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Five Nuclear Challenges

Building reactors requires new federal commitment.

Fortnightly Magazine - March 2009

take on such construction without some assurance that it won’t lose money. Therefore, without a restructuring of electric rates for most U.S. regions, nuclear power plants can’t, and won’t, be built.

State and Local Policies Must Change : Even if nuclear designs were available, appropriate federal policies were in place, sources of financing existed, and retail rates were adjusted, current state and local policies are either missing or counterproductive.

One roadblock, which state laws commonly term Construction Work In Progress (CWIP), keeps utilities from billing customers for construction costs as they are incurred. Ameren President Tom Voss says, “that law stops construction of Callaway-Two before it ever starts.” 17 Duke and Georgia Power also are seeking reversal in CWIP laws before they consider building any new nuclear facility. 18,19 Further, Georgia Power claims CWIP costs the utility an additional $2 billion in financing on a $6.4 billion project.

Another roadblock comes from the moratorium imposed by several states and regions that prohibit nuclear power developers from building new plants in their territories. New England, New York, Wisconsin, California, and other localities have prohibitions on the construction of new nuclear units. 20,21 Ironically, many of these same regions are experiencing the highest retail electricity rates in the nation. 22

No nuclear developer or operator will proceed with construction in regions that roll out the unwelcome sign. If local rules, like CWIP, cause the capital costs and levelized costs to increase dramatically, new nuclear plants won’t be considered, much less constructed.

All five of these challenges must be addressed before any prudent organization can proceed with a firm commitment to build a new nuclear power plant. While there are undoubtedly additional factors to consider, proceeding without resolution of these challenges introduces inordinate risk.

Prioritizing Reliability

The five challenges fall into three broad and overlapping categories; regulation, policy and money. Taken together, the challenges appear to call for a “federal solution” to avoid a national energy supply predicament. An obvious solution is to adopt the approach taken by France, China, and other countries, which is to nationalize the nuclear power industry by having the federal government build, own, and operate a fleet of new nuclear power plants.

There is an alternative to the federal solution, which could maintain private-sector ownership of new nuclear power plants without significant subsidies. This alternative will require time, adjustments in existing statutes and cooperation among utilities, states, and national interests.

Part of the solution will happen no matter what path the industry or governments decide to take. Additional time is needed for the industry and the Nuclear Regulatory Commission (NRC) to complete the certification of two or more designs. If the industry successfully freezes their designs, the NRC will begin issuing full and non-contingent design certifications within the next two or three years. The timing of these certifications depends on the responsiveness of both industry and the NRC.

While many would like to have the NRC’s certification process expedited, additional time will be needed to resolve the policy and financial challenges that have been listed previously. Additional time is