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Cost of delayed Georgia nuclear project may be $25 billion
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Energy Secretary Perry turned down Scana’s bid for bailout
The U.S. Nuclear Industry’s Last Hope Seeks Help From Trump
QuickTake: Nuclear Energy Debate President Donald Trump has vowed to revive America’s dying nuclear industry. Backers of a troubled Georgia nuclear project want him to prove it. They have asked the administration to come to the aid of a project to build two reactors to the Southern Co.’s Vogtle power plant, according to people familiar with the talks. That could include increasing or speeding up disbursements of $8.3 billion in federal loan guarantees to the companies behind the nuclear plant, the people said. They asked not to be identified discussing ongoing negotiations. A Georgia public service regulator was in Washington to make a case for the project, the last nuclear plant under construction in the U.S., and Southern has hosted congressional staff members at the construction site. The company also wants Congress to extend tax breaks for nuclear power. “We have asked anybody that would help us achieve the best commercial outcome possible,” Southern chief executive officer Tom Fanning said in an interview Aug. 2. Tom Fanning, CEO of Southern, discusses the Vogtle project.
Source: Bloomberg
With Southern set to tell regulators in Georgia by the end of this month whether it plans to continue with construction plans for the plant, federal support could be crucial. Last week, Southern said it estimated its portion of the cost to complete the reactors was at least $11.5 billion, excluding $1.7 billion in guaranteed payments from Toshiba. Given Southern’s 46 percent stake in the project, that would put the total cost of building the two reactors at $25 billion. "This thing is in our national security interest,” Fanning said. “That’s why we’ve preserved the option to go forward. That’s why government has been helpful." After Energy Secretary Rick Perry turned down a request for $3 billion in aid for Scana Corp.’s nuclear plant in South Carolina, it’s not clear how much the federal government will help. Scana abandoned its V.C. Summer nuclear projects last month after it concluded the two reactors would end up costing it more than $20 billion to build. In general, the Trump administration has said it’s studying the nuclear issue. "A complete review of U.S. nuclear energy policy will help us find new ways to revitalize this crucial energy resource," Trump said during a visit to the Energy Department earlier this summer. The Energy Department is close to issuing a study on how to help baseload power, which is primarily coal and nuclear power. Plants using those fuels are struggling as cheap natural gas and renewable energy has kept wholesale power prices largely flat. The request for help could be in addition to or part of the $8.3 billion loan guarantee provided by the Energy Department under the Obama administration. As of June 30, Southern has borrowed $2.6 billion through the loan guarantee pact, but disbursements from that financing agreement were put on hold until it decides if construction will continue, according to a company filing. Oglethorp Power Corp., which has a 30 percent stake in the Vogtle project, said in a filing Thursday that its cost estimate to complete the reactors had increased from $5 billion to as much as $7.3 billion. It has withdrawn $1.7 billion of a $3.1 billion loan guarantee from the federal government. Read More: Two Half-Finished Nuclear Reactors Scrapped as Costs Balloon Both the Summer and Vogtle projects hit additional delays and cost overruns after Westinghouse Electric Co., the U.S. unit of Toshiba Corp., went bankrupt in March. Westinghouse was building both plants. Instead of granting Scana a grant, Perry suggested the company apply for a loan guarantee, according to an Energy Department official. Kevin Marsh, Scana’s CEO, told state regulators he got "no response" on the company’s grant request. "When Scana showed up on Perry’s doorstep dragging the carcass of Westinghouse behind it, it’s understandable the administration blanched and turned away," Peter Bradford, a former member of the Nuclear Regulatory Commission, said in an interview. An spokeswoman for the department didn’t respond to a request for comment. Southern continues to talk with the administration and Congress and has found support from Washington to be "critical to the project," spokesman Schuyler Baehman said in an emailed statement. "On Vogtle and nukes in general the Trump administration is what the Texans call ‘Big Hat and No Cattle,’" said James Lucier, an energy analyst and managing director at Capital Alpha Partners. "They don’t have any ammo in the gun." "You hear them talking such a good game about nuclear power and base load power, but the reality is there isn’t a lot they can do," he added. Beyond re-jiggering or expanding the loan guarantee, direct aid for Southern would most likely require an act of Congress, and getting that done is uncertain. However, the House has passed an extension of the production tax credit for nuclear power; because of delays in the Vogtle project it may not be completed before those credits are set to expire. Tim Echols, the vice chairman of the Georgia Public Service Commission, was in Washington this week to brief lawmakers about the project. If Westinghouse comes through with the payment of $3.68 billion it has promised toward the project, it should be in good shape, he predicted. "We are not going to throw in the towel like South Carolina," he said in an interview. — With assistance by Jennifer A Dlouhy, Billy House, and Jim Polson ©2017 Bloomberg L.P. All Rights Reserved |