Cover Story: Georgia Power takes a fresh look at nuclear power

Longtime environmental lobbyist Neill Herring remembers cutting his teeth in the early ’70s as a volunteer activist in Atlanta, opposing the licensing of a new nuclear power plant on the banks of the Savannah River.</
Even in that era of sit-ins and “Ecology now” posters, Herring didn’t fall back on the emotional arguments favored by what he termed the “radiation fear crowd.” Instead, he attacked the bottom line.</
Georgia Power hadn’t justified its proposed Plant Vogtle nuclear facility, he explained in testimony to state utility regulators, because the company hadn’t sufficiently studied safer, less expensive options, such as energy conservation and other renewable resources. In fact, he argued, if the state would only force its namesake power producer to find ways to curb growth in energy demand, the plant wouldn’t be needed at all.</
Too costly. Unnecessary. And there were less risky alternatives. The message couldn’t compete with utility lobbying clout. Plant Vogtle – about half an hour south of Augusta – was approved but, because of calamitous cost overruns, only two of the planned four reactors were built.</
Now, three decades later, the state is adding new population at a furious pace, and nuclear energy is being widely touted as an antidote to global warming. Again, Georgia Power is looking to the atom. Again, the site is Vogtle. And, again, the company has momentum on its side.</
Yet, Herring says, the arguments against a Vogtle expansion remain essentially the same. Georgia Power still has done little to explore renewable energy resources or, even more obviously, to take advantage of what he calls the “low-hanging fruit” of energy efficiency. At the same time, the company sells power to Florida that could be used to serve Peach State residents. And the threat of environmental damage to the Savannah River is even more serious today than it was in the ’70s.</
But, again, the question of Georgia’s nuclear future comes down to a big unknown: cost.</
While Georgia Power officials claim advances in nuclear-plant design have made construction relatively quick and inexpensive, the company has yet to give state regulators a firm estimate of the eventual price tag for Vogtle. Since no new nuclear plants have been built in the United States in the last 30 years, many scientists and industry watchers aren’t convinced meaningful estimates are even possible.</
Says Sam Shelton, director of research for Georgia Tech’s Strategic Energy Institute: “The bugaboo with nuclear energy is that nobody knows how much it’s going to cost because no contractor will build on a fixed-price contract.”</
Thus, the decision on how to meet Georgia’s future energy needs carries an unknown element of risk – and the stakes could hardly be higher. If Georgia Power takes a gamble on nuclear and finds itself in another money pit at Vogtle, it’s conceivable that utility rates could soar and the economic development of the entire state could suffer.</
Despite the proposed Vogtle expansion, the admittedly jaded Herring theorizes that the company is simply keeping its options open.</
“There is reason to believe that Georgia Power doesn’t really want to build Vogtle 3 and 4, but they’re trying to keep their shareholders happy,” he says. “They’d much rather build coal plants because nuclear is a crapshoot – they have no idea what these plants will cost.”</
These are heady days for nuke boosters.</
Ronald Reagan was still in his first term when the last new U.S. plant was green-lighted, but the current atmosphere in Washington suggests all systems are go for a full-scale revival of nuclear energy. Call it the Al Gore Effect: Political pressure to reduce greenhouse gases is getting stronger at the same time that population growth, bigger houses and more gadgets are pushing up demand. As a result, the nation’s energy producers are looking for new sources of power that won’t expose them to future taxes or penalties for spewing carbon, which is believed to be the main contributor to global warming.</
Until recently, that role was largely filled by natural gas, a comparatively clean fuel that doesn’t require building the kind of large, expensive plants needed for coal or nuclear. But since 2000, the price of natural gas has shot through the roof, making it by far the least cost-effective fuel to burn. Many gas-fired plants in Georgia are switched on for only a few hours each summer to help the state’s utilities meet spikes in peak electricity demand.</
Although the state is home to more than 30 gas-fired power plants, Georgia Power’s corporate parent, the Southern Co., has never been much for clean energy. The Atlanta-based company is the country’s second-largest utility operator, with 71 power plants and subsidiaries in Alabama, Florida and Mississippi. It’s also one of the nation’s most visible opponents of pollution controls, carbon regulations and even the notion of human-induced climate change.</
“The Southern Co. has long been the poster child for denying global warming,” says Stephen Smith, executive director of the Southern Alliance for Clean Energy. “Among utilities, it’s known for being the most regressive.”</
And among the most influential. The company is the largest utility lobbyist in Washington, where it led the charge to repeal federal laws requiring clean-air upgrades on older coal plants. Its executives and political action committees rank among the richest sources of campaign contributions.</
In Georgia, its influence is even more pronounced. Last year, Ed Holcombe, a longtime Georgia Power lobbyist, was named chief of staff to Gov. Sonny Perdue – adding to the widely held belief that Southern Co. is the most powerful corporation in the state. And the utility has long had an iron grip on the Public Service Commission, the five-member elected board responsible for regulating utilities. In the Legislature, Georgia Power has successfully used its influence to fight environmental regulations; in the PSC, it’s brushed aside calls to increase energy efficiency. Says Smith: “The PSC is so far up the butt of the utilities that it won’t do anything to rock the boat.”</
But the long years of polluting with impunity may be coming to a close. The prospect of steep new federal carbon penalties is pushing many utilities, including the Southern Co., to reconsider their reliance on coal.</
With gas plants on the decline and global warming looming as a crisis of potentially epic proportions, it’s not hard to also find scientists, politicians and editorial writers scrambling onto the nuclear bandwagon. Even many environmentalists, most prominently Greenpeace founder Patrick Moore, support nukes as an alternative to greenhouse-gas-producing coal plants.</
“Because of global warming, a lot of people who once opposed nuclear have crossed over,” says Nolan Hertel, a Georgia Tech nuclear engineering professor who advocates fission as a safe energy source. “And utilities like their nuclear plants because they’re much cheaper to operate than fossil-fuel plants.”</
Nuclear energy also has gotten strong support from Congress and the White House. The Energy Policy Act of 2005 extended a ’50s-era law limiting corporate liability for nuclear mishaps, streamlined the plant-licensing process and, most notably, earmarked billions of dollars in federal subsidies for the first six new nuclear plants.</
The effect on the energy industry has been roughly equivalent to firing a starter pistol at the beginning of a marathon. At last count, 32 new reactors are being proposed from Maryland to Idaho. And just last month, the U.S. Senate approved a new energy bill containing a hidden provision for tens of billions in additional loan guarantees to nuke builders.</
Georgia Power first floated the nuclear option two years ago. Last month, the company received unanimous PSC approval for a long-range plan that calls for meeting increased statewide energy demand with a Plant Vogtle expansion. The commission decision allows the utility to charge back to ratepayers an estimated $51 million in licensing and preconstruction expenses – money it can keep even if the new reactors are never built.</
On the surface, Vogtle looks to be on the fast track. But the world of energy production and regulation moves with excruciating deliberateness. The PSC’s July vote is only a first step. Even if Vogtle wins final approval, the first new reactor wouldn’t be up and running until 2015, at the earliest.</
Complicating matters, the PSC has mandated that Georgia Power can’t proceed until it provides persuasive evidence that nuclear is the most cost-effective option for future power production. If the utility can’t prove its case – or if another company shows it can meet Georgia’s energy needs at a lower price – then the Vogtle expansion may not happen, says PSC Chairman Bobby Baker.</
“It’s not a done deal that the next plant built in Georgia will be nuclear,” Baker says.</
March 16, 1979, saw the opening of The China Syndrome, a thriller about an unscrupulous, corner-cutting power company bent on covering up design flaws at its nuclear plant. Just 12 days later, a partial core meltdown at Three-Mile Island outside Harrisburg, Pa., spelled the end of the first era of nuclear-plant construction in the United States.</
The demise of plant building wasn’t due simply to heightened fear of radioactive fallout; the larger factor was runaway costs associated with meeting constantly shifting regulations imposed by government officials whose single-minded goal was that another Three-Mile Island not happen on their watch.</
One of the biggest victims of that nuclear winter was Georgia Power. When construction began on Vogtle in 1974, the company’s rose-colored estimate was that four powerful reactors could be built for $680 million – a considerable savings over the $934 million spent to construct half as many nuke units at South Georgia’s Plant Hatch.</
By early 1979, Southern Co., like many utilities, was reeling from the national energy crisis. In the flurry of new regs that followed Three-Mile Island, Vogtle became a financial disaster zone. Design specs were redrafted, scrapped and redrafted again. Construction was halted as costs soared into the billions, but the company had no means of recouping its investment unless the plant went operational, so the plan was scaled back to two reactors and building resumed.</
By the time Vogtle was completed in 1989, Georgia Power had spent 15 years and $8.4 billion – more than 20 times the original per-unit cost – and narrowly avoided bankruptcy. In those days, when the utility finished a construction project, it presented the final tab to the PSC for approval to pass the cost on to energy customers. But, in face of such an outrageous sum, the PSC ruled that the company had to eat $1 billion of the cost overruns.</
Georgia Power has since gotten state law changed to ensure that, so long as the company is deemed “prudent” in its cost projections, it will be able to recover its capital investments – along with a healthy 12 percent profit margin – by raising rates.</
Vogtle was the last major power plant built by Georgia Power, but it enabled the company to produce more than enough energy to satisfy customer needs. So, with the PSC’s assent, the utility has sold sizable amounts of excess electrical capacity across state lines over the years. One unit at Macon’s huge coal-fired Plant Scherer, the fifth-largest power generator in the United States, was sold outright to Florida Power & Light. And last fall, without asking the PSC’s permission, Georgia Power renewed a long-term contract to provide the Florida utility with 1,000 megawatts of capacity, nearly equal to the energy produced by one of the existing reactors at Vogtle.</
As Herring puts it: “Other utilities, whose states wouldn’t allow them to build over-capacity plants, came shopping for power in Georgia. We pay higher rates so Florida can have air-conditioned beach homes.”</
Georgia Power now has taken the position that the state’s sharply rising population growth calls for a major new plant by 2016.</
“If we don’t get an additional 500 megawatts a year in base-load capacity, we can’t guarantee that we can meet the energy needs of Georgia,” says utility spokeswoman Carol Boatright.</
In the next few months, she says, the company expects to file a formal bid for a Vogtle expansion, complete with the planned energy capacity, the construction time line and the estimated construction cost. After that, it will be up to the PSC to decide whether new nukes are a cheaper option than a different kind of plant.</
Some environmentalists argue that the utility hasn’t made a compelling case for any kind of new plant – at least, not until it looks at putting a lid on energy consumption. On average, Georgia residents use 25 percent more electricity per capita than the rest of the country.</
One reason for that is cheap power.</
“In Georgia,” Baker explains, “the principle driving regulation of the energy industry has always been on keeping rates low, but keeping the price low is not going to encourage folks to use less of something.”</
Smith explains that another reason for the state’s profligate power consumption is that, for Georgia Power, waste is good business.</
“If everyone runs their air conditioner with the windows open, the company makes more money,” he says. “The Southern Company has been so hostile in fighting energy efficiency because it views it as lost revenue, which is a perverse disincentive.”</
If energy efficiency sounds like crunchy, feel-good lifestyle choices, like carpooling and remembering to turn off the light when you leave a room, you’re still stuck in the ’70s. Nowadays, efficiency involves investments in updated technology – better insulation, A/C regulator switches, compact fluorescent light bulbs, Energy Star appliances, etc. – that result in a direct, calculable reduction in energy consumption.</
“The good news is that Georgia wastes so much energy now that efficiency is a cheaper solution than building a new plant,” says Dennis Creech, executive director of the Southface Energy Institute, a nonprofit group that promotes energy efficiency.</
“We’re not telling people they have to sit in the dark,” he adds. “What we’re saying is that they should install energy-efficient lighting and appliances.”</
More to the point, the state could direct utilities to offer financial incentives to customers who make energy-saving investments. It’s called “demand-side management”: Instead of spending money building power plants to continually expand the supply of electricity, a utility can control demand by spending money to retrofit customers’ homes with better duct work and up-to-date insulation.</
Years ago, California stopped permitting new power plants in favor of reducing demand on existing plants through efficiency programs. The result is that electricity rates are about twice as high as in Georgia, but per capita consumption is less than half.</
“I don’t pay a utility rate; I pay a bill,” Creech says. “Georgia Power says we have some of the lowest rates in the country, but we have high bills because of inefficiency.”</
So how big a difference could efficiency make in Georgia? A recent, state-commissioned study estimated that as much as 24 percent of future demand could be avoided through energy-efficiency programs. The study concluded: “Georgia has not invested in energy efficiency as vigorously as most states. In fact, Georgia is one of a small number of states in which energy efficiency programs are barely in evidence.”</
In the subsequent State Energy Strategy, the Governor’s Energy Policy Council – a group of 22 mostly business-friendly Perdue appointees – recommended that Georgia, “as its highest priority, should aggressively pursue all cost-effective energy efficiency opportunities.”</
Georgia Power recently launched a $43 million efficiency plan involving commercial tax incentives and consumer thermostat upgrades that it estimates will reduce about 5 percent of the current energy demand. By contrast, California utilities have earmarked $2 billion for efficiency programs.</
Creech calls the Georgia initiative a “modest first step” and notes that there has never been much political will for the PSC or state lawmakers to push the company to do more.</
“We’re one of the worst states in the country in terms of public policy to promote energy efficiency,” he says. “And this is not a liberal vs. conservative issue. Texas has some very aggressive policies to promote efficiency.”</
But most Georgia politicians have generally turned up their noses at the idea of an aggressive push to reduce demand. Even Baker, a Republican who’s considered a pro-consumer commissioner, isn’t ready to use the power of the government to push Georgia residents into making sometimes costly appliance upgrades.</
“Why should someone have to subsidize me so I can go out and buy a programmable thermostat?” he says. “I have a problem with the philosophy that Big Brother needs to help people make these choices.”</
Still, Baker says he will watch how similar programs fare in other states.</
“Sometimes it’s best not to be out front leading the charge,” he says. “Sometimes the most prudent thing is to monitor what’s being done around the country so we can implement tested programs that are known to work.”</
Even if Georgia Power caught the efficiency bug, the company would likely explore the Vogtle expansion. After all, efficiency is likely only to slow the rising demand for energy. And the utility’s heavy dependence on coal means it still needs to prepare for what is likely to be a less carbon-friendly future.</
Currently, about 70 percent of Georgia’s electricity comes from burning coal in huge, old plants, such as Scherer, which has been ranked the nation’s dirtiest in terms of carbon emissions. And Southern Co. regularly finds itself among the nation’s top two or three companies in greenhouse-gas emissions.</
But the company may soon be forced to start cleaning up its act. Ask any industry watcher who’s been paying attention in the past few years and he’ll tell you carbon restrictions are on the way. Even if the Democrats don’t take the White House next year, many energy experts say the political support is overwhelming for a federal limit on commercial CO2 emissions.</
“The tipping point has passed on carbon caps,” agrees Tech’s Shelton. “It’ll happen in the next three years, max.”</
And when it does, it could take one of two basic forms, explains Derik Broekhoff, a senior energy expert with the World Resources Institute, a Washington think tank. One scenario has the nation’s utilities effectively starting from the status quo, with the mandate that they cut emissions by a certain percentage each year or trade carbon “allowances” with companies able to meet their goal. It’s a scheme that does little to reward companies that have already invested in cleaner technologies.</
In the other scenario, the feds would set stricter clean-air standards and auction off a finite number of carbon allowances. Heavy polluters that couldn’t meet the new standards would need to buy more allowances, sharply driving up operating costs.</
“A utility with a lot of old-fashioned coal plants, like the Southern Co., could find it more expensive to limit emissions under a cap-and-trade system,” Broekhoff says.</
The resulting rate hikes could hurt the state’s ability to attract employers, stunting job growth. Theoretically, two new Vogtle reactors could allow Georgia Power to shift some production away from coal, thus insulating itself from future penalties that may come down the pike.</
Not so fast, says Sara Barczak, safe energy director for the Southern Alliance for Clean Energy. Barczak says the utility is again ignoring some preferable alternatives.</
“In the long run, there will be a need for new power generation in Georgia, but we feel nuclear is the worst option because of the unknown costs and the radioactive waste,” she says.</
Not that Georgia has a superabundance of options. Contributing scarcely 2 percent of the state’s electricity, hydroelectric power is already maxed out. Natural gas is too pricey and, while cleaner than coal, produces carbon of its own. The prospect of solar energy is dubious, wood-derived ethanol is just beginning to be explored and off-shore wind power is still regarded as a question mark.</
For large-scale power production in the Peach State, the choices seem limited to nuclear and coal. But Barczak says the PSC should insist Georgia Power consider not simply the cheapest options, but cleaner ones as well. New “clean-coal” technology – a process known as IGCC, in which coal is transformed into a gas before it’s burned – screens out many common pollutants and makes it easier to capture the CO2 before it goes up the smokestack, she says.</
“When you’re talking about building a new power plant,” Barczak says, “the lesser of all the evils is an IGCC coal plant.”</
The most familiar knock against nuclear energy is that there’s never been a permanent solution for dealing with radioactive waste. It’s an argument that’s as valid today as it was 30 years ago. Spent fuel rods are still stored in on-site containment vessels at Vogtle and Hatch, just as they are at the nation’s 102 other nuclear facilities. Meanwhile, the Yucca Mountain waste dump in Nevada is little closer to opening than when it was first proposed 20 years ago.</
The heightened threat of terrorism is also cited as a reason to back off nuke building, but by most accounts, new plant designs are much less vulnerable than existing facilities. And innovations in safety features have largely muted concerns over an accidental core meltdown at a new plant.</
Instead, the most immediate environmental impact of doubling the size of Vogtle would be added strain on the Savannah River.</
All power plants that generate energy from heat – which is to say, nearly all power plants – need lots of water: Coal plants use it to turn giant steam turbines, and nuclear plants to cool their reactors. Plant Branch, a spectacularly thirsty, 1960s-era coal-fired plant an hour southeast of Atlanta, sucks an average of more than a billion gallons a day out of Lake Sinclair, but it pours back all but 4 million of those gallons. Vogtle draws a comparatively small 85 million gallons a day from the Savannah River, but about half of that water – 43 million gallons – is lost to evaporation in the thick cloud of superheated steam rising out of the plant’s iconic cooling towers.</
“If Vogtle were to operate four reactors, the plant would use more water than all the residents of Atlanta, Augusta and Savannah combined,” Barczak says. “We’d be pursuing the most water-intensive energy option there is.”</
Vogtle already has a negative impact on the river ecosystem, Barczak notes, because the water it returns to the river is warmer and contains less oxygen than it did when it was withdrawn. And the loss of river volume – intensified by the ongoing statewide drought – allows brackish sea water to wash farther inland where the river meets the Atlantic Ocean, raising saline levels in the sensitive Savannah Wildlife Refuge.</
“When you’re talking about increasing the capacity for one of the biggest water consumers on an already impacted river, that’s a red flag,” Barczak says.</
In March, the federal Atomic Safety and Licensing Board determined that the potential threat to the Savannah River was great enough to warrant further study by Southern Co. The mandate may end up doing little to halt the Vogtle expansion, but for now, Barczak will take that small victory.</
Even nuclear proponents such as Tech’s Hertel concede that one giant hurdle is the absence of a domestic nuke-building industry. The United States has a shortage of nuclear engineers and few companies with the experience of making the highly technical equipment that goes into building a plant, he says. When an existing plant needs a replacement part these days, it typically orders it from France or Japan.</
Those two countries have also shown, he says, that nuclear-plant construction can be streamlined, delivered on time and on budget. France’s success at building plants allows it to sell energy to other countries.</
“In the U.S., every plant was custom-built, but now they have standardized designs so parts are interchangeable,” Hertel says.</
But Herring says any lessons learned from France – where nearly 80 percent of the electricity is generated by 56 identical nuke plants – don’t translate so well to our country. The French power grid is a nationalized, nonprofit, single-operator system with the government assuming all risk.</
“Comparing us to France isn’t apples and oranges,” he says. “It’s apples and coal.”</
Even if the billions of dollars in federal subsidies and loan guarantees now on the table help make America’s transition back into nuke building possible, that money is only available to the first half-dozen plants out of the gate, notes David Lochbaum, director of nuclear safety for the Union of Concerned Scientists. Meaning, he says, many of the proposed plants will probably not get past the blueprint stage.</
“There are a lot of companies competing for the subsidies in the energy bill,” he says. “I wouldn’t want to be the president of the company that’s seventh in line.”</
Although standardization of plant design is essential to the revival of the industry, Lochbaum says, the energy bill actually discourages that by stipulating each proposed plant use different technology. Georgia Power plans to use a Westinghouse-designed reactor at Vogtle, while other companies have selected models from GE and Mitsubishi, as well as a new, terrorist-proof design from a French firm, Areva.</
As for the question of what a new nuke costs, Lochbaum points to the Tennessee Valley Authority. Last year, the public utility restarted a unit at its Browns Ferry, Ala., plant that had been mothballed for 22 years – at a cost of nearly $2 billion.</
“That suggests to us that the TVA board decided it couldn’t build a brand-new reactor for close to $2 billion,” he says.</
“If you’re in the ballpark of $2 billion for a 1,000-megawatt reactor, then you can stay competitive with some non-nuclear options,” Lochbaum explains. If not, then building nuclear plants will continue to require generous government subsidies to be financially viable.</
It’s anybody’s guess whether Vogtle will be among the first six plants to make it across the finish line. Even as he awaits Georgia Power’s formal permit application, the PSC’s Baker says the company would be smart to hedge its bets.</
“They realize there’s a mad rush to build nuclear plants, and they’re proposing using a design that’s never been built before, so it may make sense for them to sit back and see how the technology shakes out,” Baker says.</
Georgia Power spokeswoman Boatright confirms that the company does, indeed, intend to file a backup plan this fall in case Vogtle doesn’t work out – a plan that doesn’t involve energy efficiency.</
So what’s the company’s fall-back option?</
Naturally, it’s another coal plant.