Cost, timeline of nuclear reactors keeps Georgia Power negotiating

By MARGARET NEWKIRK
The Atlanta Journal-Constitution
Published on: 01/17/08

A month after asking for more time to negotiate a price for new nuclear reactors, Georgia Power is still at the bargaining table.

But just barely.

The company had a press release ready to go Wednesday, saying that it couldn't reach an agreement with reactor vendor Westinghouse and was walking away from its original nuclear plans, knowledgeable sources said.

Something changed Wednesday afternoon.

"We are still negotiating," Georgia Power spokesman John Sell said Thursday.

The company would not discuss what did or did not happen the day before.

According to the sources, negotiations broke down over both the cost and timeline of the two reactors Georgia Power has proposed adding to its Vogtle nuclear plant.

The brinkmanship was another sign of a steep increase in the cost of new reactors since the utility industry first proposed building them again.

Georgia Power has proposed building two 1,100-megawatt reactors at its Vogtle nuclear plant near Augusta. The reactors would go on line in 2016.

The company is among a number of utilities nationally poised to launch the country's first reactor construction wave in three decades.

Bloodied by both the Three Mile Island disaster and construction cost overruns, the industry had languished in the United States.

Growing environmental concerns about coal, the power industry's other workhorse fuel, helped revive interest in nuclear.

So did a newly streamlined process for permitting reactors and advances in reactor design.

And so did billions of dollars in federal subsidies, which will include loan guarantees and insurance against delays.

The promise of those subsidies helped quell queasiness about the economic risk of building new reactors: Many companies, including Georgia Power parent Southern Co., had to eat some of the cost overruns on the last generation of new plants. An estimate cost of $975 million for four reactors ballooned to $9 billion for two.

Georgia Power has not given a cost estimate for its proposed reactors.

"We have not given out numbers because we have been working with our vendor to try to get the best price for nuclear," Sell said in December.

Nor has the company committed to building them, although it is in the permitting process.

The state Public Service Commission approved a process for moving forward in July.

The company was to submit a cost estimate in February which would then be compared with other bids to supply 2016's estimated power needs.

Those proposals would include a second Georgia Power option - a new coal-fired plant - as well as bids from other companies.

Last month, the company asked for an extension until May - and a few days later a Florida utility gave a hint as to why.

Florida Power & Light also plans on building two Westinghouse reactors. It estimated that the cost would be $12 billion to $18 billion.

The estimate was two to three times higher than numbers bandied around the industry a few years ago.

Costs of all construction had soared. And U.S. utility companies are vying not only with each other but with other countries for the parts and labor needed to build new reactors.

A Japanese company is the world's only manufacturer of one key reactor part, for instance.

A key point of contention between Georgia Power and Westinghouse has been what kinds of benchmarks will be used to predict and control future costs.

The company and state regulators have expressed concern about benchmarks that are too open ended, and could allow costs to spiral out of control.

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