VCCC: Dominion Faces Shareholder Vote Wednesday On Financial Risks Of Proceeding With "Most Expensive Nuclear Reactor In US"

RICHMOND, Va., May 10, 2016 /PRNewswire-USNewswire/ -- Dominion faces a vote tomorrow on a shareholder resolution calling on the utility to analyze the financial risks faced by investors if it is not able to complete a new nuclear reactor (North Anna 3) that already has cost more than $600 million and could end up with a sky-high price tag of $19 billion or more.

Available online at http://bit.ly/1NzQv6B, the shareholder resolution (Item #5) was filed by Ruth McElroy Amundsen, an engineer for 32 years with an undergraduate degree in physics from Stanford.  The Dominion annual meeting of shareholders takes place Wednesday (May 11, 2016) at 930 a.m. EDT at the Hilton Columbia Center, Columbia, SC. 

The Amundsen resolution states:

"RESOLVED: Shareholders request that Dominion prepare and make public a financial analysis by November 30, 2016 reporting on the potential impact on earnings, share price and dividends should the State Corporation Commission deny a certificate for the development of North Anna 3 and further deny the recovery of $1.87 billion in costs associated with the North Anna 3 nuclear reactor incurred prior to an order denying a certificate to construct the reactor."

As the background section of the shareholder proposal notes: "The [North Anna 3] price tag makes it far more expensive even than the other nuclear plants currently under construction in Tennessee, Georgia and South Carolina.  All three are behind schedule and over budget, which does not inspire confidence in the industry's ability to contain costs.  As a result of this high capital cost, Norwood found that the 'total delivered cost of power from NA3 is more than $190 per MWh in 2028.'  That translates into more than 19 cents per kWh.  Average wholesale price of electricity in the [Virginia] region was 5.3 cents per kWh in 2014."  A total of five reactors are now under construction in the three states.

For the full text of the supporting memo for the resolution, go to http://bit.ly/1Uh4wrg.

Commenting on her resolution, Amundsen said: "Shareholders, who need Dominion to make the right long-term moves, will now weigh in on the controversial and costly North Anna 3 reactor. Because the financial stakes are so high, it is important to have shareholders fully aware of the financial risks Dominion is taking by proceeding with North Anna 3.  Given what is at risk here in terms of the cost and placing insufficient focus on more renewable energy, it should be a simple matter for Dominion to report out the calculations it already has made."

VCCC President Irene Leech said: "The massive $19 billion cost for the North Anna 3 nuclear reactor project makes it the biggest single threat posed today to the pocketbooks of Virginia consumers. The ever-escalating cost of this project and the fact that it is at least twice as expensive as other alternatives, including energy efficiency and renewables, makes this a situation that cries out for responsible shareholders to speak up and be heard. If fuel diversity is the concern, Virginia would be better off catching up with other states by developing more renewable energy resources and better supporting energy efficiency, which would be a bargain compared to North Anna 3."

"Dominion is trying to use the Clean Power Plan to justify building the third reactor at North Anna. That is more than misleading, it's simply not true," said Kate Addleson, Sierra Club Virginia chapter director. "The company can substantially reduce carbon pollution with renewable energy like solar and wind power. There is no need to expand our use of nuclear power at this time. In fact, over-building nuclear actually 'crowds out' the possibility of building off-shore baseload windpower, because it exhausts finite financing while artificially inflating the price of electricity."  

Controversy over the North Anna-3 reactor project flared up in the public eye in late 2015 when Scott Norwood, an energy analyst for the Virginia Office of the Attorney General, Division of Consumer Counsel, estimated that "after including a conservative estimate of construction interest costs, the current capital cost forecast for NA3 would be approximately $19.3 billion." The Office of Attorney General then testified before the Virginia State Corporation Commission that the high price tag makes the project unreasonable and urged that Dominion abandon its plans for North Anna 3.

Norwood, the expert for the Virginia Attorney General, found that Dominion intends to incur $1.87 billion in costs related to planning and developing the new nuclear reactor, North Anna 3, by 2018 and $4.7 billion by the end of 2020.

In December 2015, the Virginia State Corporation Commission concluded: "The evidence demonstrates that Dominion has already incurred approximately $580 million in development costs related to North Anna 3 through September 30, 2015, and that, based on current forecasts, the total cost of North Anna 3, including an estimate of construction interest costs, would be approximately $19.3 billion. The Virginia jurisdictional share of this estimated $19.3 billion capital investment would increase the total rate base for the Virginia jurisdiction by approximately 100%, and would obviously, if it were recoverable, represent a large enough increase in electric bills for residential and business customers to impact Virginia's economic climate."

SOURCE Virginia Citizens Consumer Council (VCCC), Richmond, VA