before they are built is misleding and incorrect.

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