Delays mire nuclear plant construction

LATE AND COSTLYWatts Bar: 3 years late, $2 billion over budgetPlant Vogtle: $900 million cost overrunVirgil Summer project (Jenkinsville, S.C.): At least $300 million over budgetSource: TVA, Southern Co., Scana Corp.

It almost feels like the 1970s and '80s again with so much news about every new and under-construction nuclear plant registering cost overruns and delays.

Five reactors are under construction, and all are reportedly over budget and behind schedule. What that ultimately means to electric rates remains unclear.

• Unit 2 at the Watts Bar Nuclear Plant in Spring City, Tenn., is up to $2 billion over budget and three years behind, according to the Tennessee Valley Authority.

TVA blames its own management oversight and planning.

Instead of basing a plan and estimates on the twin reactor already running at Watts Bar, the utility used as a model the only other reactor work that had ever been deemed on time, close to budget and a success: Unit 1 at Browns Ferry. The trouble was that Browns Ferry and Watts Bar are completely different types of reactors with different work spaces and work needs.

• Georgia's Vogtle project reportedly has a $900 million cost overrun. Southern Co. and its subsidiary Georgia Power argue the cost from improperly installed rebar and design problems should fall to the contractors and designers.

Work began in February on the two reactors in Waynesboro, Ga. Due to be completed in 2016 and 2017, they already are seven-and-a-half months behind and could be set back farther, according to the Georgia Public Service Commission's website.

• In Jenkinsville, S.C., the Scana Corp.'s $9 billion expansion of its Virgil Summer nuclear power station began with work on two new reactors in late March. The Summer reactors already are reported to be at least $300 million over budget because components did not meet shifting safety standards.

Too costly?

POWER MIXSources of U.S. electricity productionCoal: 43 percentNatural gas: 25 percentNuclear: 18 percentHydroelectric: 7 percent-plusWind: 3 percentBiomass: 2 percentSolar/geothermal: Less than 1 percentSource: Energy Information Agency

In April, days after TVA said it might cost twice as much as planned to finish Watts Bar's Unit 2 reactor, former board member S. David Freeman implored the current board members "to just stop" TVA's nuclear building program because it is too costly.

"When I read that newspaper story about Watts Bar cost overruns and delays, I thought I was having a bad dream. ... [A TVA manager] told me that plant was 92 percent completed back in 1979," said Freeman, in a five-minute pitch to the board to rethink TVA's commitment to nuclear power.

"Maybe the problem is in the technology. Maybe nuclear power is just such a demanding technology it requires near perfection. It requires so many people to always do the right thing. It just inherently is going to have cost overruns," he said.

Some environmental groups and investment bankers, too, question whether nuclear power really is "affordable" energy.

The nuclear plant operators, however, insist that it is.

"I guarantee you it's still the most cost-effective" way of making electric power, TVA CEO Tom Kilgore said on the day he announced the new $4 billion to $4.5 billion estimate to complete Watts Bar Unit 2. He has said he doesn't expect that extra cost to raise electricity rates.

Southern Co. spokesman Steve Higginbottom said Vogtle cost and schedule targets "remain achievable," with Unit 3 coming on line in 2016 and Unit 4 in 2017.

Georgia Power owns the lion's share of Vogtle, at 45.7 percent. Southern Co. estimated that Georgia Power residential customers using 1,000 kilowatt-hours per month would see bills boosted by about $10 per month in 2018, when both units are fully operational.

High stakes

A lot is at stake for nuclear proponents, ratepayers and taxpayers.

There are 104 operating nuclear reactors at 64 plants across the country. Half are more than 30 years old.

The Nuclear Energy Institute says 19 companies and consortia are studying, licensing or building more than 30 reactors. The U.S. Nuclear Regulatory Commission is reviewing 10 combined license applications from nine companies and consortia for 16 nuclear power plants.

As concerns grow about atmospheric carbon pushing climate change, nuclear proponents say carbon-free nuclear is clean energy.

Opponents say it is costly, not safe and there is still no plan for safe disposal of the nuclear waste -- the spent fuel.

And even staunch nuclear proponents are nervous about what the overruns and delays mean for the nuclear renaissance.

Tim Echols, chairman of the Georgia Public Service Commission and a supporter of nuclear power, says that how work goes on the new reactors is very important -- especially at Vogtle and Summer, where they're being built from the ground up, not just resuming work on unfinished units such as Watts Bar.

"Significant cost overruns on the AP1000 reactors would most likely make other [public service] Commissions wary of building in their own states," he said. "We need to come in as close to budget as possible for the sake of nuclear expansion throughout the country."

Repeat performances?

TVA began building nuclear plants in 1960. It planned to build 17, but abandoned the whole program in 1979 with just one operating reactor -- Browns Ferry in Athens, Ala.

The utility eventually stopped work in Hollywood, Ala., and canceled facilities at Phipps Bend, Hartsville, Yellow Creek and the Clinch River Breeder Reactor.

Now, after fits and restarts, TVA has three reactors at Browns Ferry, two at Sequoyah in Soddy-Daisy and Unit 1 at Watts Bar, which it completed and put online in 1996. That is the nation's most recently completed reactor, though TVA plans to complete Bellefonte when Watts Bar Unit 2 is finished.

TVA's new nuclear construction chief, Mike Skaggs, is trying to push the reset button at Watts Bar 2.

After ordering an unpaid "stand down" at Watts Bar when contractors removed parts on the operating reactor instead of the one under construction and made other errors, Skaggs forced a new effort for both TVA and contractors to "get their heads in the game."

Early performance reports seem promising, Skaggs said.

"Greater than 96 percent of the work is being done with the appropriate level of quality," he said.

"We are making some good progress here. We've improved the skill of the team that's working at Watts Bar 2. Our confidence in the new schedule and estimate is much improved, with the exception of Fukushima [refits]. And the detailed metrics we're using to track our performance are telling us that our safety is continuing to improve."

Skaggs said "megaprojects" like TVA nuclear plants have historically not had enough "risk" margins budgeted into their cost and schedule estimates.

Another problem is the 16-year hiatus after the most recent plant was built. The lag meant inexperience in the nation's nuclear construction work force, Skaggs said.

"That has an impact on the level of work and quality," he said. "In our new estimate, we build that in on our new estimate and schedule."

Skaggs, like Kilgore, insists that while nuclear power is expensive to build, it is the cheapest to operate and has a long lifetime.

And with infrastructure already in place at Watts Bar 2 and Bellefonte, "TVA has an advantage," he said. "The structure is there. A lot of the piping systems and infrastructure is there. ... We're validating the design and [existing] construction."

Because TVA can build two reactors much more cheaply than power companies having to start on bare ground, the hope is that its rates will be more competitive with other utility companies.

All the issues that played into Watts Bar delays now have TVA re-estimating the costs and schedules for Bellefonte, too, Skaggs said.

"Everything we learn we will apply to Bellefonte going forward," he said. "But every project is different. These are complex megaprojects."

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