Advanced reactor design is out of the running for Victoria, TX, site
GE Hitachi's latest product offering, an "economic simplified boiling water reactor" (ESBWR) was dropped this week from further consideration for Exelon's planned greenfield nuclear reactor site at Victoria, Texas, 118 miles southeast of San Antonio.
The Wall Street Journal had a snappy lead in its coverage of issue. It said, "GE Hitachi Nuclear Energy has a problem with its latest nuclear reactor; getting someone to build it."
Exelon (NYSE:EXC) had proposed to build two of the giant 1560 MW reactors at the new location. The main reason is that the lagging design certification process at the Nuclear Regulatory Commission (NRC) resulting in a ranking for the Texas project at the bottom of the heap for eligibility for Department of Energy federal loan guarantees.
Thomas S. O'Neill, Exelon's VP for New Plants, was direct and to the point in a company press release. He said, "We are seeking improved eligibility for federal loan guarantees, which is critical to the advancement of this project."
Exelon spokesman Craig Nesbit was more specific, if that's possible, in a statement he made to the WSJ as reported by Reuters.
"We believe the Victoria project fell into the lower tier largely because of the uncertainty of the ESBWR design. We had no chance of getting loan guarantees with the ESBWR."
Exelon's statement was confirmed to Reuters by the Department of Energy. A government spokesperson said that applicants were given the results of the preliminary screening of loan guarantee applications. The spokesman pointed out that one of the selection criteria is the time to market for reactor technologies.
Company officials also told the Chicago Tribune . . .
The ESBWR remains in "the early design phase," Exelon said, and an internal analysis the company conducted over the summer indicated that other reactor technologies could provide the Texas project with "greater commercial and schedule certainty."
NRC reportedly unhappy with GE Hitachi
The switch by Exelon to another reactor is designed to select a technology that has the best chance of getting early design certification by the NRC. According to a report in the Wall Street Journal, the NRC has been unhappy with the quality of the information provided by GE Hitachi which has caused delays in the review process. The NRC's web page for the ESBWR does not indicate a schedule nor completion date for the reactor's design review process.
Exelon chose the ESBWR in November 2007 as it prepared to spend $23 million to submit a combined operating and construction license (COL) which it filed in in September 2008. That's a relatively low cost. Ameren's COL application filed ith the NRC in September for an Areva EPR cost a reported $42 million.
World Nuclear News pointed out the EBSWR relies on gravity to operate "passive safety systems" that are considerably less complex, and therefore cheaper to build, than existing plants with cooling systems that require active pumps and valves.
Other utilities that have "referenced" the ESBWR in their applications include; Entergy for Grand Gulf and River Bend, Detroit Edison for FERMI III, and Dominion for North Anna. No one has actually placed an order for the reactor. See the NRC's web page on COL applications on file for links to each of these applications.
GE Hitachi told the WSJ it is has approached Exelon about using another reactor, the ABWR, for the Victoria site. According to GE, four ABWR units are in operation in Japan and another three of the 1,350 MW units are under construction in Taiwan.
Unlike Westinghouse and Areva, GE Hitachi has not booked any sales in mainland China. Also, the firm has pulled out of the bid process in the U.K. and Turkey albiet for different reasons in each country. In the U.K. GE Hitachi said it wanted more time to complete the design certification process for the ESBWR. In Turkey GE Hitachi was in good company with all other bidders, except Russia's RosAtomexport, in pulling out of a contentious bid process that isn't over yet.
Next steps for Exelon
For its part, Exelon said it will complete its review of available reactor designs and make a decision in early 2009. Exelon officials did not say how much it would cost to revise the COL application now on file with the NRC.
Exelon has pointed out that the shift in reactor technology does not imply that it has made a corporate decision to actually order a reactor and build one. That decision, the company says, will likely occur in 2010.
The Chicago-based firm, which is the largest nuclear utility operator in the U.S., also said that the decision to switch reactor technologies at Victoria, TX, does not affect its hostile takeover effort for NRG (NYSE:NRG) which operates the South Texas Project and is building two new reactors there. NRG has rejected Exelon's efforts in sharply worded letters. In response, Exelon has taken its bid process directly to stockholders.
Both companies have seen their stock hammered by the current downturn on Wall Street. At 10 AM Friday November 28, NRG stock had opened at $23.10 against a 52-week range of $45.78-$14.39. Exelon's stock opened at $55.60 against a 52-week range of $92.13-$41.23.
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