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Duke Power's Goal: S.C. Nuclear Plant

Posted on: Friday, 17 March 2006, 09:00 CST

By Stan Choe, The Charlotte Observer, N.C.

Mar. 17--The country's first new nuclear power plant in decades could be rising 50 miles southwest of Charlotte near Gaffney, S.C.

Duke Power said Thursday it picked Cherokee County off the Broad River as the site for what could be its fourth nuclear plant in the Carolinas.

The announcement pulls the national spotlight to the Carolinas, as utilities work to be among the first to build the next generation of nuclear plants -- and secure some of the billions in government incentives that come with that. Two of the furthest along are Duke, the Carolinas' largest utility, and Raleigh-based Progress Energy Inc.

Whether an S.C. plant will come to be and how much it would cost rate payers are up in the air.

None of the utilities says it has made the final decision to build a plant. But Duke and Progress are preparing to take a costly, multi-million dollar step: applying to federal regulators for a license to construct and operate a nuclear power plant.

Duke, which would partner with a Georgia utility owner on the S.C. plant, said Thursday it hopes to apply for a license for up to two reactors at Cherokee Falls late next year or early in 2008. A plant could be online by 2015, the company says.

Utility executives and some analysts say a new generation of nuclear plants is a necessity, as the country faces growing demand for electricity and not enough supply. Duke Power is telling N.C. regulators it could be uncomfortably close to draining power supplies during peak demand times next year.

Before it could build a plant in Cherokee, Duke would need to convince S.C. regulators that its estimates aren't overly optimistic, as they have been in the past.

Duke, which would develop and operate the plant with Atlanta-based Southern Co., said the plant could cost between $4 billion and $6 billion and create up to 1,000 construction jobs and 800 full-time operations jobs.

The plant could have a capacity of 2,234 megawatts, more powerful than its McGuire Nuclear Station on Lake Norman. Ratepayers routinely pay for such capital investments through their bills. But Duke says it's too early to say how the costs would be spread.

Duke chose the Cherokee site list from a list of 14, searching for a spot with the best mix of access to a lot of water, convenient roads and railways to bring in supplies, and big transmission lines to move the electricity.

Duke said it liked two of the other 12 enough to earmark them for possible future expansion of more nuclear plants. Duke said it will look into applying for early-site permits for two tracts of land it owns in Davie County near Mocksville and in Oconee County, S.C., next to a nuclear plant it already operates there.

An early site permit for the two would allow Duke to get approval for some preliminary environmental reviews. If it won the permits, it could come back anytime within 20 years and get a head start on the application process to build nuclear reactors there.

It's not the first time Duke chose Cherokee.

Duke began construction of a nuclear plant on the site but never finished in the early 1980s, after its projections for power demand in the Carolinas fell off.

The site has had some land clearing and grading, as well as some cooling ponds already built. That would give Duke a head start, said Brew Barron, the utility's chief nuclear officer.

Since the '80s, the 2,000-acre plot took a turn as a movie set, potential NASA training site and finally the battleground for a legal dispute over ownership between Duke and the Southern Co., the parent of Georgia Power.

On Thursday, the companies said they had come to an agreement, with Southern selling an interest in the land to Duke. They will co-own the land and the plant built on it.

Duke would get 55 percent of the power generated by the first nuclear unit, with Southern getting the balance. Duke would get all of the power from a second unit.

Such combinations are likely to be common, said Robert Hornick, an analyst with Fitch Ratings. The companies can share the costs of such gigantic projects.

It's also not surprising most of the nuclear activity in the country so far has been in the South, said David Schanzer, an analyst with Janney Montgomery Scott.

Besides being more appreciative of the jobs a nuclear plant creates and an increase to its tax base, "the South is not known for being a hotbed of gonzo environmentalism," Schanzer said.

Cherokee County, in fact, is offering to rebate 50 percent of the property taxes if Duke does build a nuclear plant there.

Environmentalists and other nuclear opponents say they are girding for a battle.

They decry the billions in incentives going to the nuclear industry.

About a dozen utilities are interested in getting the first nuclear plant license since Shearon Harris near Raleigh two decades ago.

The first six can get up to $2 billion in risk insurance to cover costs that would come from construction or operational delays outside the companies' control.

Others can get loan guarantees for up to 80 percent of a cost of a project and a 1.8 cent subsidy for each kilowatt-hour of nuclear generated electricity. The subsidy could cost about $6 billion in lost revenue for the U.S. Treasury through 2025, according to Public Citizen, a vocal nuclear opponent.

S.C. Gov. Mark Sanford welcomed a possible nuclear plant.

"In the competition for global investment, this announcement could potentially be an enormous win for South Carolina in terms of not only direct jobs, but our power generating capacity for further job-creating efforts going forward," he said.

What's Next

LATE 2007/EARLY 2008: Duke Power applies to U.S. Nuclear Regulatory Commission for S.C. plant.

LATE 2010/EARLY 2011: Duke expects a ruling from feds. Meanwhile, it could also apply to S.C. regulators for siting authority.

2015: A new nuclear plant could be online.

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Copyright (c) 2006, The Charlotte Observer, N.C.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Charlotte Observer (Charlotte, N.C.)

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