Regulator Approves Southern’s Reactors as Chairman Dissents

The U.S. Nuclear Regulatory Commission approved Southern Co.’s (SO) application for the first licenses to build reactors in more than 30 years, with the chairman’s dissenting vote sparking new controversy over whether safety upgrades are needed after Japan’s 2011 disaster.

The split vote mars the start of a new atomic era as Southern builds the first U.S. nuclear reactor from a standardized design that promises to speed construction and reduce risks of runaway costs that plagued nuclear development during the 1970s and 1980s.

“I simply cannot ignore what happened at Fukushima,” Chairman Gregory Jaczko said in a statement after the 4-1 vote today at NRC headquarters in Rockville, Maryland.

Jaczko said in an interview he couldn’t support the licenses without a binding agreement from Atlanta-based Southern and its partners that the new reactors would be able to handle a power failure, earthquake, flooding and other hazards that contributed to explosions and meltdowns at the stricken Japanese station.

The licensing process “is a little bit like buying a house,” where home inspectors identify things that need to be fixed, Jaczko said. “Once you close on your house, which would be like issuing a license, you own those problems.”

‘A New Day’

Southern Co. and industry officials said Jaczko’s concerns were appropriate for the old generation of reactors operated at Fukushima Dai-Ichi and in the U.S., but were overblown for the atomic generators under construction at Vogtle, about 26 miles (42 kilometers) southeast of Augusta, Georgia.

“Greg Jaczko, I think, was making a statement that it is a new day and we’re clearly prioritizing safety,” said Michaele “Mikey” Brady Raap, a nuclear engineer and board member of the American Nuclear Society, an organization of nuclear engineers and scientists. “It was kind of a strange way to do it.”

Southern’s plans for Vogtle and the new reactors themselves were vetted by the commission over a five-and-a-half-year process, Thomas Fanning, Southern’s chairman and chief executive officer, said during an interview today.

“It has been thorough, it has been thoughtful and it is complete,” Fanning said. “In my opinion, all the issues being raised have been answered satisfactorily.”

The new reactors’ safety systems are triggered by gravity and other natural forces. While Fukushima’s meltdowns and explosions resulted from stuck vents and a power blackout, Southern’s reactors are designed to shut down without any human intervention, Raap said in a phone interview.

“The whole emphasis here is to take the human element out of the equation,” Raap said.

Billions Spent

The NRC plans to issue the license for the $14-billion project tomorrow, said Scott Burnell, an NRC spokesman, in an interview.

Southern and its investment partners have already spent more than $4 billion laying pipes and other groundwork at Vogtle and plan to begin work immediately on the nuclear portions of the project, Fanning said.

Up next for Vogtle: setting re-bar, building the world’s largest crane and pouring concrete in the nuclear areas of the new plant, Fanning said. Later this year, the plant will start to rise above the foundation.

The license also allows Southern and its partners to finalize federal loan guarantees for $8.3 billion for the plant. Fanning said he expects the financing to close during the second quarter.

Scana (SCG) Vote

Southern’s license marks the start of a mini-nuclear revival that is expected to result in five reactors added to the U.S. fleet this decade. The NRC is expected to vote soon on Scana Corp.’s application to build two reactors at an existing plant near Columbia, South Carolina. The Tennessee Valley Authority (3015A) plans to complete by 2014 a reactor it stopped building in 1988.

“It’s a big day for the industry and for the country,” Bill Johnson, chairman and chief executive officer of Raleigh, North Carolina-based Progress Energy Inc. (PGN), said today in an interview in New York prior to the NRC vote.

“We’ve been talking about a nuclear renaissance for years now and this is the first tangible sign that we are going to proceed in a meaningful way,” said Johnson, who is also chairman of the Nuclear Energy Institute, a trade organization.

‘Abdicated Its Duty’

The NRC’s previous construction permit was issued in 1978 for the Shearon Harris plant, operated by Progress Energy, southwest of Raleigh. A 1979 partial meltdown at the Three Mile Island plant near Harrisburg, Pennsylvania, stalled the development of U.S. nuclear power, which accounts for about 20 percent of the country’s electricity.

Still, Jaczko’s dissenting vote galvanized opponents of nuclear energy and renewed calls for speeding up the adoption of safety measures found wanting at Fukushima.

“The NRC abdicated its duty to protect public health and safety just to make construction faster and cheaper for the nuclear industry,” said Representative Edward Markey of Massachusetts and the senior Democrat on the House Natural Resources Committee.

“Rather than ushering in the so-called nuclear renaissance, today’s vote demonstrates that the NRC is still stuck in the nuclear safety Dark Ages,” Markey said in an e- mailed statement.

A coalition of environmental groups also called on the NRC to fully consider how lessons from Japan’s nuclear disaster last year may affect new structures at the Vogtle plant. The groups plan to file a lawsuit at the U.S. Court of Appeals for the District of Columbia to challenge the license as early as next week.

Reactor Not Needed?

“The chairman absolutely got it right,” Stephen Smith, executive director of the Southern Alliance For Clean Energy, said today in a telephone interview. “The regulator has the responsibility to incorporate all lessons learned before they rush forward with a new reactor design, and there’s no rush for Georgia Power. The need for this reactor evaporated five years ago.”

The dissent “certainly doesn’t hurt” the environmental group’s chances of prevailing in their lawsuit, he said.

The chance of a court injunction stopping NRC-licensed construction is “very low,” Marvin Fertel, chief executive officer of the Nuclear Energy Institute, said today at an investor conference in New York. No such lawsuit has ever stopped nuclear construction, he said.

AP1000 Design

The NRC on Dec. 22 certified a reactor designed by Toshiba Corp. (6502)’s Westinghouse Electric unit, which Southern and Scana plan to build. Duke Energy Corp. (DUK), Progress Energy and NextEra (NEE) Entergy (3009B) Inc. of Juno Beach, Florida, also are considering the design, known as the AP1000, for proposed nuclear plants, according to the NRC’s website.

The Energy Department in 2010 awarded Southern and its partners, Oglethorpe Power Corp. of Tucker, Georgia, and the Municipal Electric Authority of Georgia, conditional approval for an $8.3 billion loan guarantee for the Vogtle project.

“The federal government is putting the American taxpayer on the hook for billions of dollars to build nuclear reactors that corporations would never risk building themselves,” Jim Riccio, a nuclear policy analyst for Greenpeace USA, an anti- nuclear group, said in an e-mail.

Fanning said that customers of its Georgia Power subsidiary would see their electric bills rise by about 1 percent annually for about five years as a result of construction at Vogtle.

Southern rose 7 cents to $44.68 at the close in New York. The shares have increased 18.9 percent in the 12 months ended today.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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