Thursday, March 24, 2011

Texas Nuclear Plant In (High) Doubt

I always start these posts by saying that I am a big supporter of nuclear power and believe that it is good for America to have a solid foundation of base load nuclear plants. As a realist, however, I am bound to continually explain the frankly insurmountable obstacles that are in place to any sort of plan to build new nuclear units in the USA. As soon as any of the nuclear events in Japan started I put up this post saying "it's over".

While it isn't final, it looks like it is almost over with the two units that they are building in Texas. You can find this news everywhere but here is a small summary.

Utility company NRG has put the brakes on a plan to build two new nuclear reactors at its South Texas plant, CEO David Crane said Wednesday.

All along I have said that NRG was a lousy candidate to build a nuclear plant. Since they are more of an IPP (Independent Power Generator) than a baseload utility subject to traditional "rate of return" regulation (in a state that has that, like South Carolina or Georgia, where it is NO SURPRISE that the only plants are being built), they need to continually raise money and hit profit targets in the near term and they can't just pour billions into construction and endless delays.

One of their partners is the Tokyo utility struggling to contain the recent nuclear plant issues in the wake of the Japan earthquake - TEPCO (Tokyo Electric Power Company).

Tepco holds a 10% stake in the NRG expansion project, with the option to purchase an additional 10% share. A spokesman for NRG confirmed the company has been in touch with Tepco following Japan's twin natural disasters -- but only to offer assistance.

On top of that, the US has announced a plan to review nuclear safety throughout the country. Given our relatively poor record of utility planning and regulation (see the Yucca Mountain Storage fiasco for a primer on how our government can't plan or execute and wastes billions while accomplishing nothing), there is little hope for a near term answer from our regulators.

"The timing of this from where our project stands could not be more unfortunate," Crane said. "And time can be the biggest enemy for a project like this." It's unclear how long the review will take. "We actually agree that we need the review," Crane said. "But the question is what are we looking at? A three month review or longer?" Crane said he hopes his plant will be among the first to be given the green light by regulators. He stressed that the proposed reactors will sit 10 miles from the Gulf Coast, in a non-seismic area.

It is unfortunate in its timing. This project was already seriously weakened by the pull out of municipalities that used to contribute to new baseload growth; these sorts of alliances were behind many of the nuclear plants that exist in the US right now. But even prior to this disaster in Japan the municipalities were "spooked" by the prospect of unlimited delays and cost over-runs and also under a financial gun more or less to start with.

We will see what happens in Georgia and South Carolina. I will bet that South Carolina is "all in" because they are in a small state and if they have to "eat" this massive hit by writing off their investment and passing it to taxpayers they will be embroiled in rage, so they have little choice. As for Georgia, Southern Company is much bigger and can absorb more pain, so they may be able to take an (unfortunately) more pragmatic approach.

Cross Posted at Chicago Boyz

1 comment:

Overload in Colorado said...

They're also trying to build a Nucular Plant near Pubelo, CO. From my readings, it would have been part of an 'energy park' and also included other green energy sources.