Cost Estimate Doubles for New Nukes at Shearon Harris
Progress Energy amends license application to counter critics, who say
watch out for more hikes due to mounting design problems
Statement by Executive Director Jim Warren:
DURHAM, NC – Progress Energy has notified federal regulators that the cost to build two more nuclear power plants at the Shearon Harris site could be over twice the estimate provided in its license application submitted just eight months ago. However, the new price tag of $9.3 billion for both units remains well below industry estimates, and it excludes financing charges as well as cost escalations that Progress has anticipated at its parallel project in Florida.
This pricing gaffe, occurring so early in the 10-year plan for Progress to build four giant power plants, raises more questions about the corporation’s capability to protect shareholders and customers from cost overruns, plant cancellation, and a doubling or tripling of power bills if the projects go forward.
The cost adjustment came in response to NC WARN’s legal contention filed in August with the U.S. Nuclear Regulatory Commission. We charged that Progress violated federal law by grossly underestimating the costs of the Harris reactors while grossly overstating the costs of less risky alternatives – efficiency, cogeneration and renewable power sources – that can entirely displace the need for the new reactors. Eight additional contentions are under review by an NRC licensing board.
Because nuclear construction is a highly risky venture, Progress, Duke Energy and their NC legislative allies shifted most of the risk to state ratepayers in 2007. Meanwhile, Wall Street refuses to finance new plants without 100% taxpayer backing.
The new Harris estimate does not include financing charges that could exceed 40% of the base price, nor a 3% annual escalation clause Progress included in its application to build two units in Levy County, Florida. Escalation at even that modest level could add billions to either project.
Cost estimates are also shaky because the Westinghouse AP1000 design remains years from completion. Although the NRC claimed in 2005 that the blueprint was “complete,” scores of design flaws and scheduling delays have emerged this year involving major components and operating systems. This has created a morass for NRC staffers trying to review thousands of pages of license applications that are based on the evolving plant designs, and has resulted in industry-NRC meetings replete with bickering and nervous laughter over the all-important project timelines.
The AP1000 has never been constructed even on a demonstration scale, increasing the risk both financially and in terms of safety. Progress’ cost estimate also omits the cost of thousands of acres to be flooded under a larger Harris Lake, the land taken for new transmission lines, relocated roads and bridges, and other infrastructure.