The U.S. Nuclear Regulatory Commission’s Jan. 5 approval certifying Westinghouse’s AP1000 nuclear reactor is “a major milestone for the U.S. nuclear generation industry,” according to a special comment from Moody’s Investors Service.
Nuclear generation projects using the AP1000 reactor are under development in Georgia and South Carolina, both with major participation by public power agencies.
Certification of the AP1000 was delayed after the March 2011 earthquake and subsequent tsunamis at the Fukushima nuclear plant in Japan while the NRC evaluated the impact of the twin disasters. At the same time, opposition to nuclear development by people in the United States mounted.
“The NRC’s action reflects its opinion that the new reactor design can operate safely,” said Moody’s analyst Dan Aschenbach. “The certification is credit- positive for the two principal owner-developers of new nuclear generating plants in the U.S. using the AP1000 reactor design, Southern Co. and SCANA Corp., and is a precursor for the NRC to issue combined construction and operating licenses.”
Southern Co. is the developer of two new nuclear units at the existing Vogtle nuclear power station in Georgia. The Municipal Electric Authority of Georgia owns 22.7% of the project and the city of Dalton owns 1.6%.
MEAG sold $2.67 billion of Build America Bonds and $48 million of tax-exempt bonds in March 2010 to finance its ownership position. It also has $1.8 billion in federal loan guarantees from the U.S. Department of Energy.
In South Carolina, the project at the Virgil C. Summer station’s Nuclear Units 2 and 3 is partly owned by the South Carolina Public Service Authority.
The authority, also known as Santee Cooper, is rated Aa3 with a stable outlook by Moody’s.
Santee Cooper issued $300 million of BABs for the Summer project, and expected to spend additional funds through 2012.
Aschenbach said the combined construction and operating licenses were originally expected to be issued in the third quarter of 2011. With this month’s certification of the AP1000, the licenses could be issued in the first quarter of 2012, he said.
The two projects have a combined capital cost of more than $25 billion and the owners have already invested several billion dollars in site preparation.
Key risks include potential cost overruns and timing delays, engineering risks associated with the new AP1000 design, “and any potential regulatory or operating changes that emerge from the Fukushima nuclear disaster, which are yet to be fully understood,” Aschenbach said.
