Watch your wallets: Dominion getting license to build nation’s most expensive nuclear plant

Erica Gray, Nuclear Issues Chair of the Sierra Club, at a protest against Dominion’s planned North Anna 3 nuclear reactor. Photo courtesy of the Sierra Club.

The Richmond Times-Dispatch reports that within the next few days, the Nuclear Regulatory Commission will approve a Combined Operating License (COL) for Dominion Virginia Power’s third nuclear power plant planned for its North Anna site in Louisa County, Virginia. That means that as far as the federal agency is concerned, North Anna 3 is good to go.

As far as Virginia residents are concerned, though, this project has gone way too far already. Dominion has poured hundreds of millions of dollars of ratepayers’ money into NA3, and that’s money we will never see again. But that’s better by far than moving forward with what would be the most expensive nuclear plant ever built in the United States.

Dominion Resources CEO Tom Farrell dearly wants this nuke precisely because of its price tag. The more expensive the plant, the greater the profit for Dominion, under the perverse incentives of Virginia law. Before Mr. Farrell gets his way, though, the State Corporation Commission has to issue a Certificate of Public Convenience and Necessity (CPCN).

The SCC has repeatedly made its skepticism plain. As recently as December 2016 it reiterated its warning that if Dominion were to be allowed to recover the $19.3 billion investment from its customers, it would “represent a large enough increase in electric bills for residential and business customers to impact Virginia’s economic climate.”

There is no reason to think the SCC will change its opinion now. Unless, that is, the legislature does something stupid to force the SCC to approve NA3. Given the power Dominion has over Virginia’s General Assembly, this can’t be ruled out.

So let’s briefly review the reasons why absolutely no one should want this nuclear plant to go forward.

NA3 is a terrible deal for the people who would have to pay for it.

The Attorney General’s office has calculated that the $19 billion price tag for NA3 would increase the bills of Dominion customers by 25% beginning its first year in operation. And that’s if it somehow avoids the cost overruns that have plagued other nuclear plants in recent years.

For a case study in how bad the economics of nuclear have become, one need look no further than South Carolina and Georgia, and the disastrous efforts of utilities SCANA and Southern Company to build the Summer and Vogtle nuclear plants. Construction is three years behind schedule and more than a billion dollars over budget, plagued by missteps that caused the bankruptcy of developer Westinghouse Electric Co. and threaten the survival of its parent Toshiba Corp.

The chairman of the Georgia Public Utilities Commission is questioning whether work on the Vogtle plants should even continue, given the escalating costs and the availability of lower-priced natural gas and renewables. Southern’s CEO recently told investors it may not be able to complete the project. Meanwhile, South Carolina customers have already seen their rates rise 20% to pay for the Summer plants, and SCANA is considering abandoning the project.

In states where utilities don’t have monopolies on generation, even existing nuclear plants are closing (including one owned by Dominion Resources in Wisconsin), or are begging for state subsidies to let them survive (as the company is doing in Connecticut). If fully-paid-for nuclear reactors aren’t competitive in today’s market, it can’t make sense to build a new one.

NA3 would make our electricity grid more vulnerable to outages.

Concentrating power generation at a single site is a bad idea. If something goes wrong, there is that much more power at risk. This is especially true when the site already has a known vulnerability, in this case its location on a fault line. An earthquake near North Anna in 2011 shut down the existing reactors for three months. A third plant in the same location, on the same fault line, increases the amount of generating capacity that could be forced offline without warning, challenging grid operators to find replacement sources—instantly.

National security experts say protecting the grid from weather events and physical and cyber-attacks requires moving away from large, centralized generating stations to dispersed sources located near consumers. NA3 would take us in the wrong direction.

We don’t need the power.

Virginia is part of PJM Interconnection, a regional power grid that covers all or part of thirteen states plus the District of Columbia, and includes over 1,300 generating units. Today, Dominion buys a portion of its power on the PJM wholesale market, at a price far below the projected cost of electricity from NA3. PJM already faces a power glut. Adding more generation to PJM would be expected to lower wholesale power prices. That would benefit buyers in other states, at the expense of the Virginia consumers paying for NA3.

Nuclear energy is not a climate solution.

Low-cost wind and solar are increasingly viewed as the backbone of the 21st century electricity grid. Dominion’s latest integrated resource plan recognizes solar as the lowest-cost resource, even compared with “cheap” natural gas. Nuclear is not just more expensive; it is actually incompatible with large amounts of renewable energy. That’s because U.S. nuclear plants are designed to run all the time at a constant level, regardless of demand. At night when demand is low, nuclear plants still have to deliver power to the grid, even if it means turning off wind turbines that could supply free electricity.

Right now, Dominion stores surplus energy at its huge Bath County pumped storage facility. The stored energy supplies power in the daytime when demand rises. This pumped storage is good for consumers because it allows Dominion to run its baseload coal and nuclear plants for maximum efficiency. But it could just as well be used to store excess wind or solar energy.

Finally, nuclear waste is piling up with no long-term storage plan in place. Deliberately adding more waste when we have no idea what to do with it is beyond reckless. Our environmental agencies are underfunded and dealing with more problems than they can handle, even as climate change increases the magnitude of those problems. Far from being a climate solution, nuclear energy simply increases the burdens on our children and future generations.

Dominion admits cost of North Anna 3 will top $19 billion

photo by Peter Burke/Wikimedia

A nuclear plant in Pennsylvania. Photo by Peter Burke/Wikimedia

Dominion Virginia Power is projecting that the capital cost of a third nuclear reactor at its North Anna facility will total over $19 billion, according to filings in its 2015 biennial review before the State Corporation Commission (PUE-2015-00027).

This works out to over $13,000 per installed kilowatt, according to the testimony of Scott Norwood, an energy consultant hired by the Attorney General’s Department of Consumer Counsel to analyze Dominion’s earnings evaluations. He notes that this capital cost is “approximately ten times the capital cost of the Company’s new Brunswick combined cycle unit,” which will burn natural gas.

As a result of this high capital cost, the “total delivered cost of power from NA3 is more than $190 per MWh in 2028.” That translates into 19 cents per kilowatt-hour.

By comparison, in 2014 the average wholesale price of electricity in the PJM region (which includes Virginia) was 5.3 cents per kWh. Dominion currently sells electricity to its customers at retail for between 5.5 and 11 cents/kWh.

In other words, NA3 is ridiculously expensive.

Dominion had kept its cost projections for NA3 secret until this rate case forced the disclosure. Previously, executives had acknowledged only that the cost would be “far north of 10 billion.”

This cost revelation may point to the real reason Dominion pushed so hard for SB 1349, the 2015 legislation that insulates the company from rate reviews until 2022.

As Norwood testifies, “DVP forecasts a dramatic increase in NA3 development costs over the next five years, during which there will be no biennial reviews.”

These costs are dramatic. A table included in Norwood’s testimony shows Dominion expects to have spent $4.7 billion on NA3 development by the end of 2020. By the time the SCC is allowed to review this spending, more than one-quarter of the total cost will have been spent, and Dominion will be looking to ratepayers to cover the bills.

With perfect deadpan, meanwhile, Dominion executives told legislators this year that SB 1349 was necessary to protect ratepayers from higher costs to be imposed by compliance with the Environmental Protection Agency’s Clean Power Plan.

This isn’t the first time legislators have been snookered in the cause of NA3. Recall that in 2014 Dominion succeeded in lobbying for a law that allowed it to shift 70% of already-spent NA3 development costs onto ratepayers, some $323 million. The effect was to soak up the company’s over-earnings so it would not have to rebate millions of dollars to customers.

This year’s snookering was more comprehensive. Given that Dominion has continued to over-earn, those who opposed SB 1349 assumed it was this year’s version of the 2014 maneuver, designed to protect over-earnings this year and for years to come. Now it appears the real purpose of SB 1349 was to allow Dominion to spend freely on NA3 development costs in amounts that it knew would be unacceptable to state regulators, not to mention the public.

That Dominion thought it could do so in secret is especially reprehensible. Lawmakers and the Governor should be outraged by this deception, whether they voted for SB 1349 or not.

The Attorney General’s office is now trying to force Dominion to justify NA3 to regulators before it racks up billions in sunk costs. Norwood recommends that the SCC “initiate a proceeding to address the prudence of DVP’s planned future investments for development of NA3. This proceeding would allow the Company to present its case regarding the need for and cost effectiveness of NA3, including the value of the proposed project from a fuel diversity perspective and as a means to comply with any final version of the Environmental Protection Agency’s proposed Clean Power Plan and other potential future environmental regulations.”