Tag Archive | North Anna 3

The Case against North Anna 3

This letter to the editor was not printed by the Richmond Times Dispatch

Sadly, I will not be able to attend this year’s shareholders meeting for Dominion Resources on May 11th in Columbia SC. Were I there, I would be asking out-going CEO Tom Farrell some difficult questions about the proposed North Anna 3 reactor.

“The estimated cost of building the new reactor at North Anna is $19 billion. Dominion paid $192 million for the Kewaunee reactor in Wisconsin. You ran this reactor for 5 years and were not able to make it be profitable. Dominion closed Kewaunee in 2013. How can Dominion expect to run the North Anna plant profitably, if it is 100 times more expensive than one it has already closed for economic reasons?”

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“Dominion has already put over $1 billion into the rate base for this project it claims to have not yet decided on, making this one of the most expensive non-decisions in history. Now Dominion wants to spend in 2016 over half a billion dollars (the cost of a very large solar array) to wait another year to decide on North Anna, while the clean energy regulations are being litigated. Why not invest this money is solar PV which could be generating cheaper electricity, without toxic radwaste, at a lower price, even factoring in the cost of batteries?”

The global investment for renewables new capacity exceeded investment in fossil fuels (including fracking) and nuclear combined in 2015. Is Dominion just unable to find capable people to tap into this clear emerging market? Dominion has a fairly small fraction of its capacity in high profile renewables.

renewables better than reactors

Dominion is fundamentally failing to become a forward thinking utility and instead depends on its comfortable relationship with the state government to push off the costs of its mistakes (like North Anna 3) onto ratepayers and taxpayers. Wise investors would recognize that this is not a sustainable investment strategy.

 

Paxus Calta

Louisa, Virginia

 

Our Own Private Language

As I watched Tom Farrell, CEO and Chair of Dominion Resources at the May 6th  shareholders meeting I had one recurrent thought:

I was supposed to be him.

Tom Ferral

Farrell – my alter ego:  “Let me explain to you how this really works”

We have the same class background, the same white privilege, attended similar fancy schools.  We are both propagandists, we are both storytellers.  I was being groomed to be a captain of industry who would stand in front of a room containing many angry shareholders and I would be cordial and friendly and respectful and ultimately dismissive of any of their substantive concerns.  Just as he was with me.

And as I explored this fantasy world in which I was running a nuclear utility, GPaul pointed out in that world I would need to like ties, and have a monogamous wife who also liked ties.  And I would have a lot of money and influence.  I would give evasive sound bite answers to the media and smile slyly when they tried to nail me down with a follow up, simply pointing to the another reporter and saying, “Next question please.”

And I would not trade places.

I was talking with Emilia and she was laughing at the idea of me being monogamous and wearing ties.  She repeated her appreciation that I did not make that choice and ended up “on our side.”  I said I got lucky and fell in love with a witch. She is dismissive of my explanation, saying instead that we make our own luck.

this label is held very differently

This label is held very differently

Tom Farrell recognized me in the brunch before the shareholders meeting.  He asked why I was not at last years shareholders meeting.  I did not have the heart to tell him I missed the last three.

Security was tighter than it had ever been.  Cell phones were not allowed into the meeting.  There were multiple checks before you could get into the meeting space.  They made it seem like it was a big deal for them to permit you to come to this meeting which they are legally required to have and the fact that we technically owned the company somehow seemed lost.

Though I did get this convenient cell phone extra battery.  Which in a comic irony broke immediately.

Dominion swag for shareholders

Dominion swag for shareholders

I watch Tom Farrell do his thing.  He presented a carefully selected subset of the available data, focusing on the areas where his company had done well.  I’ve been to enough of these presentations to know that there are always some metrics left out.  And it is important to admit that by many classical measures Dominion is a quite well run company.  Which means that workers and customers are getting taken advantage of to make sure that shareholders do well.

But then a strange thing happened.  As the hour and a half long presentation about how safe and profitable the company continued, i noticed something that very few other people in the room noticed.  There was not a single mention of the North Anna 3 reactor project.  As part of my complex question to Farrel at the end I inquired about this:

“You just spoke for an hour and a half about Dominion and you did not once mention the North Anna 3 project, which is without doubt the most expensive and likely riskiest project our company might embark on in the next few years.  Why is that?”

Farrell of course had his pat answer.  “I did not mention North Anna 3 because we have not yet made a decision about this project.  We are still awaiting the EPAs carbon ruling before we decide if we are going to go forward with it.”

Not on our fault lineAnd for almost everyone in the meeting, this likely seemed a completely reasonable answer.  But in our private unspoken conversation, it had a completely different meaning.  This is my 7th shareholders meeting.  North Anna 3 has been mentioned in every proceeding meeting, not just in passing, but in some depth.  This at least $10 billion and more likely $20 billion project is not getting mentioned, because Dominion is walking away from it.

At every previous meeting I had attended, Dominion had also not made a decision about going forward with this project.  But this not “making a decision about it” is not free.  To not make a decision about this reactor has already cost Dominion over half a billion dollars, which is more than most power generating stations cost in their entirety.  And normally investors would like to see some return for that amount of money.  Dominion, however, has decided to call these wasted funds “research” and pass them on to the rate payers.  Sadly the bought off Virginia legislature quickly agreed to this theft.  This research will never have any value to the customers who are paying for it.  But it is just too close to the time when they we will be forced to pay for it to announce that they were not planning on building the reactor at all.

Our private conversation has other parts as well.  I said, “Four years ago you said Japan would start building reactors again domestically, yet today we see all 50 reactors in the country are either melted down, marked for decommissioning or not in service.  Are you still confident Japan will build more reactors?”

Farrell replied, “Japan has paid a high price for these reactors being closed.  And yes i am confident in the next year, some of these closed reactors will come back online.”

Japan is not forgetting Fukushima

Japan is not forgetting Fukushima

Again, if you were not paying close attention, you would have just believed the story tellers version of reality.  But if you look closer, you will see he is not answering my question at all.  I was asking about new construction, which is decades off in Japan, if it ever happens at all.  Fukushima was and is a huge crisis.  While the US has mostly blissfully moved on, Japan is looking at record numbers of childhood thyroid cancers and 100K people who can’t return home.  Farrell was wrong 4 years ago when he promised new domestic construction of reactors, and he knows it.  But instead of admitting that, he answers a different question.  Just like slick politicians do

Farrell and i have sparred like this for years.  This is our own private language.  I generally don’t cut in and ask follow up questions.  But i am not quite comfortable just letting him get away.  I ask the one question there is not a good answer for.

“While there are many uncertainties around building a new reactor, we do know one thing for sure.  Credit agencies have promised that if utilities begin new nuclear construction their companies rating will be down graded.  And for all the new reactor projects in the US we have seen this happen.  How is Dominion going to avoid this fate, if it does decide to build North Anna 3?”

Farre;; talks about all companies being different.  About how SCANA which started construction in 2013 and is already behind schedule and over a billion dollars over budget.  They got down graded because they are so small and the two reactors are such a large part of the portfolio.   Farrell speaks non-specifically of how Southern Company (which also got down graded after they started their reactor construction in 2013 and is the same size as Dominion)  got down graded for other reasons.

But Farrell knows, we both know, that nuclear construction companies have an absolutely terrible time controlling costs.  He even hints at this when he is complaining about a recent off shore wind project Dominion was considering.  “They could not cap the costs,” he said. “We can’t pursue projects which have uncapped costs.”

In our own private language Farrell is finally telling me what i want to hear.  North Anna 3 is dead and we just are not talking about it anymore.

More Nails in Nuclears Coffin

I was quite pleased to find out today that the Kewaunee nuclear-power plant in Wisconsin will close next year.  Partly i was happy because the owner of this plant is Dominion Resources which is trying to decide if it wants to build another reactors near my home in Louisa County Virginia. Dominion stepping out of Kewaunee increases the chances they will never build North Anna 3 for several reasons:

  1. Their own nuclear staff and expertise is diminishing
  2. It means they can be convinced a reactor with lots of license life should be closed
  3. They bought this reactor in 2005, hoping to buy more reactors in the region
  4. Dominion tried to resell the plant and no one wanted it
  5. Because it will help highlight that insufficient funds are being saved for decommissioning costs.

If you cant make the economics of an already operating plant, which has a license to run until 2033, how is it going to make economic sense to build a brand new expensive plant, with all the new reactors running wildly over budget and years delayed?

Another one bites the dust

Dominion paid $220 million for the single small reactor (556 MW) in 2005 and has been trying to sell it since April of last years.  But there are no buyers for this white elephant.  The Washington Post article on the closure points out that fewer than 20 commercial reactors have been closed in the US and the last one was in 1998.  But nuclear power in the US is losing it’s race against time.  The fleet is aging far faster than new units are being built and while the NRC is granting life extensions to ever utility which asks for one, it can not beat the fundamental truth that these plants, even with sunk costs long covered are becoming greater liabilities than assets.

“i think he is to blame”

Separately, the World Nuclear Industry Status report for 2012 was released, here is part of the executive summary.

Reactor Status and Nuclear Programs

Startups and Shutdowns. Only seven reactors started up, while 19 were shut down in 20111
and to 1 July 2012, only two were started up, just compensating for two that were shut down
so far this year. As of end of June 2012 no reactor was operating in Japan and while two
units at Ohi have got restart permission, it remains highly uncertain, how many others will
receive permission to restart operations.

Nuclear Phase Out Decisions. Four countries announced that they will phase out nuclear
power within a given timeframe: Belgium, Germany, Switzerland and Taiwan.

Newcomer Program Cancellations. At least five countries have decided not to engage or reengage in nuclear programs, although they had previously planned to do so: Egypt, Italy,
Jordan, Kuwait, and Thailand.

New Nuclear Countries. Iran became the first country to start commercial operation of a new
nuclear power program since Romania in 1996.

Construction & New Build Issues

Construction Cancellation. In both Bulgaria and Japan two reactors under construction were abandoned.

Construction Starts. In 2011, construction began on four reactors and two so far in 2012.

New Build Project Cancellation. In Brazil, France, India and the United States new build
projects were officially cancelled. In the Netherlands, the U.K. and the U.S. key utilities
withdrew leaving projects in jeopardy.

Certification Delays. The certification of new reactor technologies has been delayed numerous times. The latest announcement concerns the certification in the U.S. of the Franco-German designed EPR2 that was pushed back by 18 months to the end of 2014.

Construction Start Delays. In various countries firmly planned construction starts were
delayed, most notably in China, where not a single new building site was opened, but also in
Armenia, Finland and the U.S.