Bloomberg: Electric customers could pay $2.5B for unbuilt nuclear plants
Electric power ratepayers could end up paying $2.5 billion for nuclear plants that do not get built, Bloomberg reports.
Despite the fact that only two nuclear plants are under construction, some utilities are keeping their options opening by spending on federal licensing, permitting, land purchases, financing and equipment. At least seven states allow utilities to recoup nuclear licensing and planning costs from customers before construction begins.
Utilities such as Duke Energy, Dominion Resources and NextEra Energy have received regulatory clearances for $1.7 billion, and Duke and Dominion could seek another $839 million, according to regulatory filings.
Nuclear power has had its share of problems. Existing plants are looking for incentives and subsidies to ensure profitability and plants under construction are facing massive budget overruns.
Now, Bloomberg report, even nuclear plants that are not under construction are costing ratepayers billions of dollars.
The boom in natural gas production brought about by hydraulic fracturing technology has made gas so cheap that it has become the first choice fuel for power generation, outstripping coal and, in many cases, replacing nuclear power in the distribution stacks of wholesale markets.
Not only has natural gas risen in the U.S. generation fuel mix, representing about 33% of all the electricity generated, gas-fired plants have dominated new builds too, at least in terms of conventional generation.
The only nuclear power plants to begin construction in the past generation are in Georgia and South Carolina – Southern Co.’s Vogtle plant and SCANA’s Virgil Summer station – and they are both past due and over budget. In this environment it would seem odd that any utility would consider building a new nuclear plant, but some utilities are hedging their bets.
The nuclear planning process takes so long that they want to be sure they have the licenses in place should natural gas prices rise enough to make nuclear power more viable.
Those utilities are mitigating their risks “so that you have a license to build a nuclear plant if and when you need to,” Richard Myers, vice president of the Nuclear Energy Institute, told Bloomberg.
Nuclear licenses are expensive. At least seven utilities have already received regulatory clearances for nuclear fees totaling $1.7 billion, according to Bloomberg. They have also spent $1.2 billion for items they cannot or will not ask to recover.
The costs of keeping their options open could come back to haunt them. Virginia’s attorney general is concerned about the expense of Dominion’s proposed new reactor at its North Anna facility.
“If Dominion proceeds on this ruinous path, it will extract $6 billion to $12 billion in needlessly higher energy bills,” Irene Leech, president of the Virginia Citizens Consumer Council, told Bloomberg.
Follow Peter Maloney on Twitter