Why Nuclear?
Why Nuclear
Why Nuclear
Electricity brings comfort and security to people everywhere. It is the backbone of the world economy - powering factories, homes and businesses. In Georgia, we are fortunate to have electric rates among the lowest in the nation. Obviously, if you want to maintain low rates for consumers, and ensure adequate supply and delivery of that energy, you must plan ahead. We must have a balanced mix of electric power resources, including coal, nuclear energy, natural gas and hydro. And we need renewable sources like biomass and landfill methane, as well as conservation and efficiency. They all play a part in making sure Georgians have the reliable, affordable power they need when they need it.
For many years, the state has had enough base-load generation capacity - the plants that run all the time - to serve customers' needs. Like most other utilities nationwide, Georgia Power has met increased demand by adding only natural gas-fueled plants over the last few years. While these plants are inexpensive to construct, they are much more expensive to operate. Natural gas prices increased by as much as 475 percent from 2002 to 2007 alone. Coal prices increased, as well, by as much as 150 percent from 2002 to 2007. Transportation costs to get coal from the mine to the plant have risen as much as 50 percent. Environmental costs have also made coal more expensive to use as a generating source.
Since 1990, Georgia Power has invested billions of dollars in environmental controls. By 2018, Georgia Power's total investment in environmental controls will total more than $7 billion. As a result, the company's emissions of mercury, nitrogen oxides and sulfur dioxide will decrease between 75 percent to 93 percent, compared with 1990 levels.
But Georgia Power's energy plan, certified by the PSC, also increases focus on renewables and energy efficiency. Georgia Power will invest $43 million annually in 18 different demand-response and energy efficiency programs, including six new programs recently approved by the Georgia Public Service Commission.
While Georgia does not have the sustained winds to generate electricity from wind, and cloud cover limits the effectiveness of solar energy, the state does have an abundance of wood waste for biomass generation. Georgia Power has asked the state Public Service Commission for permission to convert coal-fueled Plant Mitchell in Albany to use wood waste. If approved, this will be one of the largest biomass facilities in the United States.
While renewables and energy efficiency will play an increasing role, Georgia continues to grow. Georgia Power projects a need for 35 percent more electric generating capacity to meet rising demand over the next 10 years. The growing volatility of natural gas prices and the uncertainties around the cost of coal, including the potential effects of carbon regulation, support the need to add more nuclear generation to our fuel mix.
Nuclear energy offers our customers much-needed fuel diversity. It's our nation's largest source of emission-free energy and nuclear power plants have operated safely and securely in Georgia for decades. Projections show investing in two new nuclear units could save customers up to $6.5 billion over the life of the plant as compared with natural gas or coal.
So, what's different about nuclear this time? The federal government recognized that the licensing process used during the last construction era contributed to cost overruns and delays. The licensing process has been streamlined. It's similar to those used throughout most of the rest of the world, allowing for the issuance of a construction and operating license prior to the beginning of construction.
Manufacturers of new nuclear reactors have also worked with the Nuclear Regulatory Commission to provide a standard design for their next generation of nuclear units. This will provide significant benefits in the licensing, construction and operations of all new facilities.
Probably the most significant change for Georgians is the integrated resource statute passed by the Georgia legislature. This law provides for full involvement by the Georgia Public Service Commission in all areas of the project. The PSC starts by approving the need for generation. They then utilize a public hearing process to review Georgia Power's specific generation recommendation. If they agree with the recommendation, they issue a certificate allowing Georgia Power to move forward. Finally, the Commission is involved throughout construction. Georgia Power must submit filings that continually track the project, its budget and major milestones.
Nuclear, like any base-load generation, is expensive to build. But again, its fuel is much less expensive than fossil fuels. Of course, a key concern about new nuclear units is how to pay for them. In the past, Georgia utilities have been allowed to recover the cost of investments, such as power plants, after the plants begin to operate and provide power to customers. But many states now allow utilities to recover their costs as construction begins. Georgia Power has proposed that it be allowed to recover financing costs during construction for new nuclear plants, which for the Vogtle expansion will save customers from paying $300 million in interest on interest.
Why is this good for customers? It allows the cost of the plant to be phased in over a longer period of time versus larger rate increases over a shorter time period. This phased-in approach would lower the total rate increases required to pay for the plant from 12 percent to 9 percent. In addition, utility credit rating agencies view recovery of financing costs during construction in a very positive light - that can lower financing costs for all utility projects. Better credit ratings lower the interest costs the company, and therefore customers, must pay to finance new power plants and other investments. After all, in 2009 alone, Georgia Power will invest $2.8 billion in Georgia on infrastructure improvements and an additional $2.6 billion in 2010.
This investment trend will continue in future years to keep up with customer needs. Strong credit ratings and capital availability can assure Georgia Power has the money available to build future projects - projects to ensure the state retains a reliable, cost-competitive supply of electricity necessary to keep Georgia economically viable. That's why other states such as Florida, South Carolina, North Carolina, Virginia, and Mississippi have already passed laws allowing recovery of financing costs during construction treatment.
Georgia Power has a long history of doing what's in the best interest of Georgia. Georgia Power works to ensure Georgia has a diverse supply of energy to provide the reliable, affordable electricity our state needs.
