AP1000

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The Toshiba / Westinghouse crisis continues to drag on without any clear resolution in sight. As things stand:

• Toshiba will probably survive in a much-weakened form, assuming it can sell profitable assets to cover debts.
• Profitable parts of Toshiba's US-based nuclear subsidiary Westinghouse will survive in one form or another after a restructuring plan has been developed and approved by the bankruptcy court. Westinghouse might survive in a weakened form or it might be carved up for sale and no longer be a recognizable entity.
• Toshiba would like to sell its entire 90% stake in Westinghouse but that may not be possible.
• Toshiba and Westinghouse will no longer take on reactor construction projects in their home countries or abroad.
• Much of the discussion about the four partially-built AP1000 reactors in the US assumes that one way or another the reactors will be completed. The four reactors ‒ two in Georgia and two in South Carolina ‒ are largely responsible for the crisis facing Toshiba and Westinghouse due to cost overruns of around US$13 billion. But to push ahead would entail enormous risk and it would be no surprise if the owners of the nuclear plants decided to cancel one or both of the reactors at each plant.
• Toshiba / Westinghouse and the NuGen consortium have yet to acknowledge that the plan for three AP1000 at Moorside in the UK is dead ... but it is dead.
• The likelihood that the plan to build AP1000 reactors in India will proceed is vanishingly small.

Toshiba

Toshiba hopes to submit audited financial figures for the 2016/17 fiscal year, which ended 31 March 2017, by August 10.¹ Toshiba and its auditor PwC Aarata are still working to reach agreement on the figures and to resolve their disagreement as to whether Toshiba should correct past financial reports.²

On June 23, Toshiba said it expects to report a negative net worth as of 31 March 2017 of ¥581.6 billion (US$5.18 billion), a 7.7% increase on earlier estimates.³ The company's estimated net loss for the 2016/17 fiscal year has also increased, to ¥995 billion (US$8.87 billion).³

Also on June 23, the Tokyo Stock Exchange (TSE) announced that from 1 August 2017, Toshiba shares will be demoted from the exchange's first section to its second tier.^2,3 The TSE is also reviewing Toshiba's internal control systems to decide whether to remove the company from the exchange's designation as a "security on alert."²

Toshiba is trying to sell its prize asset, its memory chip business, to stave off bankruptcy and to avoid being delisted altogether from the TSE. But negotiations over the sale of the memory chip business have become complicated, as reported by Nikkei Asian Review:³

"Massive losses from its U.S. nuclear unit plunged the once-mighty Toshiba into negative net worth in fiscal 2016. The company is now desperately trying to raise enough funds to save itself from remaining in negative net worth for a second year ‒ a scenario that would see the company face delisting from the TSE. On Wednesday [June 21], it decided to prioritize negotiations with a Japanese government-led alliance for the sale of its flash memory unit.

"Any conclusion to the deal, however, faces obstacles. Bain Capital, the private equity firm in the alliance, is collaborating with South Korean chipmaker SK Hynix, making a protracted examination into antitrust matters a possibility.

"In addition, Toshiba chipmaking partner Western Digital has sought an injunction against the sale in a California court. With the U.S.-based company weary of the involvement of direct rival SK Hynix, the government-led alliance will have to negotiate with Western Digital, either by asking it to drop the case or trying to include it in the consortium.

"The formation of the alliance was mostly orchestrated by Japan's Ministry of Economy, Trade and Industry, which wants to keep Toshiba's sensitive chip technologies under domestic control."

Some bankers and potential investors are reportedly pressing the Toshiba board to consider alternatives to the sale of its memory chip business. But selling other assets is problematic as Toshiba has few of sufficient value, and a piecemeal sell-off could take too long.⁴ Toshiba will be automatically delisted from the TSE if it cannot drag itself out of its negative shareholder equity position by the end of the current fiscal year, ending 31 March 2018.⁵

In mid-June, Toshiba said it is being jointly sued by 70 shareholders, foreign institutional investors, and individuals seeking damages of ¥43.9 billion (US$391 million) related to a US$1.3 billion profit-padding scandal from 2008‒2014. Separately, Toshiba has been sued by 26 groups and individuals over the scandal with total damages of ¥108.4 billion (US$960 million) being sought.⁶

There was a moment's respite for Toshiba in early June when its share price rose, partly due to an agreement to cap Toshiba's liabilities for the AP1000 reactor project in Georgia at US$3.68 billion.⁷ But Toshiba lost all those gains and more and its stock price fell to half what it was before the problems with the US AP1000 projects came to light last December.⁸

Westinghouse

According to a July 3 Reuters report, citing industry and diplomatic sources, the US administration has said that Westinghouse will emerge from Chapter 11 bankruptcy and be sold to a US investor by the end of the year.⁹

But of course the government can't force investors to buy a bankrupt company. Toshiba has previously tried to sell Westinghouse, without success, and has openly flagged its ongoing desire to rid itself of Westinghouse. But the process is on hold until Westinghouse emerges from Chapter 11 bankruptcy proceedings with a court-approved restructuring plan.⁹

According to Reuters: "Some form of U.S. backing or involvement, industry experts say, could avoid a Chinese or Russian buyer unpalatable to Washington, which would prefer to keep Westinghouse's advanced nuclear technology out of the hands of its foreign rivals."⁹

In court records filed on June 5, the US Committee on Foreign Investments in the United States said that the sale of Westinghouse or its assets could be subject to the panel's review. Consisting of various cabinet members, the Committee is authorized to review transactions which could result in foreign persons or entities acquiring US businesses.¹⁰

In May, Westinghouse was in trouble with the US Nuclear Regulatory Commission (NRC) because of problems at its nuclear fuel plant in Columbia, South Carolina.¹¹ After finding an accumulation of uranium in an air pollution control device last year, in May the NRC cited one additional violation related to the same piece of equipment. In June 2017, the NRC issued a notice of non-conformance to Westinghouse over lax quality assurance at its Mangiarotti subsidiary in Italy.¹² The problem concerns incorrect use of material for AP1000 passive residual heat removal heat exchanger stiffener plates, identified in an earlier inspection. As with the problem at Columbia, Westinghouse has been slow to act. NRC inspections were carried out at Mangiarotti's plant in Italy in July 2016. Follow-up inspections were carried out at Westinghouse's plant in Rockville, Maryland in April 2017. The NRC concluded that Westinghouse "had not taken prompt corrective action or identified the cause of a significant condition adverse to quality", which involved the use of a different type of stainless steel in the manufacture of the component from that required.¹²

It has emerged that Toshiba didn't know that Westinghouse was preparing for a bankruptcy filing even after Westinghouse had hired lawyers for the task late last year, according to court records and Toshiba's official timeline. The Wall Street Journal commented: "If Toshiba's timeline is accurate, it suggests poor communication between parent and subsidiary contributed to letting the problems at Westinghouse get out of hand. Toshiba, one of Japan's biggest and oldest conglomerates, has said it has doubts whether it is a going concern because of its unit's bankruptcy. Conversely, if Toshiba did know about the unit's bankruptcy plans ahead of time but failed to disclose them promptly, it could worsen trust among investors at a time when stock-exchange officials in Tokyo are weighing whether to delist Toshiba shares."¹³

AP1000 reactors under construction in the US

Decisions about the fate of the partially-built AP1000 reactors in Georgia and South Carolina keep being deferred. Westinghouse is expected to break its contracts with the owners of the Vogtle (Georgia) and Summer (South Carolina) plants. Meanwhile the plant owners are weighing up their options regarding the future of the reactors, and paying for work to continue in the meantime. The owners of the South Carolina plant hope to make a decision on the fate of the two AP1000 reactors by August 10.¹⁴ And Southern Co. hopes to make a decision about the two reactors in Georgia "sometime in August" according to CEO Tom Fanning.¹⁵ But no previous deadlines have been met and the issue is likely to drag on for months.

Georgia Power and Westinghouse have finalized an agreement which allows for the transition of project management at the Vogtle plant from Westinghouse to Southern Nuclear and Georgia Power. Under the agreement, finalized on June 9, Toshiba will meet its contractual obligations by paying Southern Co. US$3.68 billion from October 2017 to January 2021 to help cover the costs of completing the two reactors, while Southern Co. agreed not to ask for more, even if the project continues to run over budget.¹⁶ The agreement has been approved by the US Department of Energy, which has a stake in the outcome of the negotiations because it approved a US$8.3 billion loan guarantee for the Vogtle project.

Toshiba may strike a similar agreement with SCANA and Santee Cooper in relation to the two AP1000 reactors under construction in South Carolina. SCANA and Santee Cooper would take responsibility for completing (or abandoning) the reactors, and Toshiba would make a payment to settle contractual obligations.¹⁷

On May 15, Toshiba said it had set aside ¥670 billion (US6.0 billion) to cover parent company guarantees for the Vogtle and Summer plants. Thus a payment of US2.3 billion for the South Carolina plant can be expected in addition to the US3.68 allocated for Georgia.

Another modest win for those hoping to complete the reactor projects in Georgia and South Carolina came on June 15 when the House of Representatives approved a bill on tax credits that could amount to around US$2 billion in subsidies for each of the nuclear plants ‒ Vogtle and Summer.¹⁸ However the future of the bill in the Senate is uncertain. The owners of the nuclear plants need the tax-credit subsidies locked in, and soon.

Despite the Toshiba agreement with the Vogtle owners, and the House of Representatives' vote on tax credits, the future of the Vogtle and Summer reactors is still very much in doubt.

Construction of the four reactors is less than half complete so there is ample scope for further delays and cost overruns. A report by consultants to the Georgia Public Service Commission found that attempts to improve efficiency have had little success: over the past year, four core activities at the Vogtle plant fell an average of 325 days further behind schedule.¹⁹

A recent document written by South Carolina state regulators states: "The projection of

time and costs is made more difficult given the incredible variances in time and costs

actually incurred in comparison to Westinghouse's previous quotes and projections of time

and costs."¹⁴

Owners of the nuclear plants are doing their best to estimate the likely costs to complete the four reactors ‒ but it is a guessing game. Analysts at Morgan Stanley say future costs could exceed current estimates by as much as US$8.5 billion, more than double what shareholders of the two companies are effectively pricing in.²⁰

The Southern Alliance for Clean Energy (SACE) estimates that the total cost of the two reactors in Georgia could reach US$29 billion.¹⁹ SACE based its estimate on a June 2017 report by two utility consultants to the Georgia Public Service Commission. The consultants' report is based on a scenario in which the project comes online in 2022, and Westinghouse's bankruptcy adds further costs.¹⁹

A Morgan Stanley report in March 2017 said the final cost of the two Summer reactors could be as high as US$22.9 billion ‒ double the original estimate.¹⁸

Using the SACE figure for Georgia, and the Morgan Stanley figure for South Carolina, the total cost for the four reactors could be US$51.9 billion, more than double the original estimate of US$23.9 billion (US$14.1 billion for Vogtle and US$9.8 billion for Summer).

Nuclear corporations and lobby groups argue that completion of the Vogtle and Summer reactors is a "national security issue" and a "strategic national imperative". Typically, those meaningless assertions are backed up with the meaningless justification that the US will be "left behind" by other countries such as Russia and China if it exits the global nuclear industry. The Nuclear Energy Institute has gone one step further. The industry lobby group has been circulating a document in Washington arguing the case for tax credits to support nuclear power projects. The document states that if the Vogtle and Summer plants aren't completed, it would stunt development of the nation's nuclear weapons complex because the engineering expertise on the energy side helps the weapons side.²¹

A further complication for the owners of the South Carolina plant is that they learnt in June, much to their astonishment, that Westinghouse's detailed construction schedule for the two reactors is non-existent.¹⁸ "I'm just floored that they haven't been able to produce a schedule for their own project," said Tom Clements from Savannah River Site Watch. "That violates a basic tenet of sound construction management, and I think it reveals that there are more problems to be encountered if the project continues."¹⁸

Friends of the Earth and the Sierra Club filed a complaint with South Carolina state regulators on June 22, calling for a hearing on whether construction should be allowed to move forward at the Summer plant and whether the utilities should be forced to pay back money customers have already spent through higher rates to build the reactors.¹⁸ The South Carolina Public Service Commission approved the groups' request and a hearing is scheduled for August 14 in Columbia.¹⁸

The groups call on the Summer plant owners to "cease and desist from expending any further capital costs related to the Project" and referred to "unreasonable electric rates" ‒ in particular, nine electricity rate hikes since 2008 to help fund the Summer project.¹⁷

Dr Mark Cooper from the Institute for Energy and the Environment at Vermont Law School has written a detailed paper for Friends of the Earth and the Sierra Club in support of their complaint to the South Carolina Public Service Commission.²² Cooper argues:

"Management will waste more money going forward in a futile attempt to complete the project ... Future costs may be twice as much as the costs that have been sunk. This report outlines five steps that can be taken to soften the negative blow to both SCE&G ratepayers and the economy of South Carolina:

• Stop wasting money by abandoning the project.
• Claw back improperly expended sunk costs through reclamation under the bankruptcy laws and reparation for imprudent costs improperly incurred.
• Return to traditional least-cost, used and useful principles for utility resource acquisition.
• Rely on lower cost, cleaner resources, like efficiency, renewables and dynamic system management to meet any growth in demand or reduction in emission of pollutants.
• Mitigate the bill impact by enhancing ratepayer ability to lower their electricity costs with on-bill financing of efficiency, reducing the profit paid on wasted capital expenses, and extending the period for cost recovery."

Cooper argues that "even under the unjustifiably optimistic projection of no future delays and cost overruns, ratepayers will be better off if the utility abandons the project, even if ratepayers are forced to bear the costs that have been sunk to date." In the best-case scenario, swift action by the Public Service Commission could save ratepayers as much as US$10 billion.

Planned AP1000 reactors in the UK

Numerous media reports over the past six weeks have flagged the possibility that South Korea's Kepco could buy into the NuGen consortium that planned to build three AP1000 reactors at Moorside in the UK. Toshiba would be more than happy to sell most or all of its stake in NuGen to Kepco ‒ or anyone else. But Kepco wants to build its own APR1400 reactors instead of Westinghouse AP1000s. That brings with it another set of problems ‒ financing, the anti-nuclear stance of recently-elected South Korean President Moon Jae-in, and the several years it would take for the APR1400 reactor design to go through a generic design assessment process in the UK. Suffice it here to note that previous plans to build AP1000 reactors at Moorside appear to be stone cold dead.

Planned AP1000 reactors in India

Indian Prime Minister Narendra Modi and US President Donald Trump issued a communique after their meeting in Washington in late June. The two leaders "looked forward to conclusion of contractual agreements between Westinghouse Electric Company and the Nuclear Power Corporation of India for six nuclear reactors in India and also related project financing," the communique said.²³

However there is very little likelihood of contractual agreements, no clarity about financing, no obvious reason why India would pay for Westinghouse reactors when cheaper options are available to meet energy needs, no obvious reason why India would sign up for AP1000 reactors given the massive cost overruns in the US, and an unresolved disagreement about India's nuclear liability law.

Another obstacle is that Westinghouse ‒ assuming that Westinghouse even exists after the bankruptcy process ‒ is exiting the reactor construction business. The Hindu reported: "Westinghouse is working out a new model with its lenders under which they will design the reactor and provide consultations, but Indian companies would be entrusted with the actual construction of the plant. A process is underway to ascertain who will do what in the new business model and which Indian companies could be involved."²⁴

References:

1. Reuters, 13 July 2017, 'Toshiba: Not true auditor told co it can't form opinion on annual report', www.reuters.com/article/us-toshiba-accounting-idUSKBN19Y03K?il=0

2. Nikkei Asian Review, 24 June 2017, 'Toshiba teeters on brink of delisting', http://asia.nikkei.com/Business/Companies/Toshiba-teeters-on-brink-of-de...

3. Shotaro Tani / Nikkei Asian Review, 23 June 2017, 'Toshiba's negative net worth widens to 5.2 billion dollars', http://asia.nikkei.com/Business/Companies/Toshiba-s-negative-net-worth-w...

4. 10 July 2017, 'Toshiba need alternative plan quick', www.simmtester.com/page/news/shownews.asp?num=19296

5. 23 June 2017, 'Toshiba asks regulators for extension on annual statement deadline to Aug. 10', www.japantimes.co.jp/news/2017/06/23/business/corporate-business/toshiba...

6. Kathleen Wirth, 13 June 2017, 'Toshiba Being Sued for $399 Million for Accounting Irregularities', http://wirthconsulting.org/2017/06/13/toshiba-being-sued-for-399-million...

7. Peter Wells, 12 June 2017, 'Toshiba jumps 8% after deal to cap US reactor liability', www.ft.com/content/889d3470-4a72-3039-9450-9602bd2faef1?mhq5j=e3
8. www.bloomberg.com/quote/6502:JP

9. Reuters, 3 July 2017, 'Indo-US nuclear deal: Westinghouse could be sold by Dec, ending bankruptcy, says report', http://indianexpress.com/article/business/companies/westinghouse-could-b...

10. Michael Smith, 7 June 2017, 'Washington weighs in on Westinghouse bankruptcy', www.northaugustastar.com/news/washington-weighs-in-on-westinghouse-bankr... of Form

11. Sammy Fretwell, 8 May 2017, 'Nuclear-safety concerns linger at Westinghouse plant', www.thestate.com/news/local/article149368179.html

12. World Nuclear News, 21 June 2017, 'Westinghouse subsidiary receives notice of non-conformance', www.world-nuclear-news.org/RS-Westinghouse-subsidiary-receives-notice-of...

13. Kosaku Narioka, 8 June 2017, 'Toshiba Unaware Its Nuclear Unit Was Preparing for Bankruptcy, Timeline Shows', Wall Street Journal, www.advfn.com/news_Units-Woes-Stun-Toshiba-Toshiba-Missed-Unit-Woes_7496...

14. www.regulatorystaff.sc.gov/Documents/7-12-17%20Nuclear%20Construction%20...

15. Nikkei Asian Review, 13 July 2017, 'US utility to decide fate of Westinghouse reactors in August', http://asia.nikkei.com/Business/Companies/US-utility-to-decide-fate-of-W...

16. World Nuclear News, 12 June 2017, 'Vogtle agreement caps Toshiba obligation', www.world-nuclear-news.org/C-Vogtle-agreement-caps-Toshiba-obligation-12...

17. Michael Smith, 23 June 2017, 'Toshiba seeks SCANA, Santee Cooper takeover of V.C. Summer', www.aikenstandard.com/news/toshiba-seeks-scana-santee-cooper-takeover-of...

18. David Wren, 24 June 2017, 'Missing documentation throws Santee Cooper, SCE&G nuclear project timeline, costs in doubt', www.postandcourier.com/news/missing-documentation-throws-santee-cooper-s...

19. Tom Hals, 15 June 2017, 'Group says Georgia nuclear plant costs rise to $29 billion', www.reuters.com/article/us-toshiba-accounting-westinghouse-bankr-idUSKBN...

20. Lauren Silva Laughlin, 28 March 2017, 'Nuclear waste', www.breakingviews.com/considered-view/utilities-to-pay-price-of-westingh...

21. Amy Harder, 16 June 2017, 'Nuclear scramble on tax credits', www.axios.com/nuclear-scramble-on-tax-credits-2442400126.html

22. Mark Cooper, July 2017, 'The Failure of the Nuclear Gamble in South Carolina', www.cleanenergy.org/wp-content/uploads/MarkCooper_VCSummerReport_Final_J...

23. Reuters, 3 July 2017, 'Indo-US nuclear deal: Westinghouse could be sold by Dec, ending bankruptcy, says report', http://indianexpress.com/article/business/companies/westinghouse-could-b...

24. Vikas Dhoot, 28 June 2017, 'Westinghouse's $20 billion nuclear deal needs a reboot', www.thehindu.com/business/Economy/westinghouses-20-billion-nuclear-deal-...

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Only three power reactors have been connected to the grid in the US in the past 25 years, and no power reactor in the US has both begun construction and been completed since the Three Mile Island accident in 1979.¹ With the cancellation of the V.C. Summer project in South Carolina, only two reactors are under construction in the US: the AP1000 reactors at the Vogtle plant in Georgia. Will the Vogtle project break the streak of no reactors being ordered, built and completed since Three Mile Island? Or will the project be cancelled ‒ in which case there will be a grand total of zero reactors under construction in the US?

A decision will probably be announced by the end of the month by the project owners, then the Georgia Public Service Commission will have to decide whether or not to accept their proposal ‒ a process that could take several months.²

Comments by Southern CEO Tom Fanning on August 2 suggested that he is leaning towards recommending that construction keep going.³ Fanning said the company had costed the option of building one of the Vogtle reactors and a gas-fired plant at the same site, but preferred to either keep or abandon the nuclear project as a whole.⁴ "We would need to build a rather lengthy [gas] pipeline, and maybe other sites around Georgia are maybe more suitable for that," Fanning said.⁴

In some respects, the Vogtle project in Georgia has better prospects than the abandoned V.C. Summer project in South Carolina:

• Energy demand is growing more rapidly in Georgia.⁵
• The Vogtle project is closer to completion than V.C. Summer. According to the Augusta Chronicle, the Vogtle project is 66% complete overall, with almost all of the engineering and most of the procurement done, and construction 44% complete.⁶ The current timeline for completion of the reactors is between Feb. 2021 and March 2022 for Vogtle #3 and between Feb. 2022 and March 2023 for Vogtle #4.⁷
• Toshiba's settlement payment for the Georgia AP1000 project is US3.68 billion, well above the US$2.2 billion to be paid to the South Carolina utilities.
• The rate impact is spread across a bigger customer base ‒ Georgia Power has about three times more customers than SCE&G.⁷

But there are important similarities between the South Carolina and Georgia projects. Westinghouse is exiting from both projects. Both projects are long-delayed and billions over-budget. Ratepayers in both states are sick of paying in advance for the AP1000 reactors that may never be completed ‒ Georgia Power had collected almost US$1.2 billion from ratepayers by the end of 2016 to pay for Vogtle.⁸

Another vulnerability for the Vogtle project is that it has more owners ‒ Georgia Power (45.7%), Oglethorpe Power Corp. (30%), the Municipal Electric Authority of Georgia (22.7%) and Dalton Utilities (1.6%) ‒ and the project might collapse if just one of the owners calls for its termination.⁹ Georgia Public Service Commissioner Stan Wise said: "I would question whether the commission would have the appetite to go forward without a unanimous decision from the owners."⁹

In 2008, the cost estimate for the two Vogtle reactors was US$14 billion. Southern Co. said on August 2 that its current estimate is a total cost of at least US$25 billion.^3,10

Georgia Power estimates net additional capital costs of US$1.0-1.7 billion to complete the two AP1000s under construction at Vogtle.⁷ Costs for other owners ‒ who own slightly over 50% of the project ‒ would presumably be slightly larger.

Of course, that US$25 billion figure could prove to be an underestimate, as with all previous estimates. The Southern Alliance for Clean Energy (SACE) estimates that the cost could reach US$29 billion.¹¹ SACE based its estimate on a June 2017 report by two utility consultants to the Georgia Public Service Commission. The consultants' report is based on a scenario in which the project comes online in 2022, and Westinghouse's bankruptcy adds further costs.

Will Vogtle go ahead? "It might be a close call," said Kit Konolige, a New York-based utility analyst for Bloomberg Intelligence. "The biggest issue is, what's your level of confidence that if you do go ahead, it's going to be done on time and on budget."¹⁰

Few people on the outside looking in have much confidence that Vogtle could be completed without significant additional cost overruns and delays. But there is more confidence among the Vogtle project partners and state 'regulators' that the project can be completed.

Southern Co. recently noted that the project has fallen further behind schedule since Westinghouse filed for bankruptcy protection in March 2017.³

Matt Kempner commented in the Atlanta Journal-Constitution:¹²

"Continuing to fund the only remaining nuclear power plant under construction in the U.S. relies largely on decision-makers convincing themselves that the companies can accurately revise cost and schedule estimates for Plant Vogtle's expansion. It's a dicey proposition. Accuracy hasn't been a strong suit of the power giants in recent years.

"Southern is one of the biggest power companies in the country and the parent of Georgia Power. It has embarked on exactly two mega construction projects in the last decade or so. Both ‒ the expansion of Plant Vogtle and the Kemper clean coal/gas plant in Mississippi ‒ have gone billions of dollars over budget and faced years of delays. As each project struggled, Southern and its subsidiaries continued to underestimate the magnitude of the overruns. Independent monitors for the Georgia Public Service Commission regularly warned about rising Vogtle costs that were more accurate than Georgia Power's reassurances about stability."

Georgia Power estimates it would cost it a total of US$6.3 billion to cancel the project, comprising its share of expenditure on the project to date; financing costs; and other costs connected with cancellation, including terminating contracts for construction and other services, and securing the construction site.⁷

References:

1. www.iaea.org/PRIS/CountryStatistics/CountryDetails.aspx?current=US

2. Russell Gold, 2 Aug 2017, 'US nuclear revival hopes dim as utilities ditch reactors', www.theaustralian.com.au/business/wall-street-journal/us-nuclear-revival...

3. Russell Grantham, 2 Aug 2017, 'Southern Co. says Vogtle costs to exceed $25B', www.myajc.com/business/southern-says-vogtle-costs-exceed-25b/mvP3M8H3Db3...

4. Megan Geuss, 4 Aug 2017, 'Vogtle, Summer nuclear plants face bleak outlook after Westinghouse bankruptcy', https://arstechnica.com/information-technology/2017/08/vogtle-summer-nuc...

5. Tom Buerkle, 31 July 2017, 'Power down', www.breakingviews.com/considered-view/scana-move-signals-lights-out-for-...

6. Tom Corwin, 2 Aug 2017, 'Company update predicts longer start date for Vogtle reactors', Augusta Chronicle, http://businessinsavannah.com/bis/2017-08-02/company-update-predicts-lon...

7. World Nuclear News, 3 Aug 2017, 'Georgia Power expects late August decision on Vogtle', www.world-nuclear-news.org/NN-Georgia-Power-expects-late-August-decision...

8. Russell Grantham and Johnny Edwards, 19 May 2017, 'Plant Vogtle: Georgia's nuclear ‘renaissance' now a financial quagmire', www.myajc.com/business/plant-vogtle-georgia-nuclear-renaissance-now-fina...

9. Kristi E. Swartz, 1 Aug 2017, 'Death of Scana's V.C. Summer project puts industry on notice', www.eenews.net/stories/1060058199

10. Mark Chediak and Jim Polson, 2 Aug 2017, 'Even at $25 Billion, Southern Sees Value in Finishing Nukes', www.bloomberg.com/news/articles/2017-08-02/southern-sees-benefit-to-fini...

11. Tom Hals, 15 June 2017, 'Group says Georgia nuclear plant costs rise to $29 billion', www.reuters.com/article/us-toshiba-accounting-westinghouse-bankr-idUSKBN...

12. Matt Kempner, 3 Aug 2017, 'Kempner: Georgia's nuclear crisis of confidence', www.myajc.com/business/kempner-georgia-nuclear-crisis-confidence/Zm7o79f...

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The two partially-built AP1000 reactors at the VC Summer plant in South Carolina may be resurrected ‒ but it is a long shot. On August 15, South Carolina Electric & Gas Co. (SCE&G) ‒ 55% owner of the project ‒ announced that it had voluntarily withdrawn its petition to the South Carolina Public Service Commission to abandon the two reactors, a fortnight after saying it would discontinue work on the project and lodging the abandonment petition.¹

Kevin Marsh, CEO of SCE&G parent company SCANA Corp., said SCANA has "not changed our position on abandonment" and that the withdrawal of the petition is seen as temporary and that it will be refiled "at an appropriate time" once reviews of the project by legislators are complete.² That may be after state legislators complete their Jan.‒ May 2018 sitting session, by which time they will also have completed reviews of the VC Summer project failures.³

SCE&G said it might not complete the reactors even if a new power company is willing to partner on the project.⁴ The company previously said it would have been willing to proceed with one of the two reactors if not for the decision of state-owned Santee Cooper ‒ 45% owner of the project ‒ to abandon both. But Marsh told state legislators on August 10: "I've got to be convinced that building the one-plant option ‒ even with a new partner ‒ would be in the best interest of our customer."⁴ He also said it would take at least a year to restart the project, even if a new partner emerged.

Marsh said the project could only move forward with a willing and capable partner, a new ownership agreement, a suitable agreement with a capable construction firm, some certainty about the project being able to qualify for a federal government tax credit (effectively a subsidy of about US$2 billion), and a new agreement with Westinghouse for design engineering services since "the plant is their design."⁵ The new partner would need to stump up US$3 billion.⁶

A federal government handout would also be required to revive the VC Summer project. Marsh noted that before abandoning the project, he went to the Department of Energy seeking a grant, but the agency responded with an offer of a loan. "Loans are nice, but they don't reduce the cost of the project. What we were trying to do was minimize the cost of the project," he said.³ SCANA sought a non-repayable grant of US$1‒3 billion.⁷

Marsh said the federal government would also need to guarantee that ratepayers wouldn't foot the bill for a project with an uncertain price tag. "We would need to protect customers from that risk, and that would be an absolute we would have to have from a cost perspective," he said at an August 1 public hearing with state regulators.⁸

So SCANA wants a US$1‒3 billion direct handout, a US$2 billion indirect handout in the form of tax credits, and also a blank check covering future cost overruns! No wonder the Trump administration has been silent on a nuclear project it once called 'massively important'.⁸

Reviving the project would also depend on the Base Load Review Act, which state legislators seem intent on revising or repealing, Marsh said.⁹ The Act allowed project partners to charge ratepayers for construction of the reactors during the construction period, and also gives them the right to pursue sunk costs from ratepayers.

State Governor Henry McMaster said that he was looking for a utility to buy Santee Cooper's share of the VC Summer project‒ or even to buy Santee Cooper outright ‒ if it meant one reactor would be completed. McMaster said his office was reaching out to some of the South's largest power companies ‒ including Dominion Energy in Virginia, Duke Energy in North Carolina and the Southern Co. of Georgia ‒ to see if they were interested in all or part of the state-owned utility.⁴ McMaster said he has heard from a "number of entities that have expressed an interest in purchasing Santee Cooper, in whole or in part, or have inquired regarding Santee Cooper's ownership interest" in the plant.¹⁰

At an August 22 meeting of South Carolina Senate's VC Summer Nuclear Project Review Committee, Santee Cooper representatives said they were aware of "very preliminary" discussions involving the Governor about the possible sale of the utility.⁶ Asked what would become of Santee Cooper's almost US$8 billion of debts ‒ US$4 billion for the nuclear plant ‒ Santee Cooper's chair Leighton Lord said: "It would stay with the state of South Carolina. I don't think any investor utility would want to acquire $4 billion in [nuclear] debt."⁶

So reviving the project would require a US$1‒3 billion direct handout, an indirect US$2 billion tax-credit handout and a blank check from the federal government, a US$4‒8 billion bailout from the state government, maintaining the Base Load Review Act which allows the project partners to continue to gouge ratepayers, a new project partner with US$3 billion to spare ... and much more besides. So much for nuclear power being too cheap to meter.

Estimates of the amount already spent on the VC Summer project range from US$9 billion to US$10.4 billion.¹¹ The estimated cost to complete the project, from start to finish, is around US$25 billion including interest, according to Santee Cooper's Lonnie Carter (almost US$18 billion excluding interest).⁶

SCANA's Kevin Marsh said: "The governor has stated that he's looking for another partner to possibly come into the plant, but if someone says they're interested, that's not something that will happen overnight," Marsh said. "There are a lot of bridges that have to be crossed before we would get there."⁴ SCANA had looked unsuccessfully for a new partner before giving up on construction on July 31.¹²

Santee Cooper said it had heard from two utilities interested in buying its 45% share of the VC Summer project, after contacting "about 50 utilities and other entities in the Southeast who could enter into power purchase agreements dozens of power companies."¹³ But Lonnie Carter, the utility's chief executive, said neither company has the assets to undertake a multi-billion-dollar construction project.¹⁴ Santee Cooper has set a September 15 deadline for serious expressions of interest.¹⁵

Corso Capital Management analyst David Frank said that abandoning the project was the likely outcome: "I'm not quite sure how anyone after any comprehensive review could come to any other decision ‒ I mean, even if you had someone with half a brain ‒ to spend the amount of money with all of the risks and potential risks that are still ahead. All these people, I'm sure they are very upset, it's very emotional, but I'd be curious to really hear someone make a solid argument for going ahead and taking on all that risk."³

Dukes Scott, executive director of the South Carolina Office of Regulatory Staff, said it would take something close to a miracle to revive the project.⁶

Blame game

Just about everyone involved in the VC Summer fiasco failed to meet expectations by a wide margin ‒ state legislators and regulators, the project owners, the lead contractor Westinghouse and a number of other contractors and sub-contractors. Legislators are trying to shift blame to the project owners, who are trying to shift blame to Westinghouse.

The South Carolina House and Senate have initiated separate inquiries, both of which are providing plenty of theatre. Commenting on the failure to establish a credible work schedule or cost estimates before the project began, Republican Rep. Kirkman Finlay told the House inquiry on August 23: "We embarked on a multi-year, multi-billion project with a road map that we didn't really believe was going to get us to the destination. Help me understand how we could have planned it less thoroughly."¹⁶ Republican Sean Bennett, a member of the Senate inquiry, told a community meeting that "the good news is, there is no good news".¹⁷

Many of the legislators investigating the VC Summer fiasco are themselves partly responsible for it. South Carolina resident Joe Cali said: "This is like asking the foxes to investigate the depredations at the hen-house."¹⁷

Republican state Senator Shane Massey said at an August 22 hearing into the fiasco: "We went a number of years with Westinghouse just screwing you over and you let it happen. We can sit here and we can blame Westinghouse all day. At some point, y'all, we can't pass the buck anymore."¹⁸

Santee Cooper chair Leighton Lord blamed state and federal politicians ... and Westinghouse: "Without the state Base Load Review Act, the project would have never started. Without the Congress providing single-application licensing, and production tax credits for new nuclear construction, the project would have never happened. ... [W]e would have completed the new units if Westinghouse had lived up to its contract to complete the project for an agreed fixed price. Westinghouse failed to do what it promised it could do."¹⁹

Cindi Ross Scoppe, a columnist with The State newspaper, highlighted the absurdities of the Base Load Review Act:²⁰

"You're a private-sector, regulated utility, so your job is not to protect ratepayers. They're stuck with you, and besides, it's the government's job to look out for them. Your job is to protect your stockholders. And you're doing that. Magnificently. That's why you and your executive team keep getting those huge bonuses.

"There's this law, the Base Load Review Act, that your team convinced the Legislature to pass in 2007. It says your stockholders won't suffer the consequences of your decisions, no matter how much you go over budget. In fact, the more you spend, the more they profit, because they're guaranteed a 10.25 percent return on investment. So you have no incentive to keep costs down. Just the opposite.

"You have no incentive to get out unless things get so bad that it would be "imprudent" ‒ an important legal term that can yank that profit out of your fingers ‒ to continue. Like, say, if your prime contractor goes belly up. And your 45 percent partner bails on you. Until that happens, invest more, profit more.

"When you add this bizarre economic incentive to the natural human inclination toward inertia, it's almost impossible not to keep sending money on the project. More than you should. Longer than you should. That situation is not SCANA's fault, at least not mostly. It's the fault of our Legislature, which created that disincentive to keep costs down. Or pull the plug."

In a blistering attack that's worth reading in full, Republican state Senator Chip Campsen blamed state legislators for passing the Base Load Review Act.²¹ He says that as a freshman senator he voted against the Act in 2007 but it was approved by a vote of 21 to 1.

Campsen writes:²¹

"This shifting of risk to customers, when coupled with guaranteed returns up to 11 percent on construction costs, created a perverse incentive to spend big dollars building risky plants. The more utilities spend, the more money they make. Customers underwrite it all, even if a project fails.

"How did such a bill ever pass the General Assembly? The principle of concentrated benefits and diffuse or abstruse costs. When the benefits of a bill are significant and concentrated in a few, beneficiaries lobby the General Assembly assiduously for its passage. When costs are diffuse, abstruse, or both, no one is motivated to lobby against it. Members sense a lot of support and no opposition. The bill typically passes.

"In this case utility lobbyists descended upon the General Assembly like the plague of locusts in Exodus 10. And what of the opposition? Instead of locusts, it was crickets chirping. Opposition was essentially nonexistent."

Cheryl Rofer, who runs the 'Nuclear Diner' blog, blames everyone in a sarcastic post:²²

"So congratulations to:

The contractors who cannot build nuclear plants on time and within budget. Special mention for lowballing their bids and failing to meet quality control requirements.

The utilities that cannot contract or manage the building of nuclear plants.

The financiers who have botched their judgments of the projects.

Proponents of nuclear power. The strategy of competitive parading of one's knowledge, parochial defense of a single system against all others, and unthinking opposition to wind and solar have been tremendous public relations successes.

Opponents of nuclear power. Spreading incorrect information and confusion instead of clearly delineating actual problems with nuclear power has made the public dumber.

Reporters who can't be bothered to learn middle-school science.

The schools that didn't teach it.

The Department of Energy and its predecessors. From a major misjudgment by a Rickover protégé through continuing confusion as to its role relative to the national laboratories and wildly varying support for nuclear energy, these agencies at best have been a neutral influence on commercializing nuclear energy.

Congress. Ever-increasing micromanagement of budgets, bending to lobbyists without a clear plan, and, since the mid-1990s, continuing resolutions rather than thought-out budgets make long-range plans impossible.

The national laboratories. Replacing their role as national resources for nuclear issues with a university model of individual investigators, but with more fighting over resources and overhead has diluted what they can contribute to the development of nuclear power.

Particular thanks to those who have assembled studies showing their favorite type of energy to be the most economically favored.

Good job, all! Your participation trophies are in the mail."

Environmentalists and nuclear opponents

The weirdest part of the blame game is the mud being thrown at environmentalists. Environmentalists aren't to blame for the VC Summer fiasco. As Houston Chronicle business columnist Chris Tomlinson noted: "Let it be written that environmentalists didn't kill the nuclear power industry, economics did. South Carolina Electric and Gas Co. and partner Santee Cooper abandoned work on two new nuclear reactors ... not because of public protests, but because the only way to pay for them was to overcharge customers or bankrupt both companies."²³

Nonetheless, attempts are being made to blame environmentalists and nuclear opponents more broadly. James H. Holloway Jr., an accountant whose clients have included nuclear utilities and companies, runs this curious argument:²⁴

1. Historically, environmentalists and other nuclear opponents forced costly delays to reactor construction, stopping some and driving up the cost of others.

2. As the nuclear renaissance took hold, power companies had to eliminate the risk of opponents forcing costly delays. Hence the need for the Base Load Review Act and similar legislation elsewhere: "If customers were charged for the interest during construction (and construction delays), then opponent activities to stall or stretch out construction would have less financial impact on the project. ... If the activities of nuclear power opponents had not had such a large effect on earlier construction, there would have been no need for a base load law for the new construction."

3. "So when you're sending out thank you notes to the Public Service Commission, SCANA and the Legislature for their roles in forcing you to pay the construction interest on these now-abandoned nuclear plants, be sure to include one to your favorite nuclear power opponents. They won't like it, but they do need to hear from you."

But of course, as Santee Cooper's Leighton Lord bluntly stated, without the state Base Load Review Act, the project would never have started.¹⁹

And of course, Westinghouse, SCE&G, Santee Cooper and others proved themselves perfectly capable of screwing up the VC Summer project without any help from environmentalists and other nuclear opponents.

Had the early warnings of environmentalists been heeded, the project never would have started. South Carolinians would have saved many billions of dollars. Or some or all of the wasted money could have been invested in renewables which would have been producing low-carbon power years ago.

Had the mid-project warnings of environmentalists been heeded, problems with the project might have been forced onto the public and political agenda and the project might have been put back on track ‒ or abandoned at a much earlier date with the associated savings.

Sammy Fretwell wrote in The State newspaper on August 12:²⁵

"The troubles at the site didn't surprise [Columbia lawyer Bob] Guild and a small group of environmentalists who oppose nuclear power. Even though they philosophically do not believe in building more nuclear plants, activists from the Sierra Club and Friends of the Earth raised questions as far back as 2008 about the cost of the project and how it might affect ratepayers. Through the years, they held signs and acted out satirical plays, in an effort to raise awareness.

"Despite the efforts, Guild and others said they were able to gain little more than moderate support. "There were so many issues, but people didn't pay attention'' said Leslie Minerd, a longtime environmental activist and Five Points business owner. "Legislators bought what SCE&G said hook, line and sinker. They were listening to them before us.""

The fake environment group 'Environmental Progress' claims that SCE&G and Santee Cooper were "caving into pressure from Sierra Club and Friends of the Earth" by abandoning the project.²⁶ Attempting to justify that ridiculous claim, 'Environmental Progress' said: "The effect of the campaigns funded by [Friends of the Earth and the Sierra Club] has, in fact, been to create the environment in which the Summer project is abandoned".²⁷

Friends of the Earth complained in an August 22 statement about the failure of the South Carolina legislature to include public interest groups in their inquiries into the VC Summer project.²⁸

Friends of the Earth has nevertheless filed unsolicited testimony ‒ titled 'Doomed from the Start' ‒ with the legislature.²⁹ The testimony "documents the state's Public Service Commission (PSC) and the Office of Regulatory Staff (ORS) repeatedly failed to thoroughly analyze suspect requests by utility South Carolina Electric & Gas (SCE&G) concerning cost overruns, schedule delays, construction problems and nine pay-in-advance rate hikes to pay for project financing. Public interest groups, namely Friends of the Earth and the Sierra Club, repeatedly raised warning flags about challenges facing the project but were ignored by both the PSC and ORS."²⁸

Tom Clements, senior adviser with Friends of the Earth and author of the 'Doomed from the Start' testimony, said: "As has been clear since day one, both the PSC and ORS viewed their roles as facilitators in what SCE&G requested, an approach that makes the regulators in large part responsible for the resulting debacle. Both the PSC and ORS rubber stamped every cost overrun and schedule delay that SCE&G asked for and it is now clear that those decisions were based on faulty information and grossly inadequate analyses. For their failure to protect the public interest, PSC commissioners and the director of the ORS must accept responsibility for enabling this $9 billion debacle and resign."²⁸

References:

1. SCE&G, 15 Aug 2017, South Carolina Electric & Gas Company to Voluntarily Withdraw Its New Nuclear Abandonment Petition to Accommodate the Legislative Review Process', www.scana.com/docs/librariesprovider15/pdfs/press-releases/08152017-sce-...

2. World Nuclear News, 16 Aug 2017, 'SCE&G withdraws petition to scrap Summer project', www.world-nuclear-news.org/NN-SCEG-withdraws-petition-to-abandon-Summer-...

3. Kristi E. Swartz, 17 Aug 2017, 'Will V.C. Summer project restart? Probably not', www.eenews.net/energywire/stories/1060058867

4. Thad Moore, Aug 2017, 'CEO: SCANA may not return to scuttled nuclear project — even if a new partner emerges', www.postandcourier.com/business/ceo-scana-may-not-return-to-scuttled-nuc...

5. Rod Adams, 17 Aug 2017, 'Is V.C. Summer really dead or is near term revival possible?', https://atomicinsights.com/v-c-summer-really-dead-near-term-revival-poss...

6. John Downey, 22 Aug 2017, 'Senators told saving V.C. Summer project could take ‘a miracle'', www.bizjournals.com/charlotte/news/2017/08/22/senators-told-saving-v-c-s...

7. Amy Harder, 4 Aug 2017, 'Utility made failed plea for billion-dollar nuclear grant', www.axios.com/utility-made-failed-plea-for-billion-dollar-nuclear-grant-...

8. Thad Moore and Emma Dumain, 12 Aug 2017, 'Trump administration silent on demise of nuclear project it once called 'massively important'', www.postandcourier.com/business/trump-administration-silent-on-demise-of...

9. Avery Wilks, 16 Aug 2017, 'SCANA sticking with plans to abandon nuclear project, charge customers more', The State, www.islandpacket.com/news/state/south-carolina/article167467032.html

10. 19 Aug 2017, 'McMaster to Santee Cooper board: 'All options' on the table when it comes to possible sale', http://bvtnews.com/news/mcmaster-to-santee-cooper-board-all-options-on-t...

11. Mark Nelson and Michael Shellenberger, 2 Aug 2017, 'Wind Energy Still More Expensive Than Nuclear Reactors Halted for Cost Overruns', www.environmentalprogress.org/big-news/2017/8/2/wind-energy-still-more-e...

12. John Downey, 16 Aug 2017, 'SCANA sees little hope for reviving V.C. Summer nuclear project despite partner search', www.bizjournals.com/charlotte/news/2017/08/16/scana-sees-little-hope-for...

13. 17 Aug 2017, 'Fate of US VC Summer NPP still uncertain', www.neimagazine.com/news/newsfate-of-us-vc-summer-npp-still-uncertain-59...

14. Thad Moore, 21 Aug 2017, 'Santee Cooper has heard from 2 companies interested in joining V.C. Summer project, but neither is 'viable'', www.postandcourier.com/business/santee-cooper-has-heard-from-companies-i...

15. 22 Aug 2017, 'Santee Cooper: Offers to Revive Summer Nuclear Expansion Not Viable', www.power-eng.com/articles/2017/08/santee-cooper-offers-to-revive-summer...

16. Avery G. Wilks, 23 Aug 2017, 'SCE&G got state's OK for doomed nuclear project without a detailed construction schedule', www.thestate.com/news/politics-government/article168857122.html

17. Jenna-Ley Harrison, 22 Aug 2017, 'Local senator promises to 'protect the ratepayers' after nuclear project ends', www.journalscene.com/news/local-senator-promises-to-protect-the-ratepaye...

18. Andrew Brown, 22 Aug 2017, 'SCANA CEO rushed from state Senate hearing as failure review begins on abandoned $9 billion nuclear plant project', www.postandcourier.com/business/scana-ceo-rushed-from-state-senate-heari...

19. Leighton Lord, 21 Aug 2017, 'Here's why Santee Cooper started, stopped nuclear plants', www.thestate.com/opinion/letters-to-the-editor/article168389797.html

20. Cindi Ross Scoppe, 22 Aug 2017, 'How ‘waste not, want not' became ‘spend more, profit more'', www.thestate.com/opinion/opn-columns-blogs/cindi-ross-scoppe/article1679...

21. Chip Campsen, 15 Aug 2017, 'How the S.C. Legislature paved the way for nuclear mess', www.postandcourier.com/opinion/commentary/how-the-s-c-legislature-paved-...

22. Cheryl Rofer, 3 Aug 2017, 'A Job Well Done', https://nucleardiner.wordpress.com/2017/08/03/a-job-well-done/

23. Chris Tomlinson, 3 Aug 2017, 'Nuclear power as we know it is finished', www.houstonchronicle.com/business/columnists/tomlinson/article/Nuclear-p...

24. James H. Holloway Jr., 20 Aug 2017, 'How nuclear opponents paved the way for SC law', www.thestate.com/opinion/op-ed/article167998207.html

25. Sammy Fretwell, 12 Aug 2017, 'Warnings were raised years before utilities abandoned nuke project', www.thestate.com/news/local/article166947252.html

26. Mark Nelson and Michael Light, 31 July 2017, 'New South Carolina Nuclear Plant Would Cut Coal Use by 86%, New Analysis Finds', www.environmentalprogress.org/big-news/2017/7/31/new-south-carolina-nucl...

27. www.facebook.com/environmentalprogress/posts/1944602472472775

28. Friends of the Earth, 22 Aug 2017, 'Friends of the Earth Files Unsolicited Testimony with South Carolina Legislature on Termination of Nuclear Reactor Project', www.foe.org/news/news-releases/2017-08-friends-of-the-earth-files-unsoli...

29. Friends of the Earth, 22 Aug 2017, 'Doomed from the Start: $9 Billion Reactor Construction Debacle due to Imprudence by South Carolina Electric & Gas (SCE&G) and Dereliction of Duty by the S.C. Public Service Commission and the Office of Regulatory Staff', http://webiva-downton.s3.amazonaws.com/877/92/e/10766/testimony_in_absen...

Eight AP1000 reactors are under construction around the world: four in China and four in the US. All of them, in both China and the US, are about three years behind schedule.

A Chinese nuclear engineer told nuclear lobbyist Michael Shellenberger in 2015: "People felt we paid full price for a half-completed design." The result, Shellenberger writes, was three years of delay, higher costs, and a deteriorating relationship between China and Westinghouse.¹ Likewise, the 2016 World Nuclear Industry Status Report noted that the AP1000 projects in China have suffered construction delays and cost overruns, design changes and equipment failure.²

Nonetheless, the four AP1000 reactors in China will very likely be completed.

Whether the four AP1000 reactors in Georgia and South Carolina will be completed is now subject to a 30-day "assessment period" according to Westinghouse.³ Work is continuing during the assessment period.

Costs to complete the four reactors could amount to approximately US$8.5 billion.⁴ The combined cost overruns for the four reactors amount to about US$11.2 billion and counting.⁵

Stephen Byrd from Morgan Stanley anticipates that the total costs of the plants in Georgia and South Carolina, if completed, will be about twice Westinghouse's original estimate.⁶

An April 2 article from the World Nuclear Industry Status Report website summarizes the situation:⁷

"The outcome for the U.S. AP1000 projects is more dire, and abandonment is an explicit option. In the case of the Vogtle project in Georgia, Stan Wise, chairman of the state's Public Service Commission, pointed out that it is "possible ... that Plant Vogtle just doesn't get finished at all. It's a real hit and a real blow to something that we felt like was going to be the very best possible energy choice for Georgia maybe even into the next century". But he also went on to talking about the changes in the energy landscape since the Vogtle plan was initially approved, "with natural gas getting very cheap, and technologies like solar power and batteries improving" and declaring: "If I'd known any of this a decade ago we would have gone a different way".

"[South Carolina's] SCANA chief executive Kevin Marsh, on the other hand, was more bullish: "Our commitment is still to try to finish these plants. That would be my preferred option. The least preferred option, I think realistically, is abandonment". But he has also said that SCANA will evaluate various options during the coming 30 days, including:

• continuing with the construction of both new units;
• focusing on the construction of one unit, and delaying the construction of the other;
• continuing with the construction of one and abandoning the other; and
• abandoning both units.

"Independent analysts have pointed out that not abandoning the project right away could result in "the chaos of bankruptcy and reorganization [leading] to a long period of project restructuring uncertainly and more spiraling costs".

"If either of those projects are abandoned, they would join the ranks of the forty nuclear new-build projects ‒ including 12 Westinghouse reactors ‒ that were abandoned in the United States between 1977 and 1989 at various stages of construction (see Global Nuclear Power Database for details⁸). At the time, several utilities went bankrupt."

No other reactors are under construction in the US and there is no likelihood of any new reactors in the foreseeable future. The US reactor fleet is one of the oldest in the world ‒ 44 out of 99 reactors have been operating for 40 years or more ‒ so nuclear decline is certain.

Will any other AP1000 reactors be built around the world?

In 2015, then Westinghouse chair Danny Roderick said he was "pretty confident" in achieving Westinghouse's goal of winning orders to construct 64 AP1000 reactors worldwide over the next 15 years.⁹ As recently as November 2016, Westinghouse said it had plans to build 30 AP1000 reactors around the world, and Roderick said the company was "very much in the running ... to get up near 50 units over the next 15 to 20 years in China."¹⁰

Those expectations have gone up in smoke.

China

An April 2 article from the World Nuclear Industry Status Report website states: "The idea that Westinghouse might get any more contracts to build nuclear reactors in China seems doubtful, to say the least. As Lin Boqiang, director at the China Center for Energy Economics Research at Xiamen University told Bloomberg News: "The only way Westinghouse can win contracts in China is to demonstrate they can build reactors quicker and cheaper than anyone else in China's market and win hearts with actions, not words. Westinghouse so far hasn't demonstrated such abilities.""¹¹

UK

Toshiba received notice from French company Engie on April 3 that it had exercized its right under a joint agreement to require Toshiba to purchase Engie's 40% stake in the NuGeneration (NuGen) consortium that planned to build three AP1000 reactors at Moorside in the UK.¹² NuGen is "facing some significant challenges", Engie said. Engie anticipates payment of approximately ¥15.3 billion (US$137.5 million) from Toshiba for its stake in NuGen.¹²

Once the transaction is completed, Toshiba will be left with a 100% stake in NuGen. Toshiba noted that Westinghouse's Chapter 11 bankruptcy filing met the definition of an 'event of default' under the terms of its agreement with Engie. That gave Engie the option to sell its stake in NuGen to Toshiba, or to acquire Toshiba's stake, and Engie chose the first option.¹²

Toshiba was hoping to sell its 60% stake in NuGen and is now seeking to sell its 100% stake.

Ironically, just as the Moorside project took a giant leap towards being abandoned, UK regulators announced on March 30 that the AP1000 had successfully completed the Generic Design Assessment process.¹²

Engie is the seventh international energy utility to give up on UK new nuclear build over the past decade, the others being Toshiba, E-on (Wylfa), RWE Npower (Wylfa), Iberdrola (Moorside), SSE (Moorside), and Centrica (Hinkley Point).¹³

While South Korea's Kepco has shown no interest in acquiring a stake in Westinghouse, the utility is interested in acquiring a stake in NuGen.¹⁴ Whether that interest is affected by Engie's withdrawal remains to be seen. Kepco might seek to deploy its APR1400 reactor technology instead of AP1000 reactors, in which case development would be delayed by a further 4‒5 years while the APR1400 is put through a Generic Design Assessment by UK regulators.

In 2015, Toshiba estimated a total cost of ¥1.5 trillion yen (US$13.6bn) for the NuGen project but analysts now believe the cost could be roughly double that amount due to higher labor costs and revised safety standards.⁵

Of course, the cost could be brought down by weakening safety standards and one way to do that would be to abandon AP1000 technology in favour of South Korea's APR1400 design. The APR1400 lacks safety features of AP1000 and EPR designs such as aircraft crash protection.¹⁵

India

Danny Roderick from Westinghouse said in November 2016 that the company was on track to build six AP1000 reactors in India's southern state of Andhra Pradesh and expected a final engineering, procurement, and construction agreement before the end of 2017.¹⁰

But funding had not been secured, India's nuclear liability law remained an obstacle, and the project faced stiff public opposition ... and that was all before the Toshiba / Westinghouse financial crisis began to surface late last year. The project is unlikely to proceed ‒ it is almost impossible according to three industry sources contacted by Reuters in early February.¹⁶ Likewise, a separate, less-developed plan for an additional six AP1000 reactors in India has little chance of progressing.

Toshiba said in mid-February that India's liability legislation ‒ which provides some recourse to sue vendors in the event of an accident ‒ would have to be changed to promote reactor projects in India.¹⁷

Former World Nuclear Association executive Steve Kidd noted in an April 7 article: "India is clearly not set to follow China into a rapid nuclear growth phase. Its targets announced for nuclear generation in the early 2030s look even more unachievable than before, and the Indian industry is becoming inward-looking once again. Its tie-up with Russia on reactors appears sound, but proposed cooperation with Areva, Westinghouse and GE now looks dead in the water after their recent financial disasters."¹⁸

A senior Indian government official reportedly said in early April that the "atomic meltdown" of Toshiba and Westinghouse "is a blessing in disguise", and the Economic Times of India reported that "many in the Indian atomic establishment are silently celebrating this premature death of suitors who were wooing to put tens of atomic plants in India".¹⁹ The argument is that the 'Indian atomic establishment' can take up the slack with new reactors in India and the atomic meltdown "could also provide an opportunity to the country to become a hub for low cost suppliers of nuclear technology".

But in all likelihood, despite the opportunities afforded by the meltdown of its competitors, the Indian atomic establishment will probably continue doing what it does best: building bombs, taking an axe to the global non-proliferation and safeguards regime, and failing to meet its nuclear power targets by orders of magnitude.

References:

1. Michael Shellenberger, 13 Feb 2017, 'Why its Big Bet on Westinghouse Nuclear is Bankrupting Toshiba', www.environmentalprogress.org/big-news/2017/2/13/why-its-big-bet-on-west...

2. World Nuclear Industry Status Report, 2016, www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Report-2016...

3. Westinghouse, 29 March 2017, Westinghouse Announces Strategic Restructuring, http://www.westinghousenuclear.com/About/News/View/WESTINGHOUSE-ANNOUNCE...

4. Samantha Cheh, 3 April 2017, 'Never-ending misfortunes: Toshiba stuck in the news cycle from hell', http://techwireasia.com/2017/04/toshiba-stuck-newscycle-hell/

5. World Nuclear Industry Status Report, 2 Feb 2017, 'Toshiba-Westinghouse: The End of New-build for the Largest Historic Nuclear Builder', www.worldnuclearreport.org/Toshiba-Westinghouse-The-End-of-New-build-for...

6. 1 April 2017, 'Westinghouse files for bankruptcy', www.economist.com/news/business/21719836-global-nuclear-power-industry-b...

7. World Nuclear Industry Status Report, 2 April 2017, 'Westinghouse: Origins and Effects of the Downfall of a Nuclear Giant', www.worldnuclearreport.org/Westinghouse-Origins-and-Effects-of-the-Downf...

8. http://thebulletin.org/global-nuclear-power-database

9. Reuters, 5 April 2017, 'Toshiba fired Westinghouse chairman two days before bankruptcy filing', www.reuters.com/article/us-toshiba-accounting-westinghouse-idUSKBN1770O6

10. Nikkei Asian Review, 29 Nov 2016, 'Toshiba aims to nail down multiple nuclear orders in China, India', http://asia.nikkei.com/Business/Companies/Toshiba-aims-to-nail-down-mult...

11. World Nuclear Industry Status Report, 2 April 2017, 'Westinghouse: Origins and Effects of the Downfall of a Nuclear Giant', www.worldnuclearreport.org/Westinghouse-Origins-and-Effects-of-the-Downf...

12. World Nuclear News, 5 April 2017, 'Engie gives notice to sell NuGen stake', www.world-nuclear-news.org/C-Engie-gives-notice-to-sell-NuGen-stake-0504...

13. Nuclear Free Local Authorities, 4 April 2017, www.nuclearpolicy.info/news/as-engie-becomes-the-seventh-internationalen...

14. Song Jung-a in, 22 March 2017, 'Kepco rules out buying Westinghouse stake', www.ft.com/content/cd70d392-0ec8-11e7-b030-768954394623

15. Steve Thomas, July 2014, 'Nuclear technology options for South Africa', http://earthlife.org.za/www/wp-content/uploads/2014/09/nuclear-cost_repo...

16. Geert De Clercq and Kentaro Hamada, 3 Feb 2017, 'Battered Toshiba seeks exit from UK, India in nuclear retreat: sources', www.reuters.com/article/us-toshiba-accounting-idUSKBN15I0VG

17. World Nuclear News, 14 Feb 2017, 'NuGen confirms Toshiba commitment to Moorside', www.world-nuclear-news.org/C-NuGen-confirms-Toshiba-commitment-to-Moorsi...

18. Steve Kidd, 7 April 2017, 'The future of the nuclear sector – is innovation the answer?', www.neimagazine.com/opinion/opinionthe-future-of-the-nuclear-sector-is-i...

19. 9 April 2017, 'Global nuclear giants go bust, should India celebrate?', http://economictimes.indiatimes.com/articleshow/58091514.cms

The AP1000 is the next generation design being developed by Westinghouse, a subsidiary of Toshiba. Westinghouse constructs the AP1000 projects in partnership with Chicago Bridge and Iron (CB&I), probably the world's most experienced builder of large power stations.

The AP1000 is a 1.1 GW plant using a design based on a much smaller power station developed by Westinghouse 20 years ago. One important fact is that no stations using the original design were ever built. However, the advantages of the AP1000 are said to include a relatively simple design, a high level of passive safety and modular construction.

Modular construction means that components can be manufactured elsewhere and then shipped to the power station site. However US sites have had 5,000 workers on site at the same time, posing the some of the same huge management challenges that were experienced at the Finnish EPR site.

Four AP1000 reactors are in construction in the US and four in China. The US plants are at two separate sites in the state of Georgia ('Plant Vogtle', two AP1000s) and South Carolina ('Summer', two AP1000s).

I focus here on the experience in Georgia, but note that similar three-year delays have also happened at Summer in South Carolina, where serious cost overruns have also taken place.

Plant Vogtle - construction times more than doubled

Vogtle 3 and 4 are being built in the same complex as two earlier nuclear power stations. After delays in final design approval, they were finally licenced in February 2012. Near-concurrent construction of the two plants started in May 2013 with completion of the first planned for April 2016.

Original estimates for the total price to the utilities buying the power stations were about US$14bn (about £9.5bn). The price to be paid was essentially fixed, meaning that most of the construction risk is borne by Westinghouse and CB&I.

The most recent announcement of construction delays came in February 2015 when the station's eventual 45% owner (Georgia Power) told the state regulator that the partnership building the station had recently estimated that the eventual completion date for Vogtle 3 would be June 2019. Vogtle 4 would be finished in June 2020.

The expected delay for Vogtle 3 is now 39 months, more than doubling the initially expected construction time. The project is not yet half complete.

Costs are rising

Although the contract price has not risen significantly because it is largely fixed, the cost to electricity customers in the state of Georgia has increased. This is because the utilities that will eventually own the two new stations have been granted electricity price increases by the state regulator to cover the higher financing costs of Vogtle 3 and 4.

The utilities have been paying for individual elements of the two new plants as they are completed. The long delays mean that the interest costs are higher than expected and the regulator has already granted rate increases to compensate the eventual owners.

People in Georgia are already paying a supplement of 6% of their bills to finance the new nuclear station − Indeed Friends of the Earth US suggests that as much as 11% of their electricity bills may be supporting the project.¹

Although the deal was a fixed price contract, the company buying the largest share of the finished plants is in legal battles over extra costs that the contractors claim that the purchasers should bear.

We can reasonably expect that the cost to construct the stations has also increased. However industry estimates of the eventual final cost to the contractors are vague and imprecise. They currently seem to be around US$18bn (~£12bn). This seems low to me, given that the total project is now expected to take more than twice as long as originally expected.

CB&I says that Westinghouse will eventually pay most of the overrun costs but we can safely presume that this issue will also end up in court.

Georgia Power is losing faith in its contractors

Until recently the main buyer, Georgia Power, was reasonably content with the progress of the construction. However its 2015 submissions to the Georgia regulator have become increasingly concerned in response to the latest estimates of delay.

Note that Georgia Power has a difficult line to steer: it cannot be too critical of the contractors because otherwise the regulator that oversees it and grants its rate increases will question why it agreed to build the first new nuclear plant in the US for several decades in the first place!

Most recently, the company's May 2015 testimony² prepared for a hearing has been openly critical of the contractors Westinghouse and CB&I:

"In general, the Company, like the other Owners, has been disappointed with the Contractor's performance under the revised IPS (project plan). The Contractor has missed several key milestones since the publication of the revised IPS in January 2015, including several milestones relating to critical-path or near-critical-path activities such as the assembly of CA01 (part of the central reactor), the delivery of shield building panels, and work on concrete outside containment.

"The Contractor has also encountered difficulties in ensuring that new vendors produce high-quality, compliant components per the IPS projections." (p.15)

Georgia Power is now indicating that it has little faith in the contractor's ability to keep to the new delayed timetable.²

"The Contractor's schedule performance on critical path work such as concrete placements to start shield building installation and inside containment installation are challenges to the Contractor's ability to adhere to the revised IPS.

"The Contractor must continue to improve its schedule performance, maintain these improvements, and successfully resolve RCPs / squib valves / CMTs (components with severe quality or delivery problems) in order to complete the Facility by the currently projected substantial completion dates." (p.15)

China's AP1000s - a three year construction delay

Cost data from the Chinese construction projects is difficult to find. But they have also experienced significant construction difficulties. Building at Sanmen began construction in August 2009 and was originally expected to be finished by August 2013.

As with Vogtle, construction was said to be on schedule a year into the project and even in March 2012 completion was still officially planned for 2013. Recent updates suggests that completion will actually take place in 2016, also a three year delay.

The design used in China is simpler than that used in the US, and it may well be possible for Chinese constructors to build much more quickly and cheaply. However the modifications are unlikely to be acceptable to Western regulators. For example, the power stations are not designed to survive a direct hit from an airliner, a US requirement.

The questions in the minds of all concerned are surely these:

• How many of the problems at Vogtle, Summer and elsewhere are inherent to the construction of a large third generation nuclear power station?
• And how many simply arise because these are 'first of a kind' projects?
• Will new nuclear projects around the world avoid the major problems that have affected the first eight AP1000s because the construction companies have learnt how to build these huge projects more efficiently?
• Or is a safe third generation nuclear power station beyond the capacity of even the most experienced contractors to build to a tight timetable and at a predictable cost?

I'm afraid I don't think the answer is at all clear.

Chris Goodall is an expert on energy, environment and climate change. He blogs at Carbon Commentary (www.carboncommentary.com).

Abridged from The Ecologist, 17 July 2015, www.theecologist.org/blogs_and_comments/Blogs/2952108/moorsides_ap1000_n...

References:

1. www.theecologist.org/blogs_and_comments/commentators/2240101/toshibas_nu...

2. www.psc.state.ga.us/factsv2/Document.aspx?documentNumber=158302

UK & US regulators: unresolved safety issues EPR and AP1000.
On November 10, the UK nuclear regulator said it expects both the Areva EPR and the Westinghouse AP1000 reactors to have unresolved safety issues when the generic design assessment, or GDA, program completes next year. In a quarterly progress report, the NII said it has potential open issues in 10 out of 18 topical areas on the Areva EPR design review and in 16 out of the 18 topical areas on the Westinghouse AP1000 design. The GDA program was set up to issue design acceptance confirmations, or DACs, to the reactor vendors, which would see the regulator sign off on all but site specific licensing issues. The DAC could then be referenced in site license applications by utilities building the reactors. But the program has been plagued by delays resulting from NII Staff shortages and "a failure on the part of the reactor vendors to satisfy the regulator's queries", as Platts puts it.

A day earlier, World Nuclear News reported that Westinghouse has been told by the U.S. NRC that it's AP1000 aircraft impact study is not adequate. The Nuclear Regulatory Commission said that documents put to it in order to demonstrate a 2009 requirement did not include 'realistic' analyses and that this amounted to a violation of requirements that Westinghouse must explain and rectify. A rule introduced by NRC in 2009 states that  new nuclear power plant buildings and safety systems must maintain containment, cooling of the reactor core and the integrity or cooling of used fuel facilities in the event of the impact of a large passenger jet. All reactor vendors must fulfill this requirement for their designs. For Westinghouse this regulatory work comes in addition to a 2007 design amendment to the original AP1000 design, which was certified by the NRC in 2006.

In February, UK regulators already criticized the "long delays" and "poor quality" of replies they received from Westinghouse and Areva following safety reviews of their reactor designs.
Source: World Nuclear News, 9 November 2010 / Platts, 10 November 2010 / Nuclear Monitor 704, 26 February 2010

Update Belene, Bulgaria
The situation around the planned nuclear power station in Belene in Bulgaria has become unclear again. Under heavy Russian pressure (among others directly from Prime Minister Putin) and political pressure from a faction within his own party GERB around the Parliament Chair Tsetska Tsacheva, Bulgarian Prime Minister Boyko Borisov declared he is dedicated to the construction of the power plant on the shores of the Danube. Russian Atomstroyexport, a part of Rosatom, prolonged the construction contract with half a year under the condition of a price increase of maximally 2,5 billion Euro on top of the initial 4 Billion price tag. According former director of the Bulgarian Nuclear Regulatory Agency and current professor in risk analysis at the university of Vienna, Georghi Kashchiev, during a round table discussion on 18 October in Sofia, this does, however, not include the first load and large parts of the non-nuclear equipment. With that, the demand from Borisov that the total cost of the project remain under 7 billion Euro come under severe pressure. It is also unclear whether the 500 Million Euro already sunk into Belene are part of this budget. On 1 November, Bulgaria's finance minister Simeon Djankov once more confirmed that no state finances would flow into the project.

In a surprise move, Prime Minister Borisov declared on 25 October after a visit to Muenich a week earlier, that he had found a strategic investor from Bavaria for Belene. Bulgarian media speculate interest from Siemens, the engineering firm that recently broke its alliance with Areva and partnered instead with Rosatom. Siemens, however, refuses to comment on these speculations. An announcement from the Bulgarian Ministry of Economy, Energy and Tourism that the new strategic investor would be announced in the first week of November was not realised, however, and German media have remained suspiciously silent about a possible deal. On 5 November, Borisov announced an offer of up to 2% participation to each Serbia and Croatia in what he said was a pragmatic attempt to secure markets for the output of Belene.

… and Mochovce, Slovakia

Slovakia has asked and received an extension of the period of comment on the draft verdict of the Aarhus Convention Compliance Committee, that the Environmental Impact Assessment for the Mochovce 3,4 project has violated the rules of the Convention. The NGOs that originally filed the complaint, Za Matku Zem, Greenpeace Slovakia, Global2000 and the Oeko-buero Wien, did not object to an extension to 30 November. The ACCC is expected to come with a final verdict in December. A spokesperson of the Slovak nuclear regulator UJD, which was responsible for issuing construction licenses in spite of the fact that the EIA procedure had not been finalised, is currently looking for possibilities to implement a likely final verdict of the ACCC, but stated to Greenpeace that it has problems finding a proper legal pathway to do so.

An ACCC verdict is, however, binding and a breach of the Aarhus Convention is also a breach of EU legislation on Environmental Impact Assessments, which means that the European Commission would be obliged to start corrective procedures against Slovakia in case the ACCC verdict concludes a violation of the rules.

… and Temelin, Czech Republic

The submission date for the tender for five new nuclear power stations issued by the Czech utility CEZ has been extended with a year to 2013. CEZ argued that some of the contenders had asked for such an extension, though analysts are of the opinion that the lack of growth in electricity demand in the Czech Republic has bitten into the economic viability of the project. The tender for five blocks, two for Temelin and one for Dukovany in the Czech Republic, one for Jaslovske Bohunice in Slovakia and one for a still to be decided project is expected to cost around 500 billion Czech Crowns or 25 billion Euro. Each block is supposed to deliver between 1000 and 1600 MW capacity.
Source of these 3: Jan Haverkamp, Greenpeace EU Unit, email, 6 November 2010

Another fiasco at Monju, Japan.
A12-meter-long, 46-centimeter-wide, 3.3-metric-ton heavy fuel exchange component that lodged in the reactor vessel of the Monju fast-breeder reactor after being dropped on August 26, cannot be extracted using "usual methods," the Japan  Atomic Energy Agency (JAEA) has stated. The JAEA made the announcement November 9, after examining the component -a cylinder now stuck in an opening in the reactor vessel cap- with a camera. The agency believes that to get the part out, equipment on the reactor vessel cap will have to be removed, and an entirely new structure built to prevent sodium now covering the cylinder from mixing with the outside air and igniting during the process. The agency is now considering ways to do this, but gave no hint when testing of the reactor may recommence.

Since Monju resumed test operations on May 6 after shut down since a 1995 sodium leak, it has undergone the first stage of testing. These core confirmation tests were completed on July 22. Preparations were being made for the next stage, which involves increasing power output to 40%, planned for July 2011. However,  the jammed relay cylinder has made further long delays probable.
Source: Nuke Info Tokyo 138, Sept/Oct 2010 / The Mainichi Daily News, 10 November 2010

UK: What 'no subsidies' means: more help will be given.
Following lobbying by the nuclear industry the Government has accepted that it needs to give more financial incentives in order to ensure a new generation of reactors are built in the UK. Energy minister Charles Hendry said he now agreed with the industry that fixing a high minimum price for carbon emissions was not enough. Instead he thought other financial incentive measures would be need to encourage nuclear and other low-carbon energy sources.
Source: N-Base Briefing 674, 10 November 2910

IEA: US$312 billion subsidy annually for fossil.
On November 10, the International Energy Agency published its World Energy Outlook 2010. The IEA report clearly states that fossil fuels are heavily subsidized by more than US$312 billion per year globally! This leads obviously to unfair competition with clean and climate friendly renewable energies. IEA is increasingly recognizing the important role renewable energy can play to fight climate change and improve security of supply. However, it is failing to shift technology recommendations from unproven, dangerous and expensive technologies such as CCS and nuclear power plants.
Source: Press release Greenpeace, 9 November 2010

On April 21, twelve national and regional environmental organizations called upon U.S. nuclear regulators to launch an investigation into newly identified flaws in Westinghouse’s new reactor design. The coalition asked three federal agencies to suspend the AP1000 reactor from licensing and taxpayer loan consideration.

The newly discovered design flaw is tied to documentation of dozens of corrosion holes being found in existing U.S. reactor containments, which recently has raised concern at the Advisory Committee on Reactor Safeguards (ACRS), an independent arm of the U.S. Nuclear Regulatory Commission (NRC). Containment buildings are vital barriers against radiation releases during nuclear accidents.

“The proposed AP1000 containment design is inherently less safe than current reactors,” said Arnold Gundersen, former senior vice-president at Nuclear Energy Services PCC. Westinghouse did not analyze the scenario for failure containment warned of by Gundersen. He continued, “Westinghouse has ignored the long history of previous containment failures that indicate there is a high likelihood that the AP1000 containment might be in a failed condition [one or more undetected holes] before an accident begins. The containment leakage problem is exacerbated because the AP1000 is specifically intended to function as a chimney – to pull air up and release it through the top of the building.”
 
Gundersen, a 38-year engineering veteran of the nuclear power industry, produced a 32-page technical report(*1) detailing a history of holes and cracks found at operating nuclear plants. Such corrosion problems, if coupled with the experimental “passive” emergency cooling feature in the AP1000, could accelerate and greatly increase the early release of radiation during an accident. Gundersen’s report is backed by engineer and corrosion specialist Rudolf Hauser.

Based on the report, the coalition urged NRC Chairman Gregory Jaczko to suspend license reviews of 14 proposed AP1000 reactors pending the ACRS investigation. They also urged Secretary of Energy Chu and the White House Office of Management and Budget to drop plans for taxpayer funding for the reactor due to increasing risks of projects failing in midstream. In February, the Obama Administration awarded US$8.33 billion (6.5 billion euro) in controversial taxpayer-financed loans (with a public guarantee to cover default) to an AP1000 project at Southern Company’s Vogtle plant in Waynesboro, Georgia.

Gundersen’s analysis shows that even a three-quarter inch hole in the AP1000 reactor building could, under pressure from a pipe break or other accidents, result in a large and unfiltered radiation release because the building is deliberately intended to move air and heat into the atmosphere during an emergency. That heat removal – via a gap between an inner metal containment and the outer shield building – is the very feature Westinghouse touts as its principal safety upgrade.

Gundersen explained why the probability of a radiation accident is higher with the AP1000: “Existing data shows that containment system failure occurs with moisture and oxygen.” He explained today that for the AP1000 design, leakage from the emergency water tank located above the reactor, testing the tank and/or atmospheric humidity will create, within the gap between liners, “a constant environment of moisture and oxygen that may, in fact, provoke a through-wall containment failure in locations that are difficult or impossible to inspect.”

“The Obama Administration should put the brakes on. The consequences of containment failure at Plant Vogtle would be devastating,” said Lou Zeller, Science Director for the Blue Ridge Environmental Defense League. “We call upon Energy Secretary Chu and NRC Chairman Jaczko to recall the dangerously flawed AP1000 design before accidents occur and more tax dollars are wasted.”

A number of organizations are contesting design and licensing efforts of 14 AP1000s at seven sites across the Southeast. Also, four AP1000s are under construction in China, with more planned there and in India.

At least 77 instances of containment system degradation have occurred at operating US reactors since 1970. That includes eight through-wall holes or cracks in steel containments – two discovered in 2009 – and 60 instances of corrosion that thinned the liner walls below the allowable thickness. In addition to the ACRS, nuclear experts in Europe have recently expressed concern about the likelihood of containment failures at aging plants.

"The AP1000 flaw identified in this report puts into further question the reality of the so-called 'nuclear renaissance.' If Vogtle's proposed new reactors are the flagship of the nuclear industry's claimed resurgence, then everyone needs to pay closer attention because not only are billions of dollars at risk but so is the potential safety of communities living near these proposed new reactors," said Sara Barczak, High Risk Program Director with the Southern Alliance for Clean Energy.

Although Westinghouse and nuclear utilities such as Duke Energy, Progress Energy and others contend that the AP1000 design was “pre-certified” by the NRC in 2006, in the past two years the NRC has identified a daunting list of design problems involving major components and operating systems, resulting in eighteen revisions to the design. Thus, cost estimates for some of the projects have doubled or tripled. Last October the NRC stunned observers by rejecting the reactor building for its potential inability to withstand high winds and the weight of the emergency water tank.

“The so-called nuclear revival is in real trouble, so it’s no wonder the industry insists on socializing the risks,” said Mary Olson of Nuclear Information and Resource Service. “President Obama and Congress seem clueless to the construction failures occurring in Europe and design problems in the U.S. It’s tragic that industry’s lobbying money has blinded them into efforts to risk 54 billion public dollars for nuclear plants, while a fraction of that amount could help America move quickly into genuine climate protection through clean, efficient energy.”

*1 See www.fairewinds.com/reports for the engineer’s report and graphic illustrations of the chimney-effect during an accident.
 

Source: Press release 'AP1000 Oversight Group', 21 April 2010
Contact: Mary Olson at NIRS
Tel: +1 828 252-8409

Germany: debate on n-power in CDU party.

Debate is still raging in the German government over the use of nuclear power. Chancellor Merkel has distanced herself from comments by environment minister Norbert Röttgen a day earlier. On February 20, Röttgen predicted that Germany would be free of nuclear power by 2030. By 2030, Germany's youngest nuclear power stations will have reached a lifespan of 40 years, eight longer than that agreed in 2000 on by former Chancellor Gerhard Schröder's centre-left coalition of Social Democrats and Greens. Röttgen, a member of the conservative Christian Democrats, told the Frankfurter Rundschau newspaper that even by the most skeptical of forecasts, Germany would reach its goal of getting 40 percent of its energy from renewable sources by 2030, thus allowing the country's remaining nuclear power stations to shut down. Renewable sources currently supply 16 percent of Germany's electricity. "In the coalition contract it says that nuclear power is a stopgap until renewable energy can take over the supply reliably and at competitive prices. That's exactly the line I am following." But the Federal Environment Agency (UBA) believes that this target is still achievable. "We can still cover 40 percent from renewable energy by around 2020," UBA president Jochen Flasbarth told the Süddeutsche Zeitung newspaper on the same day.  A few days later, on February 23, Peter Mueller, Christian Democratic prime minister in the German state of Saarland, said the government should stick to its timetable to phase out nuclear power. Amending the phase-out, fixed by legislation in 2002 for about 2021, “needs plausible grounds,” Mueller is cited as saying. “I don’t see those.”
Source: The Local, 20 February 2010 / Deutsche Welle, 21 February 2010 / Bloomberg, 23 February 2010

EDF-AREVA quarrel over reprocessing resolved?

As mentioned in the January 29 issue of the Nuclear Monitor there is a lot of rivalry between the French nuclear giants AREVA and EDF. In the beginning of January AREVA stopped removing spent fuel from reactors for reprocessing at the facility at La Hague. At the end of 2008, the companies agreed on a framework for contracts for the 2008-2040 period. But since mid-2009 they have not been able to settle disagreements over prices and volumes. On January 20, the two companies were given a two-week deadline by the French government to resolve their differences on this matter. On February 5, the two companies said in a statement, they would sign a contract covering “transportation, treatment and recycling” of used nuclear fuel before the end of March. The agreement reached by the two groups lays out conditions for applying the framework agreement of Dec. 19 2008, which set out a partnership covering treatment-recycling of used fuel, and reprocessed fuel fabrication, the firms said.

Source: Reuters, 5 February 2010

European Union heading for clash on funding ITER.

European governments want to slow down construction of the International Thermonuclear Experimental Reactor (ITER) because they are paying for the bulk of the construction costs and are concerned that the budget is spiraling out of control. The EU is covering 45% of the costs of building and running ITER, which is to be built in Cadarache, France. The other six partners (the US, China, Russia, India, Japan and South Korea) are each paying 9%.  Concerned about the mounting costs, the EU rejected a construction timetable proposed by ITER's administration at a meeting of participating countries on 18-19 November. The administration had proposed that ITER, which was launched in November 2006, should conduct its first experiments in 2018. But the EU's member states agreed in a position paper in November that a 2018 deadline was “not feasible”. (see Nuclear Monitor 698, 27 November 2009: “Fusion Illusions”) They reaffirmed this at a working group of the Council of Ministers on February 1. A 2018 deadline, however, is strongly backed by all non-EU countries involved in ITER, with the exception of the US, which has shown signs of flexibility. Officials said that the EU would prefer to make construction costs less painful by spreading them over a longer period of time. Concerns about the ballooning budget led the Commission last year to set up an expert group tasked with reviewing the construction costs. The group's report, released to member states in January, said that the construction costs alone could rise as high as 1.5bn Euro (compared to a 2001 estimate of 598 million Euro).Total EU-contribution of ITER-project costs could rise to 3,5 billion Euro (US$ ) instead of the 1.5 billion estimated in 2001.The countries participating in the ITER project will hold a special high-level meeting in Paris on 23-24 February to try to resolve the dispute.

Source: European Voice, 4 February 2010

Replies safety AP1000 & EPR of 'poor quality'.

UK nuclear regulators have criticised the "long delays" and "poor quality" of replies they have received from Westinghouse and Areva following safety reviews of their reactor designs, AP1000 and the European Pressurised Reactor (EPR). The Nuclear Installations Inspectorate has raised a number of serious issues on the design of the new reactors but in its latest report says the response from the two companies is less than expected.

The inspectors have already issued a formal 'Regulatory Issue' (RI) regarding the safety and control systems of the EPR and are now considering a RI on the shield building for the AP1000. Westinghouse is planning to use a new construction method for the reactor's shield building, using a sandwich of steel plates filled with concrete, rather than the conventional reinforced concrete. Regulators say they will have to be convinced the new techniques will be sufficient to withstand an accident, including a crash of a large aircraft. Westinghouse said it changed its construction methods in response to US regulations after 9/11 requiring it to withstand an aircraft impact.

Source: N-Base Briefing 642, 10 February & 643, 17 February 2010

Kakadu mine: Uranium contamination 5400 times background.

Australia: environmental regulators for the office of the Supervising Scientist admitted to a Senate Estimates committee on February 9, that water with uranium concentrations 5400 times background and a cocktail of other radionuclides are seeping from beneath the tailings dam at the Ranger Uranium Mine in Kakadu National Park. The Office of the Supervising Scientist acknowledged to Australian Greens Senator Scott Ludlam that the contamination was occurring, and said that the estimated amount of 100,000 liters per day was based on modeling and not measurement. "The biggest surprise is that despite knowing about this leakage for years, the regulators don't know how much is seeping, where it is going, or how highly contaminated it is. The regulator suggested that directly sampling this contaminated water would be 'impractical.' I suggest that it is now essential", Senator Ludlam said. "The mining company ERA booked a 2009 profit in excess of A$270 million dollars (US$240m or 177m Euro) and yet the regulator won't compel them to undertake any water quality sampling under the tailings dam. That has to change." Uranium is only one of a number of radioactive elements present in the tailings dam – others include Thorium, Polonium, Radon, Radium, Bismuth, etc.

Source: Media release Australian Greens Party, 9 February 2010