Nuclear Power Costs 2008

The price consumers must pay for the electricity from a new nuclear power plant is around $0.25 to $0.30 per kwh, according to Craig A. Severance, CPA, in his new study on the subject.  

I have carefully checked the assumptions and calculations and conclude Mr. Severance is very close, perhaps even a bit low.    The study may be found here. 

The result is based on a two-reactor plant, at 2000 MWe, using Generation III technology such as Westinghouse AP-1000 rated at 1000 MWe each.  The construction cost, excluding interest during construction, is approximately $15 billion.  Interest on construction is another $6.2 billion, for a total of $21.2 billion that must be converted to long-term debt or equity upon startup of the plant. 

Severance used a split of 55/45 for debt/equity ratio, which is conservative since a utility tries to maintain the debt at around 45 percent, not 55 percent, in order to obtain lower bond interest rates.  The equity cost from Severance is 15 percent per year, most likely in the form of preferred stock paying 15 percent annually.   The debt cost, most likely as long-term bonds, is at 6.25 percent annually.  

Severance did not provide for any delays by lawsuits, which would increase the cost by hundreds of millions, perhaps billions depending on the delay and timing. 

The result of this study is entirely consistent with published reports of new nuclear plants in the U.S., one being a 2200 MWe plant in Florida by Florida Power and Light, which was published as costing $17 billion.  This likely does not include interest on construction loans.  

Such high costs of electric power essentially put nuclear plants off the table in the U.S., as utilities will find it very difficult to pass on costs of $0.25 to $0.30  per kwh to their rate payers.  It is far better to build gas-fired combined cycle cogeneration plants. 

Roger E. Sowell, Esq.