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NRG to Submit First New Nuke Application

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DAN CATERINICCHIA | September 24, 2007 06:29 PM EST | AP

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WASHINGTON — Power producer NRG Energy Inc. will submit the first application for a new nuclear reactor in the U.S. in nearly 30 years, the company's chief executive said Monday.

Nuclear regulators expect Tuesday morning to receive NRG's application for two new units at its facility in Bay City,Texas, about 90 miles southwest of Houston. It will be the first complete construction and operating license submission the government has processed since before the Three Mile Island accident in Pennsylvania in 1979.

"It's bold for us as a company, but for energy and the industry, it's a good step," David Crane, NRG's president and CEO, said in a phone interview.

Constellation Energy Group Inc. has filed a partial application with the Nuclear Regulatory Commission, which expects up to six more requests this year from Duke Energy Corp., Dominion Resources Inc. and others. Constellation's proposed new reactor would be located in Lusby, Md.

Utilities see in nuclear plants an opportunity to affordably meet demand for electricity, which the Energy Information Administration is forecasting will grow by 42 percent by 2030. High natural gas prices and the prospect of taxes or constraints on greenhouse gases are making gas- or coal-fired plants less attractive.

Crane would not say how far into the 42-month government review process NRG will go before making a final decision on whether to build the reactors. But he said the company already has ordered steel forgings, built exclusively in Japan, that are needed for a new plant.

While NRG and other nuclear renaissance enthusiasts expect new reactors to come online by 2015, a March report from the nonpartisan Congressional Research Service predicted the process would take closer to 15 years to complete for several reasons, including the government's new review, testing and approval procedures.

Nuclear Regulatory Commission Chairman Dale Klein has said the reviews should quicken once the first license for a certain reactor design is approved. Reactor vendors include Toshiba Corp., General Electric Co., and a joint venture of France's Areva Group and Constellation.

NRG selected a GE reactor design already approved by the commission and hired Toshiba to build the two units, which are expected to generate enough power for more than 2 million homes.

If NRG receives government approval by 2010, the company expects the first new reactor to be ready four years later, Crane said. New plants with similar reactors are being completed in Japan in less than 48 months, he added.

Calyon Securities analyst Gordon Howald cautioned about extensive construction costs for NRG, but said being the first to submit an application is a positive for the company.

"Nuclear is expensive to build, but (post-construction) is one of the cheapest sources of power generation that's out there," Howald said. "Assuming they get it up and running, it's going to be a very, very attractive plant."

The average cost of nuclear-produced electricity was 1.72 cents per kilowatt hour in 2006, compared with 2.37 cents for coal-fired plants and 6.75 cents for natural gas plants, according to the Nuclear Energy Institute, a trade group.

The NRC in June approved some internal task force recommendations designed to trim the reviews by up to 15 months, but one company already has delayed its nuclear plans.

Progress Energy in May told the NRC that if it opts to build a new reactor in Wake County, N.C., the plant would be online in 2018 or beyond, two years past its initial forecasts.

Shares of Princeton, N.J.-based NRG added 61 cents to $41.81 Monday.