Duke Energy Corp (DUK), NRG Energy Inc (NRG), Exelon Corporation (EXC): Nuclear Power is on Life Support in U.S.

New reactors are costing a fortune

One project that is going forward is The Southern Company (NYSE:SO)’s Vogtle 3 & 4 expansion. The project got a conditional $8.33 billion loan guarantee from the Department of Energy  in 2010 but since then has been a disaster of delays and cost overruns.

Georgia Power, The Southern Company (NYSE:SO)’s subsidiary, is building the project and originally was budgeted for $14 billion. But it has run into delays and lawsuits as designs have changed and last month asked for another $737 million in overrun budget that could be passed on to ratepayers.

The great thing about building nuclear power in many states is that you can pass project costs on to ratepayers years before a power plant generates any power. If the plant is never finished it’s no skin off the utility’s back and ratepayers have hundreds of million of costs that went nowhere. That’s exactly what Georgia Power is doing to its customers and with Wall Street downgrading Southern Company’s debt and stock, the loan guarantee’s final agreement at an impasse, and realistic expectations now for a $20 billion budget I doubt the project will ever be completed.

What if it is completed? A standard 10% return on capital of $20 billion would yield costs of $0.104 per kW-hr before buying fuel or paying a penny to operate the plant. Just capital costs alone are not competitive with natural gas or even large-scale solar plants at today’s costs. Nuclear power has proven to be uneconomical today in energy. That’s why it will continue to die here in the U.S.

The article Nuclear Power is on Life Support in U.S. originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Exelon and Southern Company.

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