New Wave of Nuclear Plants Faces High Costs
May 23 - Tulsa World
A new generation of nuclear power plants is on the drawing boards in the
U.S., but the projected cost is causing some sticker shock: $5 billion to
$12 billion a plant, double to quadruple earlier rough estimates.
Nuclear power is regaining favor as an alternative to other sources of power
generation, such as coal-fired plants, which have fallen out of favor
because they are major polluters. But the high cost could lead to sharply
higher electricity bills for consumers and inevitably reignite debate about
the nuclear industry's suitability to meet growing energy needs.
Nuclear plants haven't been built in meaningful numbers in the U.S. since
the 1980s.
Part of the cost escalation is bad luck. Plants are being proposed in a
period of skyrocketing costs for commodities such as cement, steel and
copper; amid a growing shortage of skilled labor; and against the backdrop
of a shrunken supplier network for the industry.
The price escalation is sobering because the industry and regulators have
worked hard to make development more e/cient, in hopes of eliminating
problems that in the past produced harrowing cost overruns.
The Nuclear Regulatory Commission, for example, has created a streamlined
licensing process. Nuclear vendors have developed standardized designs for
plants to reduce construction and operating costs. And utility executives,
with years of operating experience behind them, are more astute buyers.
Now, 104 nuclear reactors are operating in the U.S. Most are highly
profitable but that was not the case until fairly recently. For the 75 units
built between 1966 and 1986, the average cost was $3 billion or triple early
estimates, according to the Congressional Budget Office. Many plants operate
profitably now because they were sold to current operators for less than
their actual cost.
The latest projections follow months of tough negotiations between utility
companies and key suppliers, and suggest efforts tocontrol costs are proving
elusive. Estimates released in recent weeks by experienced nuclear operators
-- NRG Energy Inc., Progress Energy Inc., Exelon Corp., Southern Co. and FPL
Group Inc. -- "have blown by our highest estimate" of costs computed just
eight months ago, said Jim Hempstead of Moody's Investors Service.
Stan Whiteford, a spokesman with American Electric Power- Public Service
Company of Oklahoma, said the utility's parent company has no plans to add
nuclear power.
Originally published by REBECCA SMITH The Wall Street Journal.
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