Nuclear power inches back into energy spotlight

"They're putting the cart before the horse," NRC Commissioner Gregory Jaczko says. "They should get the design done" before applying for a license. Also, he says, some reactor makers are proposing extensive modifications to their designs. Westinghouse, for instance, wants to make about 100 changes to its AP1000 reactor, says Vice President Ed Cummins. He says they're largely minor.

Other key challenges:

•On time, within budget To avoid cost overruns, power companies want to lock in prices and put the onus on equipment vendors to pay added fees if a project is delayed. Vendors are reluctant to set prices because the reactors lack a track record, and it's impossible to predict the cost of labor and materials when construction starts in a few years.

NRG nrg, an independent power producer that's building two reactors in Texas, has signed a contract with Toshiba that nails down most costs, says Steven Winn, CEO of the NRG unit building the plant. That's possible, he says, because Toshiba owns 12% of the venture and has already built four of the same model units, called an ABWR, in Japan.

Others are having mixed success at locking in terms. Exelon, for instance, recently said it was no longer going to use a General Electric Hitachi reactor because GE ge couldn't sufficiently guarantee fixed prices and a firm schedule. "We have to be careful and pragmatic" about risks, says GE Vice President Danny Roderick.

•Elusive financing. With lenders hesitant to take chances on nuclear energy, 10 companies seek a total of $93 billion in federal loan guarantees for new nuclear plants. But only $18.5 billion is available — enough to finance three or four projects.

NEI President Marvin Fertel told Congress this month that independent power producers would likely abandon projects if the entire $93 billion is not funded, slowing the nuclear revival.

Bill Wicker, spokesman for the Senate Energy committee, says guarantees are meant to bankroll only the maiden versions of new models. No more than another $18 billion is likely to be funded, he says. "It's not like a bottomless cup of coffee."

Loan guarantees are less critical for regulated utilities, such as Southern and SCE&G, that have state clearances to recover some of their costs from ratepayers before construction is completed. In Florida, Progress Energy pgn customers began paying an extra $14.53 a month in January to finance two reactors. Missouri is among states considering such cost-recovery legislation, but lawmakers are divided. Ameren says it won't build a new reactor without it. "You'd get laughed off Wall Street," says Senior Vice President Richard Mark.

•Avoiding construction snafus. Manufacturers are trying to avoid the missteps of the first construction era. Three-dimensional computer images tell engineers precisely where pipes should go. GE and Westinghouse say 70% to 80% of their designs will be done before they break ground. And makers are increasingly building modular parts in the factory, cutting costs and minimizing mistakes on site. Westinghouse says 30% of its AP1000 reactor is modular.

Still, "When you're building (a new model) for the first time, yes, there's risk," says Jone-Lin Wang of Cambridge Energy Research Associates.

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