Electricity ratepayers in Florida, Georgia would be better served by investments in energy efficiency, renewable energy resources, rather than Progress Energy, Georgia Power's plans to build new nuclear reactors in those states, report finds

Rachel Carter

WASHINGTON , October 7, 2011 (press release) – According to a new report, ratepayers in Florida and Georgia would be better served by investments in energy efficiency and renewable energy resources, rather than building new nuclear reactors in those states. The report, “Big Risks, Better Alternatives,” (PDF) was released today by Synapse Energy Economics, a Cambridge, Massachusetts-based consulting and research firm.

The report, prepared for the Union of Concerned Scientists (UCS), takes a close look at two nuclear power projects: Progress Energy’s proposal to build Levy 1 and 2 in Florida, and a Georgia Power-led consortium plan to build two new reactors, Vogtle 3 and 4, at an existing nuclear power facility in Georgia. Both projects were proposed in 2006 to meet then-anticipated growth in electricity demand.

The report evaluates both nuclear projects and compares them with other low-carbon alternatives that could meet projected consumer demand at lower cost and risk.

“The report shows that there are major risks associated with the construction of both the Levy and Vogtle projects,” said Ellen Vancko, UCS’s nuclear energy and climate change project manager. “They include cost escalation, construction and regulatory delays, and lack of transparency, all of which could lead to much higher costs for Georgia and Florida ratepayers.”

The two projects provide illuminating case studies for the next phase of nuclear power production in the United States. They both would use the same reactor design—the new, untested Westinghouse AP1000—and are located in states that allow utilities to recover costs from ratepayers years before reactors actually produce electricity.

They represent different construction scenarios, however. Levy 1 and 2 would be a new “greenfield” power plant that would not begin to operate until sometime after 2021; the Vogtle project is an expansion of an existing plant that is projected to become operational around 2016. They also have different financing mechanisms. The Vogtle project will receive two federal subsidies: an $8.3 billion loan guarantee and production tax credits. Progress ratepayers would cover all of the Levy project’s costs.

If history is any guide, the cost estimates for both plants are likely to increase dramatically over time, Vancko said. The anticipated cost and rate impact for the Vogtle project, in particular, could increase significantly. Georgia Power routinely cites outdated cost estimates despite significant changes in economic and regulatory conditions over the past five years. At the same time, the company has refused to publicly disclose cost and schedule data for the project, hindering any independent analysis of the company’s justification for building the two new reactors.

“This lack of transparency, combined with the fact that nuclear cost estimates have skyrocketed since the plant was first announced, puts Georgia Power ratepayers at significant risk for major price hikes in the coming years,” Vancko said.

The Synapse report found that other options are readily available in Florida and Georgia that could meet energy demand and be implemented at a lower cost with far less risk to ratepayers. Energy sales growth in both states has slowed considerably compared with earlier company projections, making it possible to meet future retail energy sales growth through increased energy efficiency and renewable energy development.

The Synapse analysis found that both Florida and Georgia have significant room to improve their energy efficiency investments. In 2010, Georgia ranked 37th and Florida ranked 30th among the states across six energy efficiency categories.

The Florida Public Service Commission (PSC) recently approved a significantly scaled-back demand-side management plan for Progress Energy that will capture at most 2 percent energy savings over a 10-year period. If Progress Energy were to pursue an efficiency target of 15 percent cumulative load reduction over the same time frame, it could maintain its energy load below peak 2006 levels based on its 2010 forecast retail sales. Georgia Power, meanwhile, has no energy efficiency targets, although the state has large, untapped energy efficiency potential.

Both Florida and Georgia also have significant potential to develop renewable energy resources, but neither state has meaningful renewable energy standards. Studies have shown that achievable renewable capacity in Florida could account for 4 to 16 percent of electricity sales in 2020, while the renewable energy potential in Georgia could meet much of the state’s future energy needs—as much as 27 percent of 2008 retail electricity sales.

Available efficiency and renewable alternatives are not only capable of meeting projected demand growth for each state at a lower cost than adding new nuclear capacity, they also would reduce each state’s carbon emissions. Neither Florida nor Georgia have established carbon-reduction goals, Vancko pointed out, but the ability of clean energy resources to reduce these emissions is an important consideration when comparing the overall impact of these options with the proposed nuclear projects. The Synapse analysis shows that CO2 abatement through energy efficiency, natural gas and some renewable energy options would be less expensive and much less risky than increasing either state’s reliance on nuclear energy.

“We can’t know with certainty the final cost of any of the options we evaluated in this report, but we do know that the overall trend for nuclear projects—and other large-scale construction projects for that matter—is one of increasing costs, while the overall trend for energy efficiency and renewable energy projects is one of decreasing costs,” said Max Chang, the Synapse report’s lead author. “Florida and Georgia policy makers should reexamine their decision to place the considerable risks of new nuclear construction on ratepayers when there are cost-effective, environmentally sustainable alternatives available to meet their states’ energy needs. Pursuing these alternatives would enable Florida and Georgia to reliably meet demand growth and reduce carbon emissions at lower cost and with less risk than those posed by the proposed Levy and Vogtle projects.”

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.