Administrative Watch: Duke Ordered to Explain Nuke Cost Overrun
If you or I tried to exceed our credit card limit by more than three times, we can rest assured that the card would already have been repossessed and cut up — and it wouldn’t be coming back any time soon. Alas, different rules apply to Duke Energy.
The NC Utilities Commission (NCUC) is just now getting around to asking Duke to explain why it “apparently blew past a $120 million cap the commission set in 2011” on the amount the state’s ratepayers could be billed for advance construction costs of a new nuclear plant in South Carolina without further NCUC approval.
That’s “blew past” as in spent $520 million, under a formula in which 70% is expected to come from North Carolina ratepayers (e.g., $364 million). (The rest would come from South Carolina.) Duke was given 60 days to explain.
In a general sense, the answer is likely to be the usual one given to explain the massive cost overruns that seem inevitable for any nuclear power plant: ‘higher than expected’ construction, regulatory, and financial market costs. Near-certain additional overruns are likely to be associated with the bankruptcy of the manufacturer of this plant’s nuclear reactors.
The plant in question is the proposed Lee plant near Gaffney, South Carolina. Westinghouse is supposed to deliver its two reactors, the core part of the (currently projected) $11 billion nuclear plant — the most costly project in Duke’s history. Duke just received a license from the federal Nuclear Regulatory Commission (NRC) in December to build the plant but has not yet announced a final decision on whether it will actually try to complete it.
Bankrupt Westinghouse is also supposed to deliver the reactors for two other nuclear plants in South Carolina and Georgia, which are themselves already behind schedule and billions of dollars over budget. Skeptics doubt that those plants will ever be completed. Construction contractors are continuing to file liens for payment.
Bankruptcy by the most important international manufacturer of reactors, massive and skyrocketing construction costs, and the continued decline in costs of competing sources of energy all help explain why the market share of nuclear electricity generation is expected to fall by almost 50% in the U.S. over time (from 20% in 2016 to 11% in 2050).
Duke has been down this dead-end road before. The Lee plant site is adjacent to the abandoned Cherokee Nuclear Power Plant Site. The Cherokee plant was proposed during Duke’s previous nuclear construction heyday in the 1970s, but its construction was halted in 1983 after Duke had already spent $633 million on it. Duke’s overheated construction program of that era was doused by soaring costs, falling electric demand growth, frightened investors, and finally a decision by legislators and regulators of that era to cut off the unlimited credit spigot.
This may all go a long way toward explaining why legislators who are the most reliable friends of Big Oil and Big Nuclear keep proposing more ways to undercut solar, wind, and other renewable energy development. They may see it as the only way to prop up their buddies’ increasingly uncompetitive business model. Of course, that begs the question of whether that’s a good idea for the public and our environment. We think not.
