!

!
!
!

To: !"#$%&"%'(%$)$*$&'+&)',$-.$%*'"/'01$'!"#$%&"%2*'3&$%45'6"7895':+*;'<"%9$

From: Stephen Smith and Sam Gomberg, Southern Alliance for Clean Energy

Date: September 19, 2008

Re: High Cost and Uncertainty of New Nuclear Power Generation

New nuclear generation puts utility customers at risk of high costs. Assuming nuclear power
plants are built to budget and operate at industry standard levels of efficiency, customers
can expect to pay at least 10 to 12 cents per kWh of nuclear power in current dollars,
according to several independent analyses (see page 2).

While the cost of new nuclear power generation for investor-owned utilities is widely
*0=)8$)>':?@2*'=&8A=$'9"*0'$&#8%"&-$&0'B%$*$&0*')8//$%$&0'#+%8+.7$s that must be known for
+&'+99=%+0$'9"*0'$*08-+0$C'':1$*$'#+%8+.7$*'8&97=)$D':?@2*'8&$7848.87805'/"%'/$)$%+7'0+E'
8&9$&08#$*>'80*'FGH'.8778"&')$.0'9$878&4'01+0'-+5'8-B+90'/8&+&98&4>'+&)':?@2*'@@@'."&)'%+08&4'
due to federal backing.

I087805'9=*0"-$%*'1+#$'+&"01$%'"B08"&D'$&$%45'$//898$&95C'J02*'91$+BC'J02*'&"0'*=.K$90'0"'/=$7'
B%89$'%8*;C'J0')"$*&20'9+=*$'+&5'47".+7'L+%-8&4'B"77=08"&C'J0'8*'+#+87+.7$'+0'+'*9+7$'0"')$7+5'"%'
derail major new power plants in the next 5 years.

Energy Efficiency: The Cost-Effective Alternative to High Risk Energy

K30>4:.KDD2;203;: ! )
IJ;<0,> '#* "!
56,< "#( ")
56,<FG+55H %& "!
E267,-- ) &')
C,39D2<<.+,- ) ('"
B239 (#( &'"
=6<,>.@A0>7,< ' "%
=6<,>./? %& "$
+,-.56782309.5:;<0 "#$ "#
+,-./0,1234 !! !!

& %& !& $&

56-L.6D.30M.030>4:.>0-6J>;0.23.;03L-.N0>.1BA
O<6M.,39.A24A.;6-L.0-L27,L0-P

Sources: Levelized Cost of Energy Analysis ! Version 2.0, Lazard Management, June 2008 and National Action Plan for Energy Efficiency, July 2006.
*Cost estimates for Coal-IGCC do not include the cost of carbon capture and storage.
 !

:9783N780L-85739B3O5C3ODEK5-.3P515.-8091

:97839B315C3515.263.579D.E573013E51873F5.3GHIA
! %)
JK9C3-1/3I02I3E97835780L-857M

"+'$ "+'%
%& ""')
"+'*
"$'" A24A
<6M
) &'* &'(
('$
$'!

&
,-./0123+##* 456789153 ;-<-./3+##( :=>3+##( ?99/6@73
:5185.3+##* +##(AA

* All cost estimates adjusted for inflation to 2008 dollars. Conversion rates were determined using final 2007 CPI
and the average of early 2008 OMB and CBO inflation estimates for 2008. The CBO analysis is a synthesis of studies
published in 2003 and 2006.

MM',"")52*'$*08-+0$'8*'9+79=7+0$)'+*'01$'-+%;$0'B%89$'"/'&$L'&=97$+%'4$&$%ation with an after tax ROE of 10%.

! Cost estimates for new nuclear generation vary significantly in the costs excluded from
calculation and the assumptions made regarding such things as financing and risk allocation.
Therefore, actual costs could range significantly higher than published estimates depending on the
excluded costs and their relevance to a specific project.

! Independent analyst cost estimates typically are incomplete, excluding items such as the cost of
land purchase, new technology engineering, insurance, spare parts inventory, training, licensing,
upgrades necessary for delivery, and taxes. Each cost estimate may exclude different project costs
and this may explain some of the variation.

! 6%"4%$**'3&$%452*'B%"K$90'0"'.=87)'0L"'&$L'%$+90"%*'8&'<7"%8)+'8*'+'%$9$&0'$E+-B7$'"/'01$'1841'9"*0'
of nuclear energy and the difficulty in providing accurate cost estimates. There, the cost of two
Westinghouse AP1000 reactors (the same design proposed by TVA at the Bellefonte site) has
nearly tripled since initial estimates, to a most recent public estimate of $17 billion.1

! :1$'$*08-+0$)'9"*0'0"'%+0$B+5$%*'/"%'01$'/8%*0'5$+%'6%"4%$**'3&$%452*'0L"'&$L'%$+90"%*'L877'.$'8&'
operation is 11.4 cents/kWh.2 After adjusting for line losses during delivery, usually about 8%, this
cost rises to 12.3 cents/kWh. However, even this does not reflect th$'B%"K$902*'0%=$'9"*0')=$'0"
6%"4%$**'3&$%452*'=*$'"/'01$'NO"&*0%=908"&'P"%;'8&'6%"9$**Q'9"*0'%$9"#$%5'-$01")C3!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1
Testimony of Javier Portuondo on behalf of Progress Energy. Before the Florida Public Service Commission, March 11,
2008. Docket number: 080148-65.
2
Id.
3
This method allows the utility to recover construction costs prior to project completion. In the Progress Energy case,
Construction Work in Progress cost recovery results in an average monthly bill increase of $19.53 each year through
2015 while the projected in-service date for the first unit is 2016 (Testimony of Javier Portuondo, and FL PSC staff memo
issued July 2, 2008).