Nuclear revitalization heating up in state

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Published: March 14,2005

When President George W. Bush discussed his second term agenda with the media, he mentioned focusing on the streamlined procedures for nuclear licensing for the nation’s energy program.

It wasn’t sexy news, so not many people took note. Behind the scenes, however, work by energy companies and a utility consortium to secure an early site permit (ESP) and/or a combined construction and operating license (COL) for new nuclear reactors in the U.S. was moving forward, with Mississippi in the front ranks of the revitalization of nuclear energy. Two different entities are considering the Grand Gulf Nuclear Station in Port Gibson as the site of the next nuclear reactor.

The newfound support for nuclear energy, which supplies electricity for one of every five homes and businesses, was prompted by U.S. Department of Energy (DOE) predictions that the nation will need 40% more electricity by 2020.

“Almost all new power plants being built today will run on natural gas, and that lack of fuel diversity puts this country’s future supply of electricity at some risk,” said Gary Taylor, CEO of Jackson-based Entergy Nuclear, the nation’s second-largest operator of nuclear power plants. “Nuclear energy also generates large volumes of low-cost power without emitting equally large amounts of air pollution.”

The DOE’s Nuclear Power 2010 Initiative includes a goal of getting a new nuclear power unit under construction by 2010. (The goal of Vision 2020 is to add 50,000 megawatts of nuclear power capacity by 2020.) The program includes co-funding up to 50% of the costs to develop ESP and COL applications.

In the pipeline

Entergy is one of three utility giants that applied to the U.S. Nuclear Regulatory Commission (NRC) for ESPs in 2003. The other two: Richmond, Va.-based Dominion Resources for its North Anna power station in Virginia and Chicago-based Exelon Nuclear for its Clinton Station in Illinois.

Last month, Southern Nuclear, a subsidiary of Southern Company, parent of Mississippi Power Company, revealed its intention to file an ESP. Southern Nuclear spokesperson Steve Higginbottom said all options are on the table, but it would more than likely be located at one of the company’s pre-existing nuclear sites in Alabama or Georgia.

Entergy, which snapped up five nuclear units in the last five years, including three in New York, and is shopping for more, estimated the cost of preparing its ESP around $10 million, with shareholders and vendors paying the portion not co-funded by the DOE. (Utility power customers will not absorb the cost.)

To encourage building a first-of-its-kind nuclear plant with a lessened financial risk, Congress is considering several options, such as production credits similar to what has been given to wind power or an 80% loan guarantee, which incentivized the Alaskan oil pipeline. Other ideas have included accelerated depreciation or construction investment tax credits. The total production cost of a megawatt-hour of the nation’s 103 nuclear power plants averages $17.

“I believe the new U.S. Congress understands the urgency,” said Taylor. “I hope the Congress can pass an energy policy this year.”

The U.S. House of Representatives passed the 2004 energy bill, which stalled in the U.S. Senate last fall over provisions unrelated to nuclear energy. Nuclear provisions of the bill garnered strong bipartisan support.

Doing the two-step

The NRC requires two steps of a nuclear operator to bring a plant online: an ESP and a COL.

An ESP gives a company approval for a plant site before the decision is made to build the plant. The approval allows for possible construction within 20 years, renewable for another 20 years. The approval process generally takes two and a half years, including time to host public meetings in the plant area.

Next month, NRC is expected to release the draft environmental impact statement (DEIS) for the ESP on the Grand Gulf site. A public meeting on the DEIS will be held in June, with the comment period ending in July.

The COL, which includes vendor design certification, a selected site and ownership details, allows the construction and subsequent operation of a specific nuclear reactor design at a specific site. The COL process takes up to three years to complete.

However, the 1992 NRC revisions allow the entire process to be done in one step — the COL application. For example, Duke Energy announced in February its intent to file for a COL, bypassing the ESP process.

Industry leaders collaborate

NuStart, a consortium of the nation’s leading energy companies and nuclear reactor vendors working with the DOE, is seeking COLs for two sites to be selected this fall. The consortium’s primary goal: to demonstrate to all nuclear companies and to Wall Street that negotiating the process at NRC and obtaining a COL can be done in a timely, cost-effective manner.

In 1995, Watts Bar was the last nuclear plant to come online commercially in the U.S., but construction started on it in 1972, the last year an approved operating plant started construction. Twenty-three nuclear plants are under construction worldwide, but none in the U.S.

“The industry had basically told the NRC that the rules were so complex they couldn’t depend on getting a license despite the investment,” said Dan Keuter, vice president of nuclear business development for Entergy Nuclear. “Nobody’s wanted to test it. You had to apply for a construction permit, and then an operating license before you could run it. The Seabrook plant in New Hampshire sat there for eight years waiting for a license to run it. That’s what prompted the NRC to change the licensing process.”

Another reason why no new nuclear reactors came online in the 1990s related to difficulty “building anything that would compete with $2 gas,” said Keuter.

“At the time, gas was considered the solution,” he said. “Since then, a lot of gas generation has been built and now it’s bumping up to $7 this summer. Also, the performance of existing plants has improved substantially. The industry average is greater than 90% capacity and marginal costs are lower than any other type of generation. Reactor vendors have come up with new economical designs with passive safety features.”

Industry experts say the timing is right for a nuclear revitalization because the NRC rules change provides more certainty in the licensing process even though it has not yet been demonstrated, safer and more economical designs are being developed, co-funding by the DOE and tax credits help reduce the risk, and nuclear power can compete on price with gas and coal.

“When we started buying existing plants in 1998, not many people wanted to do that, but as soon as Entergy and Exelon showed it could be done and demonstrated that money could be made, then everybody wanted to do it,” said Keuter. “The same thing needs to happen here. We believe it will lead to the renaissance of the industry.”

Contact MBJ contributing writer Lynne W. Jeter at lwjeter@yahoo.com.

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