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Regulator Approves Southern’s Reactors as Chairman Dissents

February 09, 2012

(Updates with comment from CEO in sixth paragraph, share price in seventh.)

Feb. 9 (Bloomberg) -- The U.S. Nuclear Regulatory Commission approved Southern Co.’s plan for the first licenses to build reactors in more than 30 years, with the chairman dissenting because he said there hasn’t been a commitment to implement safety upgrades after Japan’s 2011 disaster.

The split vote mars the start of a new atomic era as Southern builds the first U.S. nuclear reactor from a standardized design that promises to speed construction and reduce risks of runaway costs that plagued nuclear development during the 1970s and 1980s.

“I cannot support these licenses as if Fukushima never happened,” Chairman Gregory Jaczko said after the 4-1 vote today at NRC headquarters in Rockville, Maryland.

Jaczko said he couldn’t support the licenses without a binding agreement that Atlanta-based Southern and its partners would operate the new reactors with safety enhancements meant to prevent the partial meltdowns that occurred at Fukushima.

Scott Burnell, an NRC spokesman, says the agency plans to issue the license tomorrow. Southern can begin work immediately on the nuclear portion of the project.

‘Monumental Accomplishment’

“This is a monumental accomplishment,” Thomas Fanning, Southern’s chairman and chief executive officer, said today in an e-mailed statement. “This project is on track and our targets related to cost and schedule are achievable.”

Southern fell 5 cents to $44.56 at 1:22 p.m. in New York Stock Exchange trading. The shares had increased 19 percent in the 12 months ended yesterday.

“It’s a big day for the industry and for the country,” Bill Johnson, chairman and chief executive officer of Raleigh, North Carolina-based Progress Energy Inc., said today in an interview in New York.

“We’ve been talking about a nuclear renaissance for years now and this is the first tangible sign that we are going to proceed in a meaningful way,” said Johnson, who is also chairman of the Nuclear Energy Institute, a trade organization.

Potential legal challenges to Southern’s license pose a near-term risk for Vogtle, about 26 miles (42 kilometers) southeast of Augusta, Georgia. In the longer term, delaying a nuclear renaissance for a decade may put the U.S. even further behind France, China and Korea.

‘Abdicated Its Duty’

“The NRC abdicated its duty to protect public health and safety just to make construction faster and cheaper for the nuclear industry,” said Representative Edward Markey of Massachusetts and the senior Democrat on the House Natural Resources Committee.

“Rather than ushering in the so-called nuclear renaissance, today’s vote demonstrates that the NRC is still stuck in the nuclear safety Dark Ages,” Markey said in an e- mail.

While the NRC has received applications for 28 new reactors since 2007, Southern’s units are among five on track to be built this decade. The NRC in coming weeks may vote on Scana Corp.’s application to build two reactors at an existing plant near Columbia, South Carolina. The Tennessee Valley Authority plans to complete by 2014 a reactor it stopped building in 1988.

The NRC’s previous construction permit was issued in 1978 for the Shearon Harris plant, operated by Progress Energy, southwest of Raleigh. A 1979 partial meltdown at the Three Mile Island plant near Harrisburg, Pennsylvania, stalled the development of U.S. nuclear power, which accounts for about 20 percent of the country’s electricity.

Natural Gas Prices

Low natural gas prices, which dictate wholesale power costs, have discouraged power companies from investing in nuclear energy and other forms of generation, according to David Crane, chief executive of NRG Energy Inc. of Princeton, New Jersey, which is part of a group that has applied for a license to build two reactors in Texas.

“Before you start actually building a $12-$13 billion nuclear plant, you need to know what you’re going to do with the power,” Crane said yesterday at a Washington conference. “It would be very hard to sell it in this commodity-price environment.”

Natural gas futures fell 2.4 cents to $2.448 per million British thermal units yesterday in trading on the New York Mercantile Exchange. Prices have fallen from a five-year high of $13.577, reached in July 2008, as drilling techniques have advanced.

Plans Canceled

Ameren Corp. of St. Louis, Entergy Corp. of New Orleans and Exelon Corp. have canceled plans to build reactors since 2009. Other applications remain in various stages of review at the NRC.

Southern, which applied for the Vogtle reactors in March 2008, has said the first unit will begin commercial service in 2016 and the second will be operational a year later, with a total project cost of $14 billion. Scana plans for its reactors to be in service in 2016 and 2019, and the company is covering 55 percent of the $10.2 billion estimated cost.

NRC action on Southern’s application is “good news” because nuclear power should be a part of the U.S. energy mix and reactors are scheduled to retire in the coming decades, Energy Secretary Steven Chu told reporters yesterday in Washington.

The agency in 1989 streamlined the process to build reactors, allowing construction and operating permits to be combined in a single license, and Southern is on track to hold the first consolidated license.

AP1000 Design

The NRC on Dec. 22 certified a reactor designed by Toshiba Corp.’s Westinghouse Electric unit, which Southern and Scana plan to build. Duke Energy Corp., Progress Energy and NextEra Entergy Inc. of Juno Beach, Florida, also are considering the design, known as the AP1000, for proposed nuclear plants, according to the NRC’s website.

The Energy Department in 2010 awarded Southern and its partners, Oglethorpe Power Corp. of Tucker, Georgia, and the Municipal Electric Authority of Georgia, conditional approval for an $8.3 billion loan guarantee for the Vogtle project.

“The federal government is putting the American taxpayer on the hook for billions of dollars to build nuclear reactors that corporations would never risk building themselves,” Jim Riccio, a nuclear policy analyst for Greenpeace USA, an anti- nuclear group, said in an e-mail.

Southern has begun preliminary construction on the Vogtle project, which has cost more than $2 billion so far. Since January 2011, the company has charged customers a fee on their utility bills to help recover its costs, according to the Southern Alliance for Clean Energy of Knoxville, Tennessee.

The NRC must adequately consider how lessons from Japan’s nuclear disaster last year may affect new structures at the Vogtle plant, the alliance and eight other consumer and environmental groups said in a statement yesterday. The groups plan to file a lawsuit at the U.S. Court of Appeals for the District of Columbia to challenge the license as early as next week.

--With assistance from Jim Polson in New York. Editors: Jon Morgan, Steve Geimann

To contact the reporters on this story: Julie Johnsson in Chicago at; Brian Wingfield in Washington at

To contact the editor responsible for this story: Jon Morgan at

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