Exelon Suspends Victoria Nukes on Economic Uncertainties, Loan Guarantees

Exelon, the largest nuclear power generator in the U.S., has suspended plans to build a proposed two-unit nuclear plant in Victoria, Texas, because of uncertainties in the domestic economy and limited federal loan guarantees. 

The Chicago-based company said on Tuesday that it would seek an early site permit (ESP), as opposed to a combined construction and operating license (COL), from the Nuclear Regulatory Commission (NRC). The change in licensing strategy allows the company to continue with some aspects of site evaluation and approvals while deferring a decision on construction and technology choices for up to 20 years. Exelon said in a statement that some visible site activity may continue, but “planned major pre-construction work such as road upgrades and site preparations will be deferred.”

“We are not leaving Victoria, but we are ramping back our schedule for decision-making,” said Exelon’s Senior Vice President for New Business Development Thomas S. O’Neill. “We have made many friends in Victoria, and the site south of the city is a good location for a new plant. But today’s economic realities compel us to defer any decision on construction for a while.”

The company is the second in two months to have deferred a nuclear project. In April, AmerenUE, the Missouri operating subsidiary of Ameren Corp., cited “financial and regulatory certainty for its decision to suspend construction of a $6 billion second nuclear project at Callaway in Missouri.

Under the ESP process, the NRC undertakes an evaluation of site safety, environmental impact, and emergency planning regarding a proposed nuclear plant. By issuing an ESP for a specific site, the NRC certifies that the site satisfies the criteria in those evaluation areas. If the company later chooses to pursue construction, the ESP becomes part of the COL application, which requires a separate review and approval by the NRC.

Exelon had submitted its COL application to the NRC in September 2008. The ESP submittal, scheduled for late this year or early 2010, would be Exelon’s second. In 2007, Exelon received the first Early Site Permit ever issued by the NRC, for an existing plant site in DeWitt County, Ill.

Exelon’s decision to build the Victoria plant has been wavering since it dropped GE-Hitachi Nuclear Energy’s Economic & Simplified Boiling Water Reactor design as its preferred technology for the proposed Victoria facility earlier this year, and then reached agreement with GE-Hitachi for two advanced boiling water reactors for that site in April. Exelon had then told POWER that securing financing for the project was imperative, and that certainty was critical to be considered for loan guarantees from the Department of Energy (DOE). 

The DOE has since reportedly narrowed its list of recipients for $18.5 billion in federal nuclear loan guarantees to four companies: UniStar Nuclear Energy, NRG Energy, Scana Corp., and Southern Co. Seventeen companies had initially applied for $122 billion of federal loan guarantees for 21 proposed reactors. Winners have yet to be formally announced. 

Exelon, meanwhile, continues to attempt a hostile takeover of NRG Energy, the New Jersey–based company whose two new reactors at its South Texas plant near Bay City, Texas, are among projects that have been shortlisted for the DOE’s loan guarantees. Last week, a U.S. district court judge dismissed NRG’s lawsuit against Exelon, saying that NRG’s arguments were without merit. Exelon has said it plans on completing the deal without support of NRG’s board of directors.

At the same time, the company is struggling to overcome economic challenges confronting the energy industry, recently announcing $350 million in cost-cutting measures, including the elimination of 500 jobs. The company has about 20,000 employees. 

Sources: Exelon, DOE, POWERnews, Reuters

CORRECTION: An earlier version of this story incorrectly identified NRG Energy’s proposed Texas nuclear project as the Vogtle power plant. NRG Energy, along with several partners, has proposed to build Units 3 and 4 at the South Texas Project, southwest of Bay City, Texas. The Vogtle plant, majority owned by Southern Co. subsidiary Georgia Power, is a two-reactor  expansion project proposed for Burke County, near Augusta and Waynesboro, Ga.. POWERnews regrets the error.

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