FOE challenges unique industry tactic to charge ratepayers for nuclear plants not built

[kristopher]

Challenge to nuclear project to be heard by S.C. Supreme Court

...The March 4 hearing at the state Supreme Court in Columbia will consider the appeal by the environmental organization Friends of the Earth of a decision by the South Carolina Public Service Commission allowing South Carolina Electric and Gas to proceed with a two-reactor nuclear power project and to begin collecting rates to pay for it.

...Friends of the Earth claims that this “construction work in progress” law is unconstitutional as it forces rate payers to pay for something they may never receive. Friends of the Earth has claimed that the Public Service Commission gave SCE&G a “blank check” for the project’s costs as SCE&G did not provide the Public Service Commission with a cost of electricity coming for the reactors nor guarantee a final cost for the project.

...Georgia Power, which also aims to build two AP1000 reactors, has said those reactors are likely to reach a cost of $14 billion. On February 2, Nuclear Regulatory Commissioner Greg Jaczko stated in an Arizona Republic article that “the best estimate for a new reactor’s price tag is about $10 billion.”

The two Westinghouse AP1000 reactors that SCE&G intends to build have yet to be certified or receive a license from the Nuclear Regulatory Commission, and are now undergoing redesign of the “shield building” that covers the reactor containment. Due to this serious matter, no established review schedule exists for the design, meaning more delays in the licensing decision or a rejection of the design by the Nuclear Regulatory Commission.

SCE&G first claimed the project would cost $9.8 billion but they are already up to 11.5 billion and we aren't even close to the final number...

The government gives them the money for 80% of the project (as a hugely discounted rate) but even that isn't enough to attract investors. In order to get the rest of the money, they STILL have to charge ratepayers for construction in addition to charging for the electricity the plant might someday produce. No other generating source has ANYTHING like this. Republicans LOVE it.

http://www.elp.com/index/display/article-display/4318673573/articles/electric-light-power/generation/nuclear/2010/02/Challenge_to_nuclear_project_to_be_heard_by_S_C__Supreme_Court_.html

And from the CBO:
Based on current industry practices, CBO expects that any new nuclear construction project
would be financed with 50 percent equity and 50 percent debt. The high equity participation
reflects the current practice of purchasing energy assets using high equity stakes, 100 percent
in some cases, used by companies likely to undertake a new nuclear construction project.
Thus, we assume that the government loan guarantee would cover half the construction cost
of a new plant, or $1.25 billion in 2011.
CBO considers the risk of default on such a loan guarantee to be very high—well above
50 percent. The key factor accounting for this risk is that we expect that the plant would be
uneconomic to operate because of its high construction costs, relative to other electricity
generation sources. In addition, this project would have significant technical risk because
it would be the first of a new generation of nuclear plants, as well as project delay and
interruption risk due to licensing and regulatory proceedings.

[jody]

1. If the plant were built by a Canadian group then the law suit would be settled by arbitration

overruling anything SCOTUS might decide because NAFTA's arbitration provision trumps U.S. sovereignty.