Cost overruns of almost $1 billion — so far — at Ga. nuke reactors

http://blogs.ajc.com/jay-bookman-blog/2012/06/06/cost-overruns-of-almost-1-billion-so-far-at-ga-nuke-reactors/

11:04 am June 6, 2012, by Jay Bookman

Last month, a consortium of utilities including Atlanta-based Southern Company announced cost overruns of almost $1 billion at two new nuclear reactors being built near Waynesboro.

That’s an arresting number under any circumstances, but it looms even larger when you realize that major construction on the Vogtle 3 and 4 reactors has basically just begun, with at least five more years of construction to come.

And if costs soar, who’s going to pay for it? Southern Company and its subsidiary, Georgia Power, own 45.7 percent of the project, so its ratepayers’ share of these recent overruns would come to more than $400 million. But according to Buzz Miller, Southern’s executive vice president of nuclear development, that cost will be borne by contractors who are building the project.

“Our official position is that there’s no way we’re going to pay that amount,” Miller said Tuesday.



William Jacobs, a nuclear expert appointed by the Georgia Public Service Commission to monitor construction at Vogtle, warns that additional problems may be coming. In his latest report, he writes that the project is already more than seven months behind schedule, engineering work is not being completed on time, critical components may be delayed and additional potential change orders “could significantly impact” construction costs. Quality assurance issues from major suppliers “continue to be a significant concern for the project.”

In addition, he warns, project owners have yet to agree with contractors on a long-term construction schedule.

“The project is being managed based on short-term forecasts showing work to be accomplished in the next 60 to 90 days,” Jacobs writes. “A first-of-a-kind project of this magnitude and complexity cannot be effectively or efficiently managed using 60-to-90-day forecasts.”

A lot is at stake in the Vogtle project. The new breed of reactors being built at the site — featuring advanced standardized design, streamlined licensing and new construction techniques — are supposed to keep costs steady and bring projects in close to budget and on schedule. That in turn is supposed to spur a new golden era for nuclear power.

However, the problems at Vogtle are not isolated. Two new reactors just under construction in South Carolina, using the identical technology as at Vogtle, are already $560 million over initial estimates and counting. And in Tennessee, efforts to complete a nuclear plant abandoned back in the 1980s have almost doubled in cost. Originally scheduled to accept nuclear material in April, the Tennessee Valley Authority reactor is now expected to go on line late in 2015 at the earliest. And TVA executives acknowledge that the fault is largely their own.

As Miller points out, some of the problems at Vogtle and in the South Carolina project are inherent in being pioneers in construction of a new generation of plants. Since no new nuclear power plants have been built in this country in three decades or longer, suppliers and contractors face a challenge in ramping up to meet the exacting standards required in nuclear construction.

However, S. David Freeman, a former chairman of TVA, warned the TVA board last month that the problems may be inescapable.

“Maybe the problem is in the technology,” he was quoted as saying. “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.”

That’s been the challenge of nuclear power from the beginning. Done right — absolutely right — it has great potential as a source of energy, especially in a global climate that is showing every sign of warming, just as scientists have warned. But as we’ve seen, the consequences of doing it wrong can be enormous in financial terms and more importantly in environmental terms.

Theoretically, we know how to handle it. At least we think we do. But it’s a technology in which very small mistakes can have very large repercussions, and when human beings are involved, there is always a significant danger that confidence will outrun competence.