Saturday, January 19, 2008

Georgia Power extends negotiations on AP1000

Utility wants better contract terms to control construction costs
[Update 04/04/08]

The Atlanta Journal-Constitution reports that Georgia Power is digging in its heels over the cost and schedule of two new Westinghouse AP1000 nuclear reactors for its Vogtle plant. The plants have a planned start-up date of 2016.

A key point of contention between Georgia Power and Westinghouse is what kinds of benchmarks will be used to predict and control future costs. The company and state regulators have expressed concern about benchmarks that are too open ended, and could allow costs to spiral out of control. Key issues include the cost of materials, especially major forgings, as well as cement and steel for the containment building.

A very high estimate of the cost of building two AP1000s for Florida Power & Light, as much as $6-9,000/Kw, has spooked Georgia Power which is demanding more stringent terms in the contract to control costs. The FP&L COL is scheduled to be submitted to the NRC in 2009 (2 units at the Turkey Point site.)

The Nuclear Energy Institute (NEI) took note of these developments and said on its blog last week that anti-nuclear activists were exploiting information that is no secret to the industry.

The nuclear industry is keenly aware of these commodity price increases, so this wasn’t exactly news. The nation faces a tremendous challenge in rebuilding and expanding the infrastructure that provides the reliable electricity on which our economy now depends. Electricity prices are expected to rise substantially in the next 10 years as utilities tackle the backlog of generation and transmission projects needed to replace outdated plants and meet new demand. The rise in commodity, labor, and component prices is affecting projected costs for all new electric generating projects, not just (and not uniquely) nuclear.

Back in Atlanta Georgia Power isn't walking away from the Westinghouse deal, but it isn't closing it either. According to the newspaper, "We are still negotiating," Georgia Power spokesman John Sell said.

Georgia Power isn't the sole player at the table. The Vogtle Plant, located near Waynesboro in eastern Georgia near the South Carolina border, is jointly owned by Georgia Power (45.7%), Oglethorpe Power Corporation (30%), Municipal Electric Authority of Georgia (22.7%) and the City of Dalton (1.6%). All of them have a stake in the costs which is what drives Georgia Power to extend the negotiations.

AP1000 specified in eight other plants

The AP1000 reactor design has not been built in the U.S. but it is certified by the NRC and has growing acceptance. According to the NRC new reactor licensing web page, Westinghouse AP1000s are also slated to be included in COL applications for Progress Energy (four units), and South Carolina Electric & Gas (2 units).

Earlier this year Duke specified two AP1000s for its William Lee plant in South Carolina and TVA specified two AP1000s for its Bellefonte site in Alabama.

The issues of cost and schedule to build a commercially successful nuclear reactor are critical success factors for the industry as a whole. A lot of other utilities are likely watching the Georgia Power deal. The competitive position of the AP1000 in the U.S. market may be tested by the outcome of these negotiations.

Update 04/04/08

The Atlanta Journal Constitution reports that negotiations should wrap up in another two weeks with the costs of the news reactors coming in at less than $3,500/Kw.

"Negotiations with Westinghouse are going well," said Paul Bowers, chief financial officer for Southern Co., which owns Georgia Power. He was speaking at Morgan Stanley's Global Electricity & Energy Conference in New York.

Bowers said the company is trying to finalize an agreement on how much the reactors will cost as well as how long it would take to build them.

Friday, January 18, 2008

Another blogger for nuclear energy

News media that mangle nuclear nomenclature
should be advised . . .

Andrea Jennetta and Nancy E. Roth have launched Fuel Cycle, a blog on nuclear energy.

The bloggers, both veteran journalists and Democrats, hope to help reframe the debate on the role of nuclear in the world’s future energy mix. Accordingly, they say they will take on the inaccurate and skewed depictions of nuclear energy that regularly appear in the popular media, and in the process detoxify the public discourse.

The blog is also about the nuclear fuel cycle especially markets and industry developments globally.

Sounds like a great idea.