ROCKVILLE, Maryland (Reuters) ? Regulators on Thursday approved plans to build the first new nuclear power plant in more than 30 years, despite objections of the panel's chairman who cited safety concerns stemming from Japan's 2011 Fukushima disaster.
The Nuclear Regulatory Commission voted 4-1 to allow Atlanta-based Southern Co to build and operate two new nuclear power reactors at its existing Vogtle nuclear power plant in Georgia. The units will cost Southern and partners about $14 billion and enter service as soon as 2016 and 2017.
The approval was cold comfort for nuclear industry officials who have touted a "renaissance" that has failed to materialize, undercut by high costs and the cheapest natural gas prices in about a decade.
Further clouding future prospects, NRC Chairman Gregory Jaczko cast an extraordinary dissenting vote, citing the Fukushima nuclear disaster in Japan in March 2011 that spurred the NRC to review whether existing and new U.S. reactors could withstand natural disasters like earthquakes and floods.
"I cannot support issuing this license as if Fukushima never happened." said Jaczko, who has close ties to congressional Democrats. "I believe it requires some type of binding commitment that the Fukushima enhancements that are currently projected and currently planned to be made would be made before the operation of the facility."
Supporters of nuclear power saw Jaczko's dissent as another sign of dysfunction at the top of the NRC, where in-fighting among members has been the subject of Congressional hearings where one Democratic commissioner called Jaczko abusive.
"The chairman just voted against the first new nuclear reactors in 30 years," said Ed Batts, a partner at law firm DLA Piper. "That's just not the way that confidence is inspired in the average American and thus does not seem like the best way for nuclear regulation."
Thomas Fanning, Southern Co.'s Chief Executive Officer, said the new Vogtle plants would provide cheap, reliable power to Southeast residents for years to come.
"This has been a thorough, thoughtful and complete process," Fanning said. "Recall that four other commissioners saw the same facts and voted" to issue the license.
The Obama administration has offered Southern and its partners $8.3 billion in federal loan guarantees as an incentive. Fanning said he expects the U.S. Energy Department to finalize the loan in the second quarter of 2012.
The new plant will use AP1000 reactors built by Westinghouse Electric, a standardized design approved by the NRC in December that will be the foundation for several other proposed nuclear plants. Westinghouse is majority owned by Japanese multinational Toshiba Corp.
There have been no nuclear power plants licensed in the United States since the partial meltdown of the reactor core of the Three Mile Island plant in Pennsylvania in 1979, which caused construction costs for nuclear plants to skyrocket and stopped dozens of planned plants in their tracks.
Southern's Vogtle project is the first in a queue of permits filed by U.S. utilities, like Scana Corp, that were once predicted to usher in a "renaissance" of nuclear power. Nuclear power accounts for about 20 percent of U.S. electric generation.
Interest in building new nuclear plants had risen about a decade ago when natural gas prices were soaring and experts thought the U.S. Congress would begin to place limits on emissions of carbon dioxide and other greenhouse gases.
Between the fall of 2007 and the summer of 2009, 13 companies applied for construction and operating licenses to build 25 new reactors, including units of Southern, Scana Corp, Exelon, Duke Energy, NRG Energy, Progress Energy, Dominion Resources, NextEra Energy and Energy Future Holdings.
But the case for widespread U.S. nuclear plant construction has eroded due to abundant natural gas supplies, slow electricity demand in a weak U.S. economy, lack of financing and uncertainty following the Fukushima disaster.
Nuclear industry officials now say they expect five new reactors to enter service by 2020 -- Southern's two Vogtle reactors, two at Summer in South Carolina and one at Watts Bar in Tennessee, to be built by the federally owned Tennessee Valley Authority.
Earlier this week, TVA said the Watts Bar unit was behind schedule and that costs would "significantly exceed" a previous building cost estimate of $2.5 billion.
New nuclear plants are "more questionable because there are economic factors right now which favor gas-fueled power plants and the fact that the economy is only growing slowly means that nationally the need for new generation is lower than people were expecting in 2007," said Michael Golay, a professor at the Massachusetts Institute of Technology.
A 1,000-megawatt natural gas plant takes a few years to permit and build and costs up to $1 billion for the most efficient, combined-cycle model. A similar-sized nuclear reactor however could take five to 10 years to develop and build and cost more than $5 billion.
Industry experts say building interest is centered in Southeast states like Georgia, the Carolinas, Virginia, Alabama and Florida, where land is plentiful and a population shift from northern states has boosted electricity demand.
(Additional reporting By Eileen O'Grady in Houston and Scott DiSavino in New York, writing by Chris Baltimore; Editing by Marguerita Choy and David Gregorio)
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