[NukeNet] state incentives for nuke plants

[Diane Farsetta]

http://www.marketwatch.com/news/story/states-maneuver-lure-new- 
nuclear/story.aspx?guid=%7B8AE42F93-8213-4704-AF26-4F4BE16B6A31%7D


States maneuver to lure new nuclear power plants
By MarketWatch
Last Update: 1:40 PM ET May 21, 2007

NEW YORK (MarketWatch) -- In a positive shift for U.S. power  
companies planning a new fleet of nuclear facilities, nuclear power  
has gained popularity in several states as a solution to high power  
prices and growing demand.

Louisiana, Florida, South Carolina and Georgia are offering  
incentives to develop new nuclear generation, hoping that nuclear  
power prices will be lower and less volatile than power generated by  
natural gas. State regulators also hope new nuclear power plants will  
create jobs and bolster local industry. Nuclear operators say state  
rules ensuring cost recovery of new plants - particularly pre- 
construction costs - will likely affect their decisions about where  
to build new plants.

Louisiana and Florida have approved measures that would allow New  
Orleans-based Entergy Corp. to pass on some pre-construction nuclear  
plant development costs to their customers, while Georgia regulators  
are considering a similar move.

A new nuclear plant in Florida would diversify the state's energy  
sources, protecting customers from fluctuations in oil and natural  
gas prices, said Lisa Polak Edgar, chairwoman of the Florida Public  
Service Commission.

FPL hasn't confirmed that it will build a nuclear reactor in Florida.  
Progress Energy last year chose Levy County as a potential site for a  
new plant, but hasn't applied for an early site permit from the U.S.  
Nuclear Regulatory Commission.

In May, the South Carolina legislature passed a law that guarantees  
utilities can recover costs from the construction of nuclear and coal  
plants in the state. Duke Energy Corp. (DUK) is working with  
lawmakers in North Carolina to pass a similar bill.

Charlotte, N.C.-based Duke is considering building a new nuclear  
plant in the Carolinas. although it hasn't applied for an early site  
permit.

Southern Co. utility Georgia Power Co. last year asked Georgia  
regulators to approve licensing and pre-construction expenses for a  
new nuclear plant near Augusta.

Even though the company hasn't confirmed it'll proceed with  
construction, Georgia Public Service Commission Chairman Stan Wise  
said he hopes his commission approves Southern's request so it will  
build the new plant.

Georgia needs a robust source of baseload power to keep up with  
growing demand, Wise said. "Somebody has got to figure out how to  
keep the lights on," he said. "Renewable energy and energy efficiency  
are important, but I'm not sure that's going to be enough to take  
care of the 4 million new Georgians."

Louisiana Prepares To Compete

Entergy Corp. is considering building two new plants: one near its  
River Bend nuclear plant in St. Francisville, La. and another near  
the Grand Gulf plant in Port Gibson, Miss.

"State regulatory treatment is going to be key" to Entergy's  
development decisions, said Randy Hutchinson, Entergy's senior vice  
president of nuclear business development and new plant activities.
Under Louisiana's cost-recovery policy, Entergy can pass through  
about 10% of its River Bend development costs to consumers before the  
new plant is operational. Jay Blossman, chairman of the state Public  
Service Commission, said he hopes the policy will encourage Entergy  
to choose Louisiana over Mississippi for a new nuclear plant.

"We wanted to be very aggressive in encouraging (Entergy) to build  
here," Blossman said.
A new nuclear plant in the state would reduce electricity customers'  
exposure to rising natural gas prices and would create at least 2,000  
permanent jobs, he said. Two Louisiana parishes have have benefited  
from existing nuclear plants, Blossman said.

"In both of those parishes, the school districts are among some of  
the top in the state," he said. "It's a win-win for everybody."

Louisiana's need for new sources of power outweighs concerns about  
nuclear waste disposal, Blossman said. Storing the waste on-site  
indefinitely isn't seen as a problem, he said.
Nuclear operators have been storing the waste from their plants for  
years. The nation's troubled waste repository at Yucca Mountain in  
Nevada is more than 18 years overdue and isn't expected to be  
permitted or operational anytime soon.

Investors Demand Rules

Investors won't back new nuclear plants unless clear rules for cost  
recovery are in place. Financing is vital to the development of a new  
nuclear plant, which can run between $1.5 billion and $2 billion,  
according to the Nuclear Energy Institute, the industry's Washington- 
based lobbying group.

In the 1970s and 1980s, nuclear power companies faced significant  
cost overruns in building new reactors, with some plants' final costs  
surpassing $5 billion. The cost of new power plants should be lower  
because next-generation reactors are more standardized and the NRC's  
licensing process has been streamlined, power companies say.

The southern states' cost-recovery policies mark a sea change from  
the nuclear plant building boom of the late 1970s and early 80s, when  
state regulators often saddled developers with cost overruns.
Still, state regulatory incentives are no guarantee that a new  
nuclear plant will be built. Power companies must weigh a number of  
factors, including the need for new power generation and the cost of  
alternative sources of energy, when deciding whether to develop new  
nuclear generation.

"State incentives do play a role, but they're not the driver for us,"  
said Beth Thomas, a spokewoman for Southern Co.

Entergy Corp. will consider the costs of supplies and materials  
needed for construction and federal tax credits for nuclear power  
production before deciding whether or not to build a new nuclear  
plant, said Hutchinson.

Corrected May 21, 2007 10:56 ET (14:56 GMT)
Duke Energy Corp. (DUK) is based in Charlotte, N.C.
("Power Points: States Maneuver To Lure New Nuclear Pwr Plants,"  
published at 12:11 p.m. EDT Friday and at 9:35 a.m. EDT Monday  
misstated the company's headquarters.)
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