Sunday, April 1, 2012

Scana steams ahead with NRC licenses

Two new Westinghouse 1100 MW AP1000 nuclear reactors will be build in South Carolina

The U.S Nuclear Regulatory Commission (NRC) on Friday March 30 voted 4-1 clearing the way for the Office of New Reactors to issue combined construction and operating licenses (COLs) for two new nuclear reactors.

The licenses issued last week are for SCE&G (Scana) and Santee Cooper to build two Westinghouse AP1000s at their V.C. Summer site 26 miles northwest of Columbia, SC.

The applications for the licenses were submitted almost exactly four years ago. Scana told Reuters March 29 it has revised the timelines for completing the reactors delaying the start for the 1st unit a year to 2017 but bringing in the second unit a year earlier in 2018.

Previously, the NRC issued the licenses last December for two similar reactors to be built by Southern at a site in Georgia.  The decision last week by the NRC is a major victory for the U.S. nuclear industry which has struggled to create credible reality out of the vision of a "nuclear renaissance."

Scana has a 55% share of the $10.2 billion in costs and the two reactors. Santee Cooper has the other 45%.  For some time there have been been reports that Duke Energy is interested in buying 500 MW of power generation capacity from Santee Cooper's share of the plants. However, such a deal is unlikely to move forward until Duke completes its planned merger with Progress Energy.

That deal was postponed from last December to this coming July.  It may be postponed again if regulatory agencies at the federal level and in North Carolina do not approve of the market impacts  for the combined firm.  Scana operates in a regulated market which allows the firm to recover the costs of building the reactors as the come in.

No loan guarantee for now

The firm has not aggressively pursued a DOE loan guarantee for the project.  Scana CEO Kevin Marsh told the Wall Street Journal March 30 that the firm has raised $1.2 billion so far to cover the cost of construction or about 11% of the total needed to complete the project.  He expressed confidence that the firm would continue to be successful in going to capital markets without DOE loan guarantees.

However, David Frantz, head of the DOE loan guarantee office said there was always a possibility the firm might change its mind.   And Dennis Pidherney, head of public-power sector for Fitch Ratings, told the WSJ that Scana was just at the start of a long journey to raise the billions is needs to build the reactors.

The long road to a license

The complicated process of applying for the license included the following milestones.
  • The NRC's Advisory Committee on Reactor Safeguards (ACRWS) independently reviewed aspects of the application that deal with safety.  It also reviewed the NRC staff's Final  Safety Evaluation Report (FSER).  The ACRS completed its work in February 2011.
  • The NRC completed its environmental review and issued a final environmental impact statement in April 2011.
  • The NRC issued the Final Safety Evaluation Report (FSER) in August 2011
Separately, the NRC completed the certification of the amended  AP1000 design on December 30, 2011. It is an 1,100 MW unit with advanced passive safety design features that would cool down the reactor after an accident without the need for electricity or human intervention.

The safety review was fraught with controversy some of it brought on by NRC Chairman Jaczko. In May 2011 he took the unusual step of issuing a press release complaining that Westinghouse was not addressing the agency's concerns about the design.  For its part, Westinghouse took the design certification document through 19 versions to satisfy all the regulatory requirements imposed by the agency.

Anti-nuclear groups tried repeatedly to stop the safety certification through various contentions filed with the NRC including a complaint that a terrorist commanded aircraft crashed into the containment structure would cause a catastrophic destruction of the reactor inside.  Tests performed by Westinghouse at Purdue University disproved that theory.  For a physical metaphor of what will really happen to the plane, try crushing an empty 12 oz soda can with your foot.

Jaczko digs in over Fukushima

Ominously, NRC Chairman Gregory Jaczko said in his vote March 30 there could be delays in future licensing actions. He cited the upcoming two license applications for similar AP1000s planned to be built by Progress at a site in Florida. He said he wants the regulatory agency change the method of implementing Fukushima related safety measures. He wants all new reactors to implement the safety changes before they start operation, a process that could take years.

In his vote against the licenses (starts on Pg. 70) for V.C. Summer, he repeated his views first aired in a vote last December against Southern's licenses.  His position is that Southern and Scana, and any other future licensee, comply with all post Fukushima safety standards before they begin operations.  Coincidentally, Progress plans to build the same type and model of reactors as chosen by Southern and Scana.  It isn't clear why Jaczko has singled that project out for additional scrutiny.

However, NRC Commissioner Kristine Svinicki told Platts following the vote that she was "very confident" that the agency has in place the established regulatory processes to implement any new safety measures. She said the NRC has the power to impose new requirements on reactors whenever they may be needed. The other commissioners agreed with her views last December and again this March with the same 4-1 votes for both licensing actions.

The complete text of the NRC Commissoner's votes are online in this lengthy document made available by the agency.  A public link to the document should be available next week in the agency's ADAMS system.

Scana settles with Shaw

The day before the NRC issued the licenses Scana settled with its contractors, including The Shaw Group, over a dispute over payment for $138 million in added construction costs. The increases were tied to differing site conditions, including unexpected rock at the foundation site, and the length of time it took the NRC to issue the licenses. Still, the settlement is $50 million less than previously disclosed by Scana.

About 1,000 workers have already been preparing the site for construction which is expected to employ up to 3,000 people to build the two plants.  Each of the reactors will have a permanent workforce of about 800 people.  This is not a green field site. One reactor was built there in 1984 and continues its operation while construction takes place on the two new units.

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