Breakfast with Liars – Dominion Shareholder meeting
I make an annual pilgrimage to the Dominion Resources shareholders meeting. I own two stocks so i can ask questions and be lied to by senior management. Before the meeting there is a continental breakfast in the fancy hotel (this year we were in Pittsburgh) where various CEO’s for Dominion (it has several) tell me things that are not true. They tell me they never give out the information about how much the reactor has cost over the past year, in fact they gave it to me for years, without complaint. They told me that the new reactor design the APWR) had already been built at Millstone 3 in Connecticut (Millstone was completed in 1974, North Anna 3 is supposed to be a 3rd generation plant, with a much newer design). And the big lie was that they are all still optimistic about building another reactor near my home.
The text below in bold is what i said. The text in italics i wrote in advance and choose not to use.
Right now every one of 50 reactors in Japan sits idle. Some of these reactors may come back on line again, but it is safe to say the prospects for new reactor construction in Japan are vanishing, since restarting completed reactors will always be cheaper than new build. These means the best nuclear engineers in Japan are seeking other work, including those engineers at Mitsubishi which is proposed designer for the new third reactor at North Anna.
Since the last shareholder meeting Germany has announced it will shut all its reactors by 2022, Switzerland, Mexico, Venezuela, Italy, Belgium, and the Netherlands have all canceled reactors. Siemens the largest engineering firm in the world is closing its nuclear construction branch. Two of Germany’s largest utilities E. On and RWE dropped out of the Horizon project in the UK to build 4 to 6 reactors, because they could not make it profitable.
The newly elected French president has proposed closing reactors, which would have been a heresy just 2 years ago. Similarly, even China, oft sited as the future of nuclear power is implementing solar PV and wind programs that dwarf its nuclear programs.
Here in the US TVA just announced an over $2 billion overrun at Watts Bar 2, nearly doubling the cost of that project and even more years of delay. Even the brand new construction at Vogtle is behind schedule and likely over budget. Even the pro-nuclear Obama administration has cut back its budgeting for federal loan guarantees for new reactors, recognizing the realities of the market. Exelon, the largest reactor operator in the US has no plan for new build.
The only places in the US which are building new reactors have three things in common, they are regulated markets, they can recover costs during construction and they have federal loan guarantees. North Anna has only a regulated market
I’ve been to this shareholders meeting many times and I have heard you and Tom Capps before you give many reasons why Dominion is pursuing new reactors at North Anna. I have heard you were concerned about carbon taxes, there is no political will for carbon taxes in the US and no international treaty likely which will require them. I’ve heard you say you dont need federal loan guarantees for new construction because you will find project partners. You have failed to find project partners. I’ve heard you say you will find private banks to fund North Anna 3, this seems extremely unlikely.
At the same time hydrolic fracturing is driving down the cost of natural gas world wide. Dominion is far more a natural gas company than a nuclear operator.
No examples of this proposed APWR plant are operating in the world, virtually insuring delays and overruns. There are no reliable cost estimates for this project. What we do know is every Gen III and Gen III+ reactor in the west is significantly over-budget and late.
I have been to a lot of share holders meetings. I have heard lots of justifications for this plant. I have heard the need for this project because of carbon taxes, president Farrell concurred with me this morning there is little chance of this now. I have heard that you will try for loan guarantees from the federal government, but you are so far down the list you will not likely get anything, especially since the Obama administration just cut this budget for this program. I have heard you say you will find partners – you have failed to find partners.
I am saddened that Dominion has become les transparent about the costs of keeping this project alive. It is just not a credible argument that this information in public will put you at a competitive disadvantage.
So my question is why do we continue to waste tens of millions of dollars per year keeping the hope for a new reactor at North Anna alive? Especially considering that if this effort was successful, it would require literally billions to build this new plant, straining the market capitalization of Dominion?
What will it take to convince you that you are wasting shareholders
money on North Anna 3 and finally drop this project?
In response Dominion CEO Farrell said he thought Japan would both turn on their closed reactors and build new ones (clearly he is not following this situation very carefully, the most recent poll shows 70% of Japan is opposed to the restart of the Ohi reactors, the only ones which have passed the stress tests). He said they had found partners for the North Anna 3 project and they will be announced in some months.
And he said that the project was delayed until at least 2014, when the NRC would grant them a license to build this reactor, which ultimately buys us more time (they were supposed to decide last year).