Politics Pushes Back Against Nuclear Cost Overruns: The Southern Company (SO), NextEra Energy, Inc. (NEE), Duke Energy Corp (DUK)

Page 1 of 2

Politicians who supported the construction of new nuclear reactors in their home states are in meltdown mode. Instead of thermal cooling towers, the only thing soaring over the skylines are budgets. The Southern Company (NYSE:SO) announced at the end of February that it needed $737 million more than originally expected for the construction of its two new reactors at Plant Vogtle in Georgia. The project will now cost $15.15 billion, if, that is, the price tag isn’t revised upwards again.

The cost overruns seem to be the last straw for Georgia and Florida — two states betting big on a nuclear renaissance — as the process for collecting project funds has also come under fire. One infuriated politician wants to penalize Southern for going over budget, but the angry mob is focusing its anger on Progress Energy, Inc. (NYSE:PGN) and Duke Energy Corp (NYSE:DUK). Regulators aren’t taking it easy on the companies and their subsidiaries, either.

NextEra Energy, Inc. (NYSE:NEE)You won’t like him when he’s angry
The Florida Public Service Commission aired some dirty laundry from the now merged companies by stating that they collected nearly $819 million from their customers over the past several years for two nuclear projects: expanding the Crystal River facility and building an entirely new plant in Levy County. While there is nothing wrong with collecting funds from ratepayers for such expenditures, neither project has gained regulatory approval. In fact, the Crystal River project was scrapped after the facility was damaged beyond repair during the expansion.

Even worse, the company maintains that the first reactor at Levy won’t be operable until 2024 at the earliest. Yikes. I’ll take a guess and say that none of the funds will be returned to customers if the application for the Levy County reactors fails to impress the Nuclear Regulatory Commission, or NRC. Regional politicians are right to be concerned.

Customer relief?
Politicians from both sides of the aisle are proposing bills that would prohibit or significantly limit the amount of funds utilities are allowed to collect pre-construction. The bills also want to ensure that companies don’t profit from nuclear plants that never leave blueprint canisters. Whether companies will be required to pay a fine to the state or give credits to customers remains to be determined.

Do customers reserve the right to be upset? Absolutely. (I don’t even live in Florida and I cringed when I heard about it.) However, I believe basing your opinion of nuclear energy on the high costs of construction alone is a bit unreasonable. I recently explained that position in more detail, showing that the low cost of fuel and maintenance actually makes atomic energy cheaper than other energy sources in the long term. There’s a reason the NRC has pending applications for 28 new reactors to review — four more than the total submissions facing the Department of Energy for LNG export terminals.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!