Tuesday, June 5, 2012

A Higher Price Tag for a Nuclear Project

The flagship project of a hoped-for but not-yet-realized “nuclear renaissance,” the Vogtle 3 and 4 reactors under construction near Augusta, Ga., may cost about $900 million more than had been estimated, the Southern Company said in a filing this week with the Securities and Exchange Commission at http://investor.southerncompany.com/secfiling.cfm?filingID=92122-12-76&CIK=092122.

The company, which is building the reactors with a consortium of utilities, said the problem arose from delays in the Nuclear Regulatory Commission’s approval of a design certification document from the manufacturer, Westinghouse, and of a combined construction and operating license.

“Issues have arisen that may impact the project budget and schedule,” Southern said. Cost and schedule are very tightly related because interest costs accumulate on the money already spent.

Southern said that the consortium building the plants, which includes its subsidiary Georgia Power (45.7 percent) as well as Oglethorpe Power (30 percent), the Municipal Electric Authority of Georgia (22.7 percent) and Dalton Utilities (1.6 percent), is in negotiations to determine the extent of the cost overrun and how it will be shared.

A total cost is hard to arrive at because each partner is likely to have different borrowing costs, but it is in the range of $14 billion.
In April the Nuclear Regulatory Commission said that some of the steel reinforcing bars used in the concrete in Unit 3 were installed in a way that differed from the plan it had approved. It has not yet said what should be done about that.

As a first-of-a-kind project, the Vogtle 3 and 4 reactors have been promised substantial federal aid, including a loan guarantee. The guarantee was contingent on winning a license.

by Matthew Wald
The New York Times www.NYTimes.com
May 11, 2012

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