CERAWEEK-State support key to U.S. nuclear revival
HOUSTON, March 12 (Reuters) – Full support from state regulators is viewed as critical to keep the U.S. nuclear revival moving forward, utility executives said this week at the IHS CERA energy conference in Houston.
Awarding of the first nuclear loan commitment by the U.S. Energy Department last month satisfied many in the industry that President Barack Obama is serious about supporting nuclear power as a way to reduce U.S. dependence on foreign oil, create jobs and cut emissions of carbon dioxide, a greenhouse gas blamed for global warming.
In the United States, federal support won’t be enough to get utilities to invest in the new plants, which will cost $6 billion to $7 billion per reactor, power company executives said.
U.S. utilities have been reluctant to build new reactors, recalling massive cost overruns during the first nuclear construction boom and the 1979 Three Mile Island accident in Pennsylvania.
“By itself, a loan guarantee will not build a plant,” said Mike Morris of American Electric Power Co Inc (AEP.N). “If the state doesn’t give you the green light, the loan guarantee won’t mean a thing.”
Worldwide, utilities are expected to spend an estimated $500 billion to build new nuclear plants in the coming decades, said Chris Hansen of CERA’s Global Power Group.
Industry studies indicate at least 75 new nuclear plants will be needed in the U.S. by 2050 to replace aging units and to meet ambitious carbon-reduction goals.
A handful of states, including Florida, Georgia and South Carolina, have passed laws to support new nuclear construction by allowing utilities to begin collecting early cost related to nuclear development directly from customers ahead of construction.
But states must be willing to support the nuclear effort over the long haul, said Jeff Lyash, executive vice president of Progress Energy (PGN.N), which is pursuing two new plants, one in Florida and one in North Carolina.
If state regulators carefully study a utility’s power need and approve its decision to build a nuclear plant, they must also show the “sustained support” over time so that the company can see the project to fruition, he said.
“Support at the state level is just as important as at the federal level,” he said.
Regulators and elected officials must stay focused on the long-term need for carbon-free electricity and not distracted by near-term factors such as reduced power demand in the current economic slowdown and lower natural gas prices.
“We’ve got to keep from a short-sighted focus that keeps us from marching down a compelling path for the long-term,” Lyash said.
Even with favorable early cost-recovery laws and supportive regulators, investment in the costly plants is not easy, said David Ratcliffe, chairman of Southern Co (SO.N), the first company to obtain a DOE loan commitment for $8.3 billion to help build two new reactors at the Vogtle station in Georgia.
“We are excited and scared at the same time,” Ratcliffe said. (Editing by Marguerita Choy)
