Bids for nuclear power soar

WASHINGTON, D.C. - The long-discussed second coming of the U.S. nuclear power industry is gathering steam.

Federal regulators have received license applications for six new reactors in the past five months. They include Dominion Virginia Power's filing late in November for a license to build and operate a third nuclear reactor at its North Anna Power Station in Louisa County. Officials expect applications for at least two dozen more reactors.

Until this year, no company had applied to build a new reactor in the U.S. since the Three Mile Island nuclear accident in Pennsylvania in 1979. A failure of that plant's cooling system resulted in a severe meltdown of the reactor core, but the reactor' containment building remained intact and prevented the potential release of massive amounts of dangerous radiation. No one was hurt or killed.

Memories of the Three Mile Island incident have mostly faded. The operation of U.S. nuclear plants without any accidents since and the nuclear industry's well-earned safety record are factors in the resurgence of interest in nuclear power, said Dave Christian, chief nuclear officer of Dominion Resources Inc., Dominion Virginia Power's parent company.

Also contributing are a streamlined federal licensing process and new government subsidies for companies building reactors. Nuclear power is being promoted by the industry and some environmentalists. They say it's a way to meet the nation's growing demand for electricity without adding to global warming caused by burning fossil fuels - the disposal problem posed by radioactive spent nuclear fuel not withstanding.... The nation's Nuclear Regulatory Commission says it expects to receive applications for 25 more reactors from 13 additional companies by the end of 2009.

In addition to Dominion Virginia Power, those that have already applied are: NuStart Energy, a consortium of nuclear companies, for two reactors at a Tennessee Valley Authority site near Scottsboro, Ala.; Constellation Energy and UniStar Nuclear Energy or one reactor at Calvert Cliffs, Md.; and STP Nuclear Operating Co. for two reactors in Matagorda County, Texas. The lure, in part is that the Energy Policy Act of 2005 contains more than $13 billion in tax breaks and subsidies for companies willing to invest in new nuclear plants.

Among the law's incentives are $2 billion to help cover the cost resulting from any delays in licensing for the first six new reactors, including setbacks caused by federal regulators or lawsuits. It also provides up to $5.7 billion in production tax credits for any reactors under construction by 2014 and in operation by 2021.

More certain for Dominion Virginia Power is the Department of Energy's pledge through its Nuclear Power 2010 grant program to pick up half of the company's $150 million in licensing costs. Virginia's government is helping, too. A law passed this year to re-regulate the utility industry offers those who build nuclear plants the opportunity to earn an additional 2 percent return on their investment.

Thomas F. Farrell II, chairman, president and chief executive officer of Dominion Resources, said that the utility would not be considering a new reactor were it not for the earnings incentive.... Nuclear plants produce 20 percent of the nation's electricity and 29 percent of Virginia's.

Coal is the most popular fuel for producing electricity, used in roughly 50 percent of power production nationwide and 39 percent in Virginia. U.S. electricity demand is forecast to grow by 50 percent by 2030.

Dennis Spurgeon, the Energy Department's assistant secretary for nuclear energy, said it will take 45 new units with the capability of the one Dominion Virginia Power has proposed, to maintain nuclear power's 20 percent share of the U.S. electric-power market. He notes a sense of urgency to get on with the development of nuclear power.

Nuclear power, Spurgeon said, represents 70 percent of electricity generated by sources that do not also produce greenhouse gas emissions.

From the 1970s to the 1990s, the nation's 104 nuclear plants increased their operational efficiency from 70 percent of generating capacity to the low 90 percent range, said Christian of Dominion Virginia Power. That efficiency improvement was the equivalent of 20 new nuclear plants and helped support growth in the nation's gross domestic product, Christian said.

Improvements in plant efficiency can no longer fill the need for more power, Christian said. More generation is needed.... Nuclear plants operate similarly to power plants that burn coal or other fossil fuels. A nuclear reaction is used to generate heat, which boils water to create steam. The steam turns a turbine attached to a generator that produces electricity.

Because of the dangers posed by nuclear radiation, the cost of licensing and building a nuclear plant can be greater than that for building a fossil-fuel plant. The construction cost difference is particularly sharp when compared with that for a simple natural-gas plant, which is essentially a jet engine attached to a generator.

Even after the Department of Energy picks up half the cost, Dominion will spend an estimated $75 million to obtain site and construction-operating licenses for a new reactor.

Based on cost estimates that GE-Hitachi, Dominion's supplier for the North Anna reactor, gave to The New York Times this year, the construction cost would be between $3 billion and $4.6 billion. The figures don't include an extra $200 million that Dominion Virginia Power has pledged to spend on a cooling system to prevent excessive increases in water temperatures at Lake Anna. The uncertainty in construction costs, evident from the wide-ranging estimate provided by GE-Hitachi, is related to escalating prices for raw materials and labor that go into building a nuclear plant.

In part, the higher construction costs are related t the growing interest in nuclear plants. Rising construction costs are a concern for Dominion Virginia Power, Christian said. But increasing prices also affect other forms of electricity generation, such as coal plants, he said.

The utility will weigh the costs of building one type of power plant against another to decide what to build, Christian said. Because construction costs are uncertain, the company is unable to estimate the cost of electricity produced by a new reactor.

The plant's construction and power-production costs and an allowance for a profit, including the 2 percent incentive in this year's law, would ultimately be paid for by consumers in their electric rates.

Michael Town, director of Virginia's Sierra Club chapter and an opponent of the proposed North Anna reactor, said that regardless of radioactive waste disposal and other environmental issues, the biggest obstacle to construction of nuclear plants is the cost.

With a proposed waste repository in Nevada not opening anytime soon, it's back to square one on the waste issue, Town said. The money Dominion Virginia Power would spend on a nuclear plant could be better spent on a cleaner generation technology, he said.

The utility has not yet committed to building the reactor, despite spending millions of dollars to obtain licenses to construct it.

Farrell said the reactor would not be built unless the economics make sense for the company's 2 million Virginia customers. If built, the new reactor would provide 1,520 megawatts of electricity, or enough to power 375,000 homes, based on the utility's estimate that 1 megawatt (1 million watts) of generation is needed for each 250 homes.

Dominion Virginia Power says the state needs an additional 4,000 megawatts of capacity in the next 10 years to cope with growing demand for electricity. The company is planning to build a $1.62 billion coal-burning power plant in Wise County that would produce 585 megawatts of electricity at a cost of $2,769 per kilowatt, roughly the same as a nuclear plant.

Town and other critics say the company should meet its energy needs first with conservation and increased energy efficiency. Only then, they say, should it consider obtaining more generation and then from renewable sources such as wind, solar and water power. The utility says its supports conservation and renewable energy but all of the state's needs cannot be met by those strategies.

Five hundred of the largest wind turbines on the market - 400-foot-tall behemoths - would be needed to produce the same output as the proposed third North Anna reactor, said Eugene Grecheck, vice president of nuclear development for Dominion Virginia Power.