The city has since pulled out. Of course, that was mostly because of the public scandal of pushing estimates known to be phony during the public hearings for the project rather than a sudden fit of real fiscal responsibility.
... One of the first movers – NRG Energy’s plan for two new advanced boiling water reactors at the existing South Texas Project – is in financial trouble. San Antonio is seriously considering pulling its City Public Service municipal utility – a 50-50 partner with NRG and Toshiba – out of the project because of escalating costs. Toshiba originally estimated the project cost at $8.5 billion. In late 2008, the cost estimate escalated to $12.7 billion (a figure that was not provided to the city government until late in 2009). There are independent estimates for the plant of close to $17 billion. (see
http://www.ieer.org/reports/nuclearcosts.pdf )
The city government was scheduled to vote in late December whether to go ahead with its participation in the South Texas expansion, but has delayed the vote.
More detailed background:
A reasonable estimate of the real cost in 2008 dollars of building a new two unit
nuclear power project is $5,022 - $6,160 per kW. If construction began in 2012, and
ordinary inflation is 2%, this implies a nominal cost of $7,000-$8,130 per kW, or
$20-22 billion. How does the cost of nuclear power compare to other alternatives?
• A new nuclear plant will be 50% more expensive over its life than the primary
conventional alternative, combined cycle gas generation.
• Energy efficiency is widely accepted as the most cost effective resource, typically
one-half as costly as constructing new gas peaking plants. Texas could achieve
15,000-18,000 MW of energy efficiency over the next 10 years at just 15% of
the annualized capital cost per kW of the nuclear option.
• The real installed cost of $5,022 - $6,160 per kW is higher than any of the
following estimated installed cost per kW: (see chart in pdf)
http://www.cleanenergyfortexas.org/downloads/nuclear_report_breakdown_full.pdf COSTS OF CURRENT AND PLANNED NUCLEAR POWER PLANTS IN TEXASA Consumer Perspective
A Report Prepared for Public Citizen, Texas Office
Author: Clarence Johnson
CJEnergy Consulting
Austin, Texas
PREFACE
With the nuclear power industry pressing for a new wave of nuclear construction, the nuclear projects proposed in Texas will be unlike those proposed by regulated electric utilities in other states in one important way — they are proposed by competitive power generators in a deregulated Texas power market (ERCOT). This report addresses the following questions about those nuclear generation proposals in ERCOT:
(1) What is the cost impact of the currently operating nuclear plants on consumers in the ERCOT market?
(2) What is the history of nuclear power costs and schedules in Texas, and what can that tell us about the likely costs of new nuclear plants?
(3) Are new nuclear power plants likely to be viable in the deregulated ERCOT market?
(4) Given that the power generators are not provided regulated rate recovery of new nuclear unit costs, why should consumers be concerned?
About the Author
Clarence Johnson has over 25 years of experience in the electric utility regulatory process. He was Director of Regulatory Analysis for the Texas Office of Public Utility Counsel until June 2008, when he left to engage in consulting. Mr. Johnson was chairman of the National Association of State Utility Consumer Advocate's economic and finance committee for more than 10 years. He has presented expert testimony in nearly 100 regulatory proceedings. He has been involved in prudence investigation proceedings for every nuclear power plant constructed by a Texas utility. Mr. Johnson has presented testimony on a wide range of issues, including generation capacity expansion, avoided costs, and the transition from regulation to competition.
EXECUTIVE SUMMARY
This report includes the following conclusions.
• The low operating costs of Texas' current nuclear power plants do not tell the complete story of their impact on customers in the ERCOT market. The low operating costs benefit the owners of the generation, rather than consumers. Moreover, consumers in ERCOT continue to pay off at least $3.4 billion for nuclear assets (net of revenues) through transition charges, as well as approximately $45 million in annual payments for nuclear decommissioning.
• Cost overruns were extensive in the U.S. nuclear power industry, and the cost / scheduling performance of Texas nuclear power projects were among the worst in the industry. The two Texas nuclear plants were 61% - 140% more costly and took 2-5 years longer to build than the average nuclear
power plant.
• Quality assurance / quality control (QA/QC) breakdowns were pervasive among the most costly nuclear power plants, and the nuclear projects in Texas had particularly significant QA/QC problems. Regulatory streamlining has not altered the requirement that nuclear construction projects comply with rigorous QA/QC. Standardized design is unlikely to eliminate QA/QC risks, and certain factors related to the new nuclear plant proposals in Texas could impose greater risks of QA/QC cost / schedule impacts.
• A reasonable estimate of the real ($2008) cost of building a new two unit nuclear power project is $5,022 - $6,160 per kW. If construction began in 2012, and ordinary inflation is 2%, this implies a nominal cost of $7,000 - $8,130 per kW, or $20 - $22 billion.
• On a real ($2008) levelized busbar basis, a new nuclear project will be 50% more costly over its life than the primary conventional alternative, combined cycle gas generation. Building a new nuclear project in ERCOT is not likely to produce a positive internal rate of return. A portfolio of energy efficiency, alternative resources, and conventional generation is likely to be more cost-effective.
Given the high costs of the nuclear option, cost overruns are likely to result in pleas for additional public subsidies. The two generation companies proposing to expand their existing nuclear projects in Texas are dominant in their relevant geographic markets and in the baseload generation product market. The expanded nuclear plants will increase the potential for market power within ERCOT, and the likelihood of financial losses resulting from construction of the plants will increase the temptation for owners of the plants to raise prices above competitive levels.
http://www.publiccitizen.org/documents/Costs%20of%20current%20and%20planned%20nuclear%20power%20plants%20in%20texas.pdf Want more? OK.
Warning From Moody`s Followed by Mothballing of New Reactor Plans in Texas and Ontario; Developments in Line with Cooper Report from June Projecting Trillions in Excess Costs for Nuclear, Compared to Combination of Renewables and More Efficiency. WASHINGTON--(Business Wire)--
Three major developments in the nuclear power industry in late June underscore the key findings of the "The Economics of Nuclear Reactors," a report released on June 18, 2009 by economist Dr. Mark Cooper, a senior fellow for economic analysis at the Institute for Energy and the Environment at Vermont Law School. The Cooper report finds that it would cost $1.9 trillion to $4.1 trillion more over the life of 100 new nuclear reactors than it would to generate the same electricity from a combination of more energy efficiency and renewables.
Available online at
http://www.vermontlaw.edu/Academics/Environmental_Law_Center/Institutes_and_Initiatives/Institute_for_E the Cooper analysis of over three dozen cost estimates for proposed new nuclear reactors shows that the projected price tags for the plants have quadrupled since the start of the industry`s so-called "nuclear renaissance" at the beginning of this decade - a striking parallel to the eventually seven-fold increase in reactor costs estimates that doomed the "Great Bandwagon Market" of the 1960s and 1970s, when half of planned nuclear reactors had to be abandoned or cancelled due to massive cost overruns.
Cooper said that three late June developments provide new evidence of the validity of the cost-related concerns documented in his report:
* On June 30, 2009, Exelon cited "economic woes" as a major factor in postponing for up to 20 years plans to build two nuclear reactors at its site in Victoria, Texas. (See
http://www.victoriaadvocate.com/news/2009/jun/30/gs_exelon_070109_56587/?business&local-news for local coverage of the decision.)
* On June 29, 2009, the Government of Ontario announced that it has suspended the competitive bidding process to procure two replacement nuclear reactors planned for a Darlington, Ontario site. As the New York Times reported: "Two years into a $20 billion nuclear upgrade project meant to replace aging reactors with next-generation technology, the Ontario government postponed the entire process on Monday, citing excessive cost and uncertainties involving the ownership status of the sole Canadian bidder ... Yesterday`s move is a setback for the Atomic Energy of Canada Limited, the 57-year-old government-owned corporation that has built all of Canada`s reactors and could soon be sold off to a private investor." (See
http://greeninc.blogs.nytimes.com/2009/07/01/ontario-puts-nuclear-expansion-plans-on-ice/.)
* On June 23, 2009, Moody`s Investor Services issued a report titled "New Nuclear Generation: Ratings Pressure Increasing." The summary to the report included the following: "Moody's is considering "taking a more negative view for those issuers seeking to build new nuclear power plants ... Rationale is premised on a material increase in business and operating risk ... most utilities now seeking to build nuclear generation do not appear to be adjusting their financial policies, a credit negative. First federal approvals are at least two years away, and economic, political and policy equations could easily change before then ..." Cooper pointed out that even though Moody`s concludes that reactors might be financially viable once operating, the barriers to actual permitting and affordable construction may make it impossible to reach the operational new-plant phase. See the report summary at
http://www.alacrastore.com/storecontent/moodys/PBC_117883 and a related news
story at
http://money.cnn.com/news/newsfeeds/articles/djf500/200906250936DOWJONESDJONLINE000658_FORTUNE5.htm. Institute for Energy and the Environment at Vermont Law School, South Royalton,
VT.
Ailis Aaron Wolf, (703) 276-3265
aawolf@hastingsgroup.com
Oh and did I mention the estimate by the CBO that more than 50% of this new round of nuclear plants are expected to go bankrupt?
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