The Nuclear Regulatory Commission and Department of Energy are preparing for a new era of American nuclear power plants.

[The following is the second in a series of contributions from Kimberly Reome, vice president of The Kenrich Group, and Krista Haley, a principal of The Kenrich Group, about the regulatory landscape of nuclear power in the U.S. -Ed.]

The United States electric industry is gearing up to build new nuclear power plants for the first time in decades. Whether and when any of these new plants are actually completed depends on the outcome of many issues, including regulatory, financing and the ultimate disposal of spent nuclear fuel.

One major regulatory requirement in building a new nuclear plant in the United States is to get a Combined Operating License (COL) from the U.S. Nuclear Regulatory Commission (NRC). When the NRC grants a COL, the NRC is authorizing the licensee to construct and operate a specific nuclear plant design at that site. A COL is valid for 40 years. Eighteen COL applications (comprising twenty-eight operating units) have been filed with the NRC. To date, of the eighteen applications filed, the NRC has published application review schedules for twelve.

Another regulatory step in building a new nuclear plant in the United States is to receive an Early Site Permit (ESP). When the NRC issues an ESP, the NRC is approving one or more sites for a nuclear power facility, independent of an application for construction permit or COL. An ESP is valid for ten to twenty years. The NRC has issued ESPs for four plants:

• Vogtle Units 3 and 4, in Georgia, majority owned by Georgia Power Company and to be operated by Southern Nuclear Operating Company, as are Vogtle Units 1 and 2;
• North Anna, in Virginia, owned by Dominion Virginia Power Corporation;
• Grand Gulf, in Mississippi, owned by Entergy (System Energy Resources); and
• Clinton, in Illinois, owned by Exelon Corporation.

Furthest along in the process thus far is Southern Nuclear, which started construction activities at Vogtle in March 2010. Current activities have been limited to site preparation and excavation, and the placement of engineered backfill, retaining walls, lean concrete, mudmats and a waterproof membrane. Southern Nuclear is performing this work under a Limited Work Authorization granted by the NRC. The NRC must issue the COL before full construction of Units 3 and 4 can begin.

Financing of new nuclear plants is another hurdle. Many industry insiders believe the Department of Energy’s (DOE) Loan Guarantee Program is necessary to provide financing for new nuclear construction. DOE’s Loan Guarantee Program Office is reviewing the financial and construction aspects of the nuclear power projects as part of its initial review and selection process. In early 2010, President Obama proposed to triple the DOE’s loan guarantee loan program for new nuclear construction in the 2011 federal budget to $54 billion, up from $18.5 billion. On February 16, 2010, President Obama announced that DOE offered conditional commitments totaling $8.33 billion in loan guarantees for Vogtle units 3 & 4. In addition, in April 2009, Georgia Governor Sonny Perdue signed into law a bill which allows Georgia Power to recover financing costs during the construction of nuclear units during construction, resulting in reducing the significant potential rate impact to customers of having financing costs included in the total cost of the plant when the plant goes into service. The new Vogtle units were the first U.S. nuclear power plants to break ground in over three decades.

Several other plants are currently on DOE’s “short list” for receiving loan guarantees:

• Calvert Cliffs – Constellation currently plans to build 1,650 MW Areva EPR in Maryland
• V. C. Summer – SCE&G currently plans to build two 1,150 Westinghouse AP1000s in Georgia
• South Texas Project – NRG currently plans to build two GE-Hitachi 1,350 MW ABWRs in Texas

Each of these plants has Engineering, Procurement and Construction (EPC) contracts in place: Bechtel Corporation at Calvert Cliffs, The Shaw Group Inc. at V.C. Summer, and Toshiba at South Texas Project.

The nuclear waste disposal problem and the closure of Yucca Mountain

There has been a great deal of activity in the past several months surrounding Yucca Mountain and the plan for ultimate spent nuclear fuel disposal in the United States. On January 29, 2010, DOE announced the formation of a Blue Ribbon Commission of nuclear experts who will spend the next 18 months working to evaluate policy options for the management of spent nuclear fuel. The Blue Ribbon panel held its first public meeting on March 25-26, 2010. On February 1, 2010, DOE filed a request to suspend Yucca Mountain’s license application at the NRC. Energy Secretary Chu stated the license application withdrawal would be done “with prejudice” which means that the application could not be reconsidered at a future date.

Yucca Mountain (Photo: Wikimedia Commons)

DOE’s cancellation of Yucca Mountain has spurred various stakeholders to file lawsuits. State utility regulators, as well as multiple utility companies, have recently challenged the 2009 decision by the DOE to continue to require companies to make payments to the nuclear waste fund when the DOE has not met its obligations and assesses alternatives to Yucca Mountain. At 1 mill (or 1/10th of one cent) per kilowatt hour of generation sold, U.S. commercial nuclear utilities currently pay approximately $800 million dollars every year in fees to the nuclear waste fund. On April 2, 2010 the National Association of Regulatory Utility Commissioners filed a petition for review with the U.S. Court of Appeals for DC circuit. The group also wants to suspend the nuclear utilities’ fee payments into the nuclear waste fund. In mid-April both South Carolina and Washington State filed suit to stop the government from permanently abandoning Yucca Mountain. The Nuclear Energy Institute and numerous utilities filed suit on April 5, 2010 seeking suspension of the fee paid into the Nuclear Waste Fund. On April 6, 2010, the NRC licensing board denied DOE’s withdrawal of the license for Yucca Mountain pending the outcome of these suits. The panel of three judges on the NRC licensing board said that NRC staff would continue to review the DOE license application.

In addition to the suits trying to stop Yucca Mountain from being canceled, or to suspend the requirement that utilities still pay fees into the nuclear waste fund, numerous utilities have filed suit in the U.S. Court of Federal Claims for damages incurred to mitigate the partial-breach of contract by DOE. With the spent nuclear fuel contracts in place with DOE, nuclear utilities did not anticipate having to add storage capacity for spent nuclear fuel generated after 1998. Instead, they are incurring, and will continue to incur, billions of dollars in costs related to the installation and expansion of highly-technical, on-site storage technologies—primarily dry fuel storage facilities and casks that house the highly-radioactive waste. To date, there have been over $900 million dollars awarded by the Court, with many dozens of additional claims yet to be heard. Additionally, there have been settlements of several utilities with the U.S. government resulting in the ultimate recovery by those utilities of hundreds of millions of dollars of costs for their on-site storage of spent nuclear fuel.

As the various disputes go on, the electric utilities continue to plan for new nuclear units and the United States still struggles to find a solution for the disposal of the country’s existing and future spent nuclear fuel.

Kimberly Reome is a vice president of The Kenrich Group and Krista Haley is a principal of The Kenrich Group, both in the Chicago office. Kim and Krista provide litigation consulting services focused in financial, accounting, economic and damages issues in areas including the electric power, construction and government contract industries.

Map credit: Nuclear Regulatory Commission