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Beyond Fossil Fuels: David Ratcliffe on Nuclear Power

The president, chairman and CEO of Southern Co. weighs in on the hurdles facing his industry
nuclear power, energy, alternative energy, Southern Nuclear



COURTESY OF SOUTHERN COMPANY

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Editor's note: This Q&A is a part of a survey conducted by Scientific American of executives at companies engaged in developing and implementing non–fossil fuel energy technologies.

What technical obstacles currently most curtail the growth of nuclear fission? What are the prospects for overcoming them in the near future and the longer-term?
Technical obstacles to building new nuclear plants include addressing licensing, design certification and first-of-a kind engineering.

The new Nuclear Regulatory Commission (NRC) licensing process provides for design certification, early site approval and combined licensing for construction and operation.

Design certification allows plant designers to secure advance NRC approval of standard plant designs. Later, these plant designs can be ordered, licensed for a particular site and built. Following an exhaustive NRC safety review, agency approval of standard designs is formalized via specific design certification rule making. This process allows the public to review and comment on the designs up front—before any construction begins. NRC design certification fully resolves safety issues associated with the design. The NRC approves the design for 15 years.

The early site permit (ESP) process enables companies to obtain approval from the NRC for a nuclear power plant site before deciding to build a plant. The process resolves any site-suitability issues before companies commit funds to a project. Companies can "bank" sites approved by the NRC for up to 20 years and build when the time is right.

ESP applications consist of three components: a site safety analysis, an environmental report and emergency planning information. Federal, state and local government officials, and the public have opportunities to participate in each of these at various stages during the NRC review.

NRC regulations provide for the issuance of a combined construction permit and operating license, also known as a combined operating license (COL). A COL may reference a certified design, an ESP, or both. This makes the process more effective and efficient by allowing the NRC review and a public COL hearing to focus on remaining issues related to plant ownership, design issues not earlier resolved, and organization and operational programs.
 
No applicant has yet been through the entire COL process. The NRC currently estimates that the review and approval of the first set of COLs could take as long as 42 months. Southern Company's new plant licensing team is working through the NRC's licensing process and applying the new licensing requirements.

Many new plants being considered will use first-of-a-kind engineering. Technology like the Westinghouse AP1000 that we have selected for two proposed new units at Plant Vogtle, near Augusta, Ga., is a simplified design that incorporates passive safety systems. The AP1000 has received design certification from the NRC, and the first AP1000 design reactors are currently under construction in China.

Additionally, Southern Nuclear, a subsidiary of Southern Company, is a founding member of NuStart Energy, a consortium of utilities created in 2004 for the dual purposes of obtaining a COL from the NRC, using the never-before-used, streamlined licensing process developed in 1992; and completing the design engineering for the selected reactor technologies. Because the immediate challenges facing a new nuclear investment are generic and one-time, it makes sense for the industry to work together to address these issues.
 
Are there obstacles to scaling up nuclear power to serve an even larger national or global customer base?
While there are obstacles to scaling up nuclear power, and any generation source, Southern Company is taking appropriate actions to address them.

For example, even though more than a decade has passed since the last U.S. reactor began operation, more than 20 new nuclear plants are being planned. One of the steps the industry is taking toward new plant construction is beginning to develop the supply chain for building new plants. This will ensure critical components are available for multiple projects.

Can the existing energy infrastructure handle growth in nuclear? Or does that, too, need further modification?
With the addition of any new generating resource to meet the needs of our customers, it is likely that we will have to expand our transmission system to maintain the level of reliability expected by our customers and required by the North American Electric Reliability Corporation (NERC).

Nuclear generating plants are generally the largest on our system because of the necessary economies of scale. Therefore, we would expect growth in our nuclear resources to create the need for a significant expansion of our transmission system.

Given the current economic crisis, can your industry get the necessary capital (from public or private sources) to adequately finance its growth?
Though the liquidity crisis has tightened credit markets, Southern Company is strong financially and maintains an "A" credit rating, helping to mitigate higher costs of capital.

In addition, a bill has been introduced in the Georgia General Assembly to allow the inclusion of construction work in progress (CWIP) for nuclear projects in the rate base. [Editor's note: This bill was signed into law last week.] Under this legislation, financing costs for the facility would be recovered as the plant is built instead of when it is placed into service—avoiding a large, one-time increase in rates. Moreover, the Energy Policy Act of 2005 incorporates a wide range of measures that support today's operating nuclear plants and provides important incentives for building new nuclear plants. Southern Company supports these incentives for the industry and will utilize them to the extent that they will benefit our customers and shareholders.

From a strategic standpoint, which is the bigger competitor for nuclear: incumbent coal, oil and gas technologies or other alternative energy technologies?
Southern Company recognizes that the key to meeting the growing energy needs of the Southeast, our nation and our world lies in a diverse supply of fuel sources—that includes new nuclear, increased energy efficiency and conservation, natural gas, renewable energy sources and advanced coal.

To limit ourselves to a few sources of energy at the exclusion of others is not in the best interest of our customers, our economy and those who invest in our business.

Is there a cost target that you and others in your industry are aiming to achieve in, say, five years?
[Southern Company subsidiary] Georgia Power's proportionate share of the estimated in-service cost of the two new units, based on current ownership interest of 45.7 percent, is approximately $6.4 billion. This figure is subject to adjustments and performance bonuses under the engineering, procurement and construction contract.

While the final rate impacts will be determined by the Georgia Public Service Commission, the company estimates the typical Georgia Power customer, using 1,000 kilowatt-hours per month, would see a base rate increase of about $12 per month in 2018 when both units are fully operational. This rate impact is expected to decline over time.

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