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Economist calls Dominion nuke project 'worst option' for meeting Clean Power Plan

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Economist calls Dominion nuke project 'worst option' for meeting Clean Power Plan

Thecost of Dominion Virginia Power's proposed 1,452-MW 3 nuclear reactor willtop the billions being spent on nuclear projects in Georgia and South Carolina,according to an economist who argues the unit is not needed for carboncompliance.

"Thereis no realistic chance of it paying off. It's just a waste of money that hasvery little possibility of providing a positive outcome," Mark Cooper, seniorresearch fellow for economic analysis at Vermont Law School's Institute forEnergy and the Environment, said July 12 during a conference call.

"Thesimple fact of the matter is that nuclear costs have never been delivered aspromised," Cooper said. "If you take North Anna 3 at the stated cost,it's the most expensive reactor ever built in America and there's very littlechance that they can deliver that reactor, given history, at that cost. It willbe higher."

Coopersaid Dominion plans to spend $19.2 billion or more on the reactor, which breaksdown to approximately $150/MWh, or 15 cents/kWh.

Incomparison, the economist said the cost overruns at the Alvin W. Vogtle nuclear plant in Georgia havepushed that project close to $140/MWh, or 14 cents/kWh, with costs at the nuclear expansionclose behind. North Anna 3, which would use a different technology than theseprojects, would exceed their costs and is significantly higher than the 8cents/kWh price tag on utility-scale solar, Cooper contended.

Compliance options

DominionVirginia Power, known legally as Virginia Electric and Power Co., has included thereactor as one of its potential generation resources in its filedApril 29 with the Virginia State Corporation Commission.

Similarto its 2015 integrated resourceplan, the DominionResources Inc. subsidiary used its IRP to present several optionsto comply with carbon-dioxidereduction goals set by the U.S. EPA's Clean Power Plan, which inFebruary was stayedby the U.S. Supreme Court.

Themost expensive option includes North Anna unit 3 and has the potential by 2030to raise the typical monthly residential bill for 1,000 kWh of energy usage bymore than 18% versus a no compliance option, which is "6 to 10 timesgreater than the bill increases" under the other alternatives, accordingto Dominion. Still, the company maintains all options are needed.

Cooperargued the SCC should remove North Anna 3 from Dominion's IRP to send a messagethat the company should invest in low-carbon, low-cost options to meet futureelectricity needs.

Dominion,however, has called spending on the North Anna reactor as it preparesfor future environmental compliance and generation needs even though it has notmade a decision on building the station.

Whilenoting that the "earliest possible in-service date" for North Anna 3is September 2028, delayed one year from the 2015 plan, Dominion in its IRPsaid "it is prudent" to continue focusing on the activities needed toobtain a combined operating license, or COL, from the U.S. Nuclear RegulatoryCommission, expected in 2017. Dominion estimates that spending on the unit willhit $647 million by the time it receives a federal operating permit, $345million, excluding financing, on top of a $302 million write-off.

"Wewant to do what is cost-effective and prudent for our customers," Dominionspokesman Richard Zuercher said July 12. "That's how we make ourdecisions. We have to plan for the long term."

No nuclear, more gas?

Dominionalso maintains that an increased reliance on renewable and energy efficiencyoptions, as promoted by Cooper and other opponents of North Anna 3, will drivethe need for additional gas-fired generation.

"Thecompany's position on generation is, we need it all," Zuercher said."We've been very aggressive in renewables, both and , but we don't put all our eggs inone basket."

Accordingto S&P Global Market Intelligence data, about 40% of the regulatedutility's nameplate generating capacity is now gas-fired, and Zuercher saidgas-fired capacity is necessary to back up intermittent renewables.

Cooper,however, questioned Dominion's overreliance on gas, which he views as the"second-worst option" to meet future generation needs based onvolatility and cost.

"Itdoes not diversify your asset base," Cooper said. "You certainly donot need the massive quantities of gas that they have talked about in some ofthe scenarios to meet your demand."