I have blogged a lot about the project to build two new Westinghouse AP1000 nuclear power reactors at the VC Summer power plant in South Carolina. This was a very important project because no new nuclear reactors had been built in the U.S. in decades. Serious cost overruns and construction delays plagued the project and resulted in the bankruptcy of Westinghouse, the prime contractor. First, the construct of the reactors was suspended and then it was announced that the project would be abandoned on July 31st. South Carolina Electric & Gas (SCE&G) petitioned the South Carolina Public Service Commission (PCE) for approval of its plan to end the project.
Following the principles of the Base Load Review Act, SCE&G wanted to amortize the project cost and a return at the weighted averages cost of capital on the unamortized balance until it was fully recovered. They planned to use the proceeds that they anticipated from their settlement with Toshiba, the parent company of Westinghouse, which has agreed to pay up to two billion dollars to SCE&G and its parent, Santee Copper and some of the benefits that SCE&G was able to realize from tax deductions to reduce the impact of the cancellation of the project on the rate payers. However, yesterday, SCE&G said that it had decided to withdraw its petition with the PCE.
The company issued a statement that “Over the past two weeks, SCE&G management has met with various stakeholders and members of the South Carolina General Assembly, including legislative leaders, to discuss the abandonment of the new nuclear project and to hear their concerns.” SCE&G said its decision to withdraw the abandonment petition was “in response to those concerns, and to allow for adequate time for governmental officials to conduct their reviews.”
The CEO of SCE&G said, “The purpose of these ongoing meetings is to discuss their concerns and to explain the path that led us to the abandonment decision. In our discussions with the legislature, we have not changed our position on abandonment.” Both bodies of the South Carolina General Assembly have formed committees to review the impact of the cancelled project on the customers of SCE&G. The committees will also consider the regulatory oversight that was applied during the project.
The CEO of SCE&G also said, “While ceasing construction was always our least desired option, based on the impact of the bankruptcy of Westinghouse on our fixed price construction contract, the results of our evaluation of the cost and time to complete the project, and Santee Cooper’s decision to suspend construction, abandonment was the prudent decision.”
The CEO said that the withdrawal of the petition was only temporary and that it would be reinstated once the General Assembly reviews were completed. When questioned about the possibility that the project might be revived, the CEO said “For us to restart the project, number one we will have to have a willing partner … We would have to start with drafting a new partnership agreement to determine who would own what percentage of the project going forward.” Part of the consideration for restarting the project would be whether only one of the reactors or both should be completed. “At that point we would have to negotiate a construction contract with the contractor, whether that be Fluor or someone else. We would also have to re-engage Westinghouse in a services agreement because the plant is their design and we would need their design engineering support if we were to go forward. Once all that was accomplished, we would have to go back to the Public Service Commission and have them review the project and agree to the reconstitution of a plan to go forward.”
The entire review process could take as much as a year. The CEO remarked that “It’s not something that would happen overnight. There would be significant negotiations to pull a project team back together. And once you’ve done that, you would then have assemble the construction team and oversight team back on site.”
Former Secretary of Energy Ernest Moniz released a report today stating that the fact that the U.S. nuclear energy sector is in decline constitutes a risk for U.S. national security. The report was issued by the Energy Futures institute. One of main benefits of a robust nuclear energy sector, according to Moniz, is preventing terrorists for getting their hands on uranium processing technology as well as supporting nuclear Navy vessels.
Moniz is a nuclear scientist who served as President Obama’s Energy Secretary. He is also the CEO of the Nuclear Threat Initiative which is a nonprofit organization dedicated to nuclear disarmament, securing nuclear materials and the nonproliferation of nuclear weapons. He says that we need to expand loan guarantees, tax incentives and research on nuclear technology.
At the present, about twenty percent of the electricity in the U.S. is generated by nuclear power plants. However, the U.S. nuclear power sector has serious problems. Since 2013, five U.S. nuclear power plants have been shut down. They were generating about five gigawatts of power. Over the next nine years, six more nuclear power plants are scheduled to be permanently shut down. There were four nuclear power reactors being constructed in the U.S. after decades of no new reactor builds. The construction of two of those reactors has been halted and the other two may also never be finished.
Westinghouse Electric Company, a subsidiary of Toshiba of Japan, was a pioneer of nuclear technology and a builder of nuclear power reactors. Over half the four hundred nuclear power reactors in the world use Westinghouse technology. The four AP1000 power reactors that Westinghouse was building in the U.S. encountered serious cost overruns and delays. This led Westinghouse to declare bankruptcy. Following the bankruptcy, Westinghouse stated that it was going to refocus its activities in the dismantling and decommissioning of existing nuclear power reactors.
The current Trump administration and Energy Secretary Rick Perry have said that they want to help the nuclear industry. Perry is conducting a study on the importance of nuclear power for what is called baseload power plants that operate twenty four/seven to provide the base for the U.S. electrical supply. However, the proposed budget by the Trump White House includes severe cuts to the budget for the Energy Department. One of those cuts would be the end of the loan guarantee program.
Moniz says that the U.S. needs to have companies that can “build and run nuclear enterprises.” The U.S. Navy has to have nuclear components and nuclear engineers to maintain its fleet of nuclear surface ships and submarines. This means that a functioning private nuclear industry is essential to the Navy because such companies it with provide nuclear technology and nuclear services.
“A shrinking commercial enterprise will have long term spillover effects on the Navy supply chain, including by lessened enthusiasm among American citizens to pursue nuclear technology careers,” according to the report. The report goes on to say that the U.S. government should direct the Federal Energy Regulatory Commission to “place a greater emphasis on the national security importance of nuclear power and its associated supply chain.”
I have blogged about thorium reactors before. They have been studied and experimented with since the 1950s. There are enthusiastic supporters of the use of thorium to produce electricity but the question can be honestly raised about why, after seventy years, there are no thorium power reactors today. A consortium of Utah counties are partnering with a private startup in an attempt to build a commercial thorium reactor.
The Seven County Infrastructure Coalition (SCIC) sent out a request for qualifications in an attempt to find a qualified analyst who could evaluate a proposal for a thorium reactor to product electricity put forward by the Alpha Tech Research Corporation. The promoters of thorium power say that thorium reactors do not produce waste that can be refined to make nuclear weapons, they cannot melt down, and they do not produce waste that is dangerous for thousands of years.
Alpha Tech is looking for a site in Utah to construct a thorium reactor to produce medical isotopes and other isotopes for industrial and research applications. One of the things that make Utah attractive is the fact that there are a lot of locations that are in rural areas but are still close to airports. This is important because some medical isotopes have short half-lives and have to be shipped out quickly after they are created. One of the founders of Alpha Tech said, “We are a young company that is working on a technology that is not only cutting edge, but could have significant impact on the world.” They estimate that thousands of jobs could be created for rural Utah.
Thorium reactors use molten-salts to capture and circulate the heat generated by the thorium reactions. The three elements that are often selected for use in molten-salt reactors are beryllium, lithium and fluorine. Utah happens to be rich in both beryllium and lithium. Utah has extensive salt flats that contain a lot of lithium. One mine in Utah provides eighty five percent of the commercial beryllium in the world.
The mission of the SCIC is to “build essential regional infrastructure elements,” such as pipelines, roads, transmission systems and railroads that are necessary to deliver extracted minerals and power to market. There have been questions raised as to whether or not this mission is consistent with investment in such a speculative venture as that proposed by Alpha Tech. The SCIC has allocated twenty five thousand dollars to review the Alpha Tech proposal and decide if it wants to participate. The SCIC is having trouble finding an analyst to review the proposal and recently extended the deadline for responses to it RFQ.
The SCIC is under investigation by the Utah State Treasurer’s office. There are concerns that the group is not following proper accounting standards. The Treasurer is also a member of the Community Impact Board of Utah (CIB). This board allocates mineral royalties from the federal government to rural counties in Utah. Grants from the CIB are the only source of revenue for the SCIC. The Treasurer has publically raised the question of whether the SCIC has been handing contracts to insiders instead of giving them to the best qualified people. He is also worried that the SCIC is wasting public money in ways that do not provide the public benefit that is the purpose of the SCIC.
Critics of the Alpha Tech project point out that while some of the technologies needed to build thorium reactors have been developed, there is still a lot of technical research and development that will be required to develop the integrated commercial facility that Alpha Tech desires. It has been estimated that it will take at least ten years to design and build a commercial facility. And it will take a great deal more money than is available from a handful of rural counties in Utah.