Consumer Group Calls for Scrapping North Anna 3

 

 

 

Dominion Energy may have declared a “pause” in the development of a third nuclear unit at its North Anna Power Station, but a consumer advocacy group says that’s not good enough. It’s time to shut down the project permanently.

“Dominion needs to kill North Anna to protect rate payers,” said Irene Leech, president of the Virginia Citizens Consumer Council (VCCC). Critics have estimated that the project will cost roughly $19 billion, which would make it the most expensive power plant ever built in Virginia by a factor of ten or more. “If Dominion doesn’t do it, the SCC (State Corporation Commission) should intervene.”

Leech made her comments while introducing Dr. Mark Cooper, senior fellow for economic analysis, Institute for Energy and the Environment, at Vermont Law School, in a media conference call. Cooper, who had predicted the recent cancellation of the V.C. Summer nuclear plant in South Carolina after massive construction cost overruns, filed testimony with the SCC today on behalf of the VCCC in regards to Dominion’s 2017 Integrated Resource Plan.

“Dominion’s recently announced decision to suspend development of North Anna 3 is welcome, but long overdue and not as decisive as it should be,” Cooper said. “The Commission should order North Anna 3 removed from the IRP and refuse to allow any cost recovery associated with the development of North Anna 3 other than through the normal rate-making process, in which the utility demonstrates that it is the least cost option and useful to ratepayers.”

While acknowledging that the nuclear plant is extremely expensive, Dominion has argued that the utility should preserve the nuclear option to cope with a worst-case regulatory scenario restricting carbon-dioxide emissions. In its integrated resource plan, the company explores six scenarios. In one of them, Plan H, Dominion would be have to cut carbon emissions 7% compared to a 2012 baseline by 2030, compelling the closure of up to four coal-fired units at its Mecklenburg and Clover power stations, and making it impossible to make up the lost base capacity with natural gas. The plan contemplates 5,760 megawatts of new solar capacity, but solar output is intrinsically variable. That would leaves nuclear as the only option when the sun didn’t shine, the company has said. The company would not need to build the nuclear plant under any other regulatory scenario.

While some observers assume that Dominion hit the pause button on North Anna 3 because of horrendous construction cost overruns at plants in South Carolina and Georgia, spokesman David Botkins says the company made the decision more than a  year ago. Regulatory uncertainty made it prudent to put the project on hold but not to spike it. The Clean Power Plan, which orders states to impose CO2 emissions on their electric utilities, is not dead. Its legality is tied up in the federal court system, and the McAuliffe administration is moving ahead with his own low-carbon plan for Virginia. The company has not made the decision to build the nuclear unit but thinks it worthwhile, after spending roughly $600 million to obtain a Combined Operating License (COL), to keep the option open.

Given the momentum of technology, Cooper argued, there is no chance of nuclear becoming economically viable. “Nuclear construction costs escalate relentlessly, driven by complexity,” he said. “Nuclear is the most expensive way imaginable to reduce carbon emissions. It’s a bad investment. I have wind, solar, and energy efficiency in hand today at a third of the cost of North Anna 3. I want to get [nuclear] off the table.”

The United States electric system is transitioning “to flexible, small-scale, renewable, distributed” energy sources like rooftop solar. Meanwhile investments in energy efficiency and demand-management strategies are holding down growth in electricity consumption, Cooper said. The ability to store large volumes of electricity in batteries will make it possible to overcome the problem of volatile energy output.

“Think about your laptop, tablet, or cell phone. Ten years ago … the battery life was an hour. Now it’s ten hours. They’re making huge progress in energy storage,” Cooper said. Meanwhile, solar + batteries can increase generating capacity in increments rather than in one a big chunk when the nuclear plant comes online. Utilities talk about solar plants sitting idle at night or under cloudy skies. Large swaths of the electrical infrastructure, such as combustion turbine plants that run only during periods of peak demand, spend much of their time idle as well. Nuclear isn’t cost competitive now, and it never will be, he said.

Putting the North Anna 3 project on hold is not an adequate response, Cooper said. The General Assembly allowed Dominion to capture $570 million from rate payers to defray the cost of obtaining the North Anna 3 operating license. That sum has economic value. Assuming rate payers could earn 3% annually on that money, the opportunity cost amounts to almost $300 million over ten years. Even with the project on hold, said Cooper, “rate payers are bearing a burden.”

Dominion thinks of the North Anna 3 option as a form of insurance policy. “As has been shown throughout history, forecasts change over time,” says a prepared Dominion statement. “Fuel diversity is a key component of any energy plan. Our customers enjoy some of the lowest rates in the United States, due in large part, to the safe, reliable, clean and dependable nuclear units at Surry and North Anna.”

“The [Combined Operating License] is good indefinitely, and, while no decision has been made to build it, we could make a decision to move forward with it if business conditions change,” said Richard Zuercher, spokesman for Dominion Energy’s nuclear power operations. “We would not do so, however, without authorization from the State Corporation Commission.”

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23 responses to “Consumer Group Calls for Scrapping North Anna 3

  1. wow… a REAL “consumer” outfit.. not one of those enviro-weenies!!!

    AND they have a pretty good set of info on PayDay Loans for all 50 states!

    Nuclear Power is problem.

    First off.. we’ve been promised “safer” community-scale plants that will not meltdown but instead passively shutdown…and are sized much smaller such that they do not endanger entire regions. and yet we’re still being sold these mega-dangerous dinosaurs … that are also now targets for terrorists.

    They’re a bad deal and they need to go away and not come back until they actually can provide safer and smaller-scale designs..

    And I say the same thing about Nukes that I do about Solar – with respect to the more than 1000 inhabited islands that currently burn fuel oil to generate electricity.

    The day that Nukes are cheap and safe enough for islands is the day that Nukes become a legitimate option and compete against renewables.

    The same is true about SOLAR. The day -we see islands adopt solar for their primary grid is the day that Nukes die for good…. and should.

    Anyone want to guess which of the two – gets to that practical and cost-effective stage first?

    Bonus question – the folks that want to bring back coal – they’d do that instead of nukes?

    At this point – as a society – we’re pretty messed up about energy… there are opinions and competing advocacies all over the map and we can’t trust the Dominion types types either.. they’re going to advocate for whatever path best benefits them as a business.

  2. I think Dominion is right in wanting to preserve the option for another nuclear facility. Given the flip-flopping between the Obama and Trump administrations who really knows what the future holds for energy regulation or global warming remedies. Normally I’d feel comfortable that the State Corporation Commission would provide the appropriate checks and balances against the monopolistic Dominion. However, the Imperial Clown Show in Richmond has proven it is willing to prostitute itself for more pockets full of money from Dominion. And our state supreme court has made it clear that our hopelessly faulty state constitution has no provision to reign in the unlimited power of the Imperial Clown Show in Richmond.

    Based on all that, I think the project needs to be permanently discarded as an option. This is a shame since, as I said, I think preserving the option makes sense. However, it is abundantly clear that no organization within the state governance structure has the ethics and the power to look after the ratepayers. We simply can’t afford to be unprotected from Dominion given the massive construction cost overruns for nuclear facilities elsewhere in the US.

  3. The fact that the two plants in SC and Ga are being abandoned – tells us something about the financials ….

    I think the ” we don’t know what we are doing about Global Warming” narrative is irrelevant because the dollars and lead time are just out of reason no matter what happens to Global Warming regulations.

    Nukes need to be smaller scale, safer, quicker to build and cheaper.

    North Anna is on a freaking active fault and I don’t trust the Nuclear Regulatory Agency as far as I can throw them… they’re obviously pro-Nuke – no matter what.

    No one in their right mind should be building a NUKE on top of a KNOWN fault – that actually did seriously damage the Washington Monument – 70 miles away as well as hundreds of structures in between including completely destroying the Louisa High School – 7 miles away.

    You have to be nuts to ignore the damage this quake did and think it’s okay to build a Nuke on top of it. It’s obvious that if a different site was picked – it would be even more expensive with and even more drawn out process… so they bailed an selected a site with a known active fault on it… to save time and money.

  4. This potential plant is Dominion’s fallback card in case the General Assembly ever restarts either the “biennial review” process it suspended in 2015 (which the Va Supreme Ct recently upheld in the case referenced by DJR) or some other related form of rate regulation.

    The biennial review statute allows the utility to make obscene profits 3 out of every 4 years, fail to make obscene profits in the 4th year, and still maintain the rates that permit the obscene profits. A utility has to be found to be “overearning” its authorized rate of return in 2 consecutive biennial reviews before its rates can be reduced. (In the years it “overearns” it returns a portion of the overearnings to customers in the form of refunds, but its rates remain untouched.)

    So, if it starts to look like Dominion is going to be in position to get a rate reduction, it simply “revives” NA3 and spends a few hundred million on “site preparation,” or something similar and then gets the General Assembly to mandate the SCC to allow the costs to be written off. Too far-fetched to believe? It’s already happened once.

    Dominion thus may be the only utility in the world that protects its shareholders by artificially suppressing its earnings periodically.

    • Why, Rowinguy, you are such a cynic! Would the utility do that again, even though of course that is EXACTLY what it did in 2014…..attempting to game the outcome of the 2015 rate case by stuffing in a bunch of premature NA 3 costs. We still got refunds in 2015, but only small ones. Absent the unprecedented approval to recover costs on a power plant merely being planned, not actually built, your refunds would have been substantial.

      By opposing the bill some of us forced Dominion to make many promises to legislators assuring them that the plant was indeed going to be built.

      “Dominion thus may be the only utility in the world that protects its shareholders by artificially suppressing its earnings periodically.” Oh, I doubt that. But they may be the only one that does it so often and so well. It really only works because of the unusual share-line refund system established by the 2007 statute.

      I have to agree that NA 3 is getting less and likely to ever be built, but unlike some I am not happy about that. But looking at the plants down south, I don’t know how Dominion does it cheaper.

    • Under traditional utility regulation, the utility does not get to include the costs of a new power plant (or whatever) unless and until it is put into service. Rather, it traditionally gets to put the amount into a reserve upon which it can recover interest expenses during construction.

      This does not argue for or against the new plant, but regulation should protect the interests of ratepayers. I don’t know why the businesses that are large users of electric power don’t spend a buck or two and hire competent counsel to represent them and raise these issues. Similarly, the VSCC should create a separate staff to represent ratepayers.

      Of course the business community spends most of its advocacy bucks trying to get special tax credits and protecting real estate developers from paying for reasonable infrastructure costs.

      • Under the Virginia constitution, Article IX, Section 2 “The Commission shall in proceedings before it ensure that the interests of the consumers of the Commonwealth are represented, unless the General Assembly otherwise provides for representation of such interests.”

        The General Assembly has, in fact, otherwise provided for such representation by creating within the Office of the Attorney General a Division of Consumer Counsel. Virginia Code Section 2.2-517.

  5. I’m in favor of nuclear power – when it advances to 21st century technological standards.

    It is unacceptable that they still -after 50 years are these uber-dangerous complexes that have the potential to totally depopulate an entire region because of a system or human failure.

    We put nuclear reactors on ships… and we’ve had talk for years of smaller, safer nukes, pebble bed, etc.. it’s time to deal with the elephant in the room and that’s the fact that if an earthquake like they just saw in Mexico hits North Anna -likely everyone in a 20-40 miles radius will have to leave – and be compensated by other taxpayers or ratepayers or both.

    As important as it is to transition away from fossil fuels – the other reality is that Nukes are baseload and do not complement with wind and solar.. they cannot dynamically alter their output in response to wind/solar dynamics.

    If we want to reduce our use of fossil fuels – then Nukes are by far the most dangerous way to try to do that.. until and unless we develop safer nukes that do not melt down when they fail – and make no mistake – Nukes do fail… tsunamis do happen.. earthquakes happen, terror attacks happen and human error and stuff that breaks happens..

    Ultimately we need Nukes that can dial up and down in response to wind/solar – and move completely away from burning fossil fuels.

    Of all the things that only govt can do – this is one of them… the R&D to do this should be a priority for the nation right up there with health care and immigration – and that R&D will provide jobs to boot!

    • Nuclear power on ships. One of my nephews (an Annapolis grad) was a nuclear power engineer on a Navy sub for a number of years. And he was an economic major. Not sure what that tells us. 😉

      • Perhaps my father designed the reactor, he was a nuke engineer at Westinghouse Bettis Labs in Pittsburgh. Sometimes I feel we need to hand over all the nukes and chemical plants to the military for safer operation, since $$ is the only thing American business managers care about.

  6. The exploration of small modular reactors (SMRs) is an outgrowth of the experience of the nuclear Navy. The bottom line problem, and Larry is illustrating it, is deep panic about the whole technology. I guess he will be first in line to testify against extensions of those operating licenses for the existing North Anna and Surry plants.

  7. No panic… but insistence that when you have an active fault that putting a 60-year old nuke design on it that you KNOW will cause immense damage…

    this is really no different that the govt subsidizing flood insurance which most fiscal conservatives know – will lead to bad outcomes… you encourage risky practices with taxpayer subsidies then when disaster actually strikes – they come back again for more govt “aid”.

    It’s the same thing with these Nukes – it’s not “panic” – it’s just plain actuarial idiocy for the govt to actually encourage private sector activities that are not only not economic but transfer risk from the company to taxpayers and ratepayers.

    As long as the govt guarantees them “no fault”.. there is no incentive for them to do R&D for safer technologies.

    If you draw a 25-50 miles radius around NA3 – and put out for bid – what it would cost to insure those potential losses and add that cost to ratepayers bills.. – it would exceed the cost of the plant… and then some…. it’s just plain fiscally irresponsible…

    we can generate that amount of energy for 1/10 or less that cost with zero risk to homes and businesses…

  8. VCCC position on NA3 is very understandable.

    The whole problem with the monopoly utility structure, is the rate payers are held hostage to pay the cost of new plants including we have to pay big profit margin to Dominion. Elected officials in turn get numerous ways to profit from the mega-projects, such as campaign contributions, revolving door job offers, host community benefits, and that’s just a few of the legal opportunities.

    Such politics is why I mistakenly thought coal use would continue unabated, but the low cost of natural gas just became overwhelming. In the case of nuclear though, you have the Fed government trying to encourage the nuclear option. Therefore project developers have the backing of the Feds to force it on us.

    I do directionally favor ideas like SMR.

  9. I just resent the fact that we’ve had 60 years to do something about Nukes and have done nothing… and the NRC has to be the epitome of bad government in that .. because these designs are so complex and inherently unsafe – that the permit process itself is arduous and drawn out ….

    we have the wrong designs and the wrong process…

    If we had modern Nukes that passively shut down and will not melt-down, -you’d not find a bigger advocate than myself. I’d support them even if they were more costly than coal – or even natural gas… for that matter.

    Almost as bad as using dinosaur nukes is burning Natural Gas for baseload instead of only to balance wind/solar.

    What is best for us – for people and for the planet …is not what is best for Dominion… and that’s the bottom line.

    Our interests are not aligned… and the General Assembly is just downright irresponsible in standing up for the Public Interest instead of Dominions Monopoly.

  10. Larry,

    “what it would cost to insure those potential losses and add that cost to ratepayers bills.”

    The 1957 Price-Anderson Act, which put a cap on the liability of nuclear plants ($4.2 trillion in today’s dollars), also pushed those costs onto US citizens (not the ratepayers). This subsidy (nuclear is the most heavily subsidized form of electrical generation) amounts to anywhere from $0.20 to over $2.00 per kWh!!! – based on the assumptions used. This does not include the costs of federal loan guarantees (also borne by taxpayers) or other subsidies related to nuclear generation.

    I have worked on nuclear units since the late 1960’s, when they said nuclear energy would be “too cheap to meter.” It didn’t seem to make economic sense then (because of constant cost overruns and schedule delays) and makes even less economic sense now.

    I am amazed why every comment talks about the pros and cons of nuclear, while ignoring that nuclear generation can be replaced by energy efficiency (24 hour – 100% capacity factor, no risk) that is priced at 2-3 cents per kWh instead of the order of magnitude higher price for nuclear power.

    Dominion operates the most profitable nuclear unit in the US (Millstone) making over $.15 per kWh, and they are asking the Connecticut legislature to pay them subsidies to keep it open. The VA legislature does not protect its citizens/ratepayers. It looks like Connecticut’s might not either.

  11. Tom – the most amazing thing to me about nukes is that places like Puerto Rico have to import fuel oil to electrify their country – at around 40 cents per KWH… If Nukes were really that cheap … it would be a no brainer and it would have a direct beneficial impact on their economy.

    We going to find out something because Puerto Rico says their power grid is “destroyed” and will have to be rebuilt – and they are broke and will need help.

    I wonder what the replacement grid will be?

    I bet it won’t be a nuke.. but I also doubt it will be 100% renewables.

  12. A nuke would be a bad fit for Puerto Rico. It would be prohibitively expensive to build a nuclear unit on an island, even if they had the capital to pay for it (which they don’t). I doubt that there is enough freshwater to cool one either. And it would not be able to respond to the variations in load.

    Solar plus batteries would be cheaper than a nuke and give them emergency power, especially if they developed microgrids around essential services.

    I have not heard reports of whether any generating units were destroyed, but the distribution system certainly was and probably much of the transmission. Islands have tough choices. Under-grounding lines protect them from wind damage but they are then more susceptible to flood damage.

    My son’s wife is a NASA astrophysicist working at the Arecibo Radio Telescope. They made it out at the last minute and are here now trying to monitor what condition the island is in and whether they have anything to go back to. Most communications are still down.

  13. Puerto Rico was bankrupt before the Hurricane … It was not a place that corporations and manufacturing wanted to be in the first place but tax credits attracted them until they expired.. then they left.

    Here’s is how electricity is done on Puerto Rico – .. it’s 98% imported fossil fuels:

    ” Electricity
    Imported petroleum costs keep Puerto Rican power prices higher than those of any state except Hawaii.

    Puerto Rico’s electricity is supplied by PREPA, a government agency that owns the electricity distribution system for the main island, Vieques, and Culebra, as well as most generating stations.79,80 PREPA (in Spanish, Autoridad de Energía Eléctrica, or AEE) was founded in the 1920s as a government irrigation system, but its responsibilities grew over the years to encompass island electrification.

    It serves more customers than any other public electric utility in the United States.

    Until recently, Puerto Rico obtained two-thirds of its electricity from petroleum, generated mainly at six PREPA stations with steam turbines, combustion turbines, combined cycle technology, or some combination of the three. The other one-third of PREPA’s power supply was almost evenly divided between natural gas and coal generation, provided by two independent power producers, plus a small fraction from hydroelectric generators.

    In 2012, natural gas firing capability was added to PREPA’s Costa Sur generating station in Guayanilla. As a result, for the fiscal year ending in June 2017, petroleum supplied just under half of the island’s electricity, and natural gas supplied nearly one-third. Coal continued to supply about one-sixth of electricity, while renewables supplied about 2.4%.

    The commercial sector consumes nearly half of PREPA’s retail electricity, and the residential sector consumes more than one-third. The industrial sector, including agriculture, accounts for one-eighth of consumption, with the balance consumed for public uses like street lighting.

    Per capita, Puerto Rico’s electricity consumption is a little more than two-fifths of the average in the 50 states.

    In recent years, high world petroleum prices have driven typical Puerto Rican power prices as high as three times the U.S. states’ average retail price.90 In 2015 and 2016, PREPA electricity rates declined along with international petroleum prices, but, in 2016, PREPA rates were still higher than rates in 49 of the 50 states.91 Only Hawaii’s rates were higher.92 To reduce fuel costs, PREPA has planned to add natural gas capability at its largest generating stations.

    so one would think they’ve picked the lowest cost options and they are fossil fuels and the option of renewables is available and not apparently used much yet. Ditto for Nukes.

    So this is a curious thing to me because back in the US – there is such a push to incorporate solar with the primary argument that is is not “dispatchable”, ergo not reliable but proponents say that it can be balanced with peaker Natural gas units… micro-grids and demand-side conservation.

    None of this seems to be a major impact to not only Puerto Rico but Hawaii and most, if not all of the worlds 1000-plus inhabited islands.

    So that’s why I am a skeptic.

    If Puerto Rico’s distribution system is trashed.. wouldn’t it be the perfect time to implement micro grid solar or similar and to essentially use their existing oil/gas turbines as complementing backup to wind/solar to reduce generation costs and to make their system more resilient and less vulnerable to hurricanes in the future?

    So .. no Nukes in Puerto Rico’s future even though they pay more for electricity right now except for Hawaii…

    I see Puerto Rico and Hawaii as the bellwether for an evolution to Solar and Wind and conversely – if solar/wind do not make economic and practical sense to them…with their 40 cents KWH… how would it make economic sense against 11 cents KWH?

    Yet.. we know that SOLAR is a major player in some states like California and is “exploding” even in Virginia…

    but that still leaves the islands as not major adopters.. and that’s a continuing puzzle.

    And clearly despite all the hurrah about Nukes.. they’re even less an option for islands… apparently…

    • When I visited several West Indian islands and Bermuda earlier this year, I was struck by the lack of solar panels anywhere. Given the high cost of generating electricity with oil, this seemed to make no sense. One likely reason is that these island countries don’t offer enormous tax benefits to install solar like we do in the U.S. Perhaps another is that the incumbent, state-owned power companies lobby their legislatures to smother solar competition. After all, if solar were adopted on a wide scale, what would happen to the power companies — and to the electric grid they maintain?

      Interesting conundrum.

      • There are many factors related to getting solar on islands. The tax credits don’t factor into it too much, except for the utilities. Most full-time residents don’t earn enough to be able to pay for the units or to take advantage of the tax credits.

        It is expensive for islands to ship materials and to train installers, etc. On the mainland, we have much lower costs and easy access to existing business infrastructure.

        In Hawaii, on Kaua’i where I lived, once solar became cost-effective for the residents, the local utility began to install it, because the utility was a co-op, the customers were the owners. On the other islands, the utilities were investor-owned and had embedded costs in existing units that could be displaced by cheaper solar generation, so they have put caps on more solar installations.

        If your legacy systems have all just been blown away, perhaps you have a different issue. You could have outside firms bring in and install new solar. But then you lose one of the benefits of these new technologies – creating a long-term source of employment for local installers.

        The wires issue remains a challenge. But if you were starting from scratch, building a network of microgrids, using largely distributed generation, would lessen the dependence on transmission and create a more reliable and resilient system at a much lower cost.

        But given our current policymakers and the desire of our energy industry for short-term profits as opposed to long-term lower costs, we will probably just replace things with the same old 20th century technology and let our children and grandchildren suffer the consequences.

  14. Our utterly useless US Congress ought to “fast track” Puerto Rico’s petition for statehood. Then, we ought to go in and rebuild the place even if it means a temporary increase in personal income taxes. Think of it like a Marshall Plan for PR. It will pay back manifold in the long run.

    • Trump needs to plant a hard right fist in the face of the asshats in Congress anyway. Imagine how much he would shake things up by calling for the immediate implementation of the process to make Puerto Rico a state. The libflakes would lose their minds and idiots like Paul Ryan would be left choking on their own vomit.

  15. remember.. we’re talking about islands around the world – both rich and poor…. the primary thing in common between them is that they have no native fossil fuels and they generate electricity primarily from imported oil and coal… at a KWH cost of around 40 cents.. about 4 times more than Virginia.

    One would think that just on an economic basis without tax credits – and including the higher cost of transportation (which also is why the imported fossil fuels are expensive) .. that at least SOME of the worlds islands would – at the very least deploy hybrid solar/fuel oil turbine systems where they harvest the solar when it is available and they switch over to oil turbines when it’s not.

    EVERY KW of solar is a KW not generated by fuel oil.

    something is not adding up.. even if solar panels cost twice as much . they still should easily beat the KWH cost of fuel oil…but to date – few if any islands have built enough solar to power them during the day.. so that’s a mystery but no mystery for Nukes and if they are too expensive for islands which their 40 cent electricity.. the economics have to be even worse on the mainlands.

    This all changes if/when we get modern Nukes … that are sized for communities and won’t melt down if they malfunction… then they will be real competition for powering islands.

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