Nuclear Energy 2014: Status and Outlook

Transcription

1 Nuclear Energy 2014: Status and Outlook Annual Briefing for the Financial Community February 13, 2014

2 Plant performance Market issues Fukushima response Today s Briefing Status of new plant construction - Summer 2 and 3: Stephen Byrne, executive vice president, SCANA Corp. - Vogtle 3 and 4: Stephen Kuczynski, president and CEO, Southern Nuclear Operating Co and beyond

3 Plant Performance

4 Sustained Reliability and Productivity Highlights 2013 average includes San Onofre 2 and 3, which did not operate, and Fort Calhoun, which had a 2% capacity factor for the year. The industry s average capacity factor without those units was 92.1%. Number of refueling outages: 2013 = = = U.S. Nuclear Plant Capacity Factor (Percent) 91.8% in % in % in % in % in % in % in 2013* Source: Energy Information Administration * NEI estimate

5 Snapshot of U.S. Nuclear Plant Costs ($ per MWh) 2012 Total Generating Cost # of Sites Fuel Capital Operating Total Generating 1 3-Year Average Total Generating Cost $62.36 All U.S $40.94 Single-Unit $33.00 $28.22 Multi-Unit Total generating cost = fuel + capital + operating 2 Excludes Crystal River 3, Fort Calhoun, San Onofre 2 and 3, and Kewaunee 1 Q 2 Q 3 Q 4 Q Quartiles Source: Electric Utility Cost Group (EUCG)

6 10-Year Trend of U.S. Nuclear Plant Costs (2012 $ per MWh) Year Fuel Capital Operating Total Source: Electric Utility Cost Group (EUCG)

7 Power Uprates Are Major Capex Drivers 1,111 Power Uprates Approved by NRC Megawatts Year Total Capex Uprate Capex Uprates as % of Total Capex Billions of Dollars (2012) % % % Power Uprates as Share of Capex Sources: Nuclear Regulatory Commission, Electric Utility Cost Group

8 Nuclear Capital Spending (2012 Billions of $) Distribution of Capex in Equipment Replacement 26% Regulatory 18% Uprates, License Renewal 51% Other 5% Uprates, Extended Operation Equipment Regulatory Replacement Other Source: Electric Utility Cost Group

9 Market Issues

10 Reactor shutdowns - Four in 2013 Nuclear Plant Shutdowns: - One at the end of 2014 The Situation Crystal River 3, San Onofre 2 and 3 were unique events - Over 110 PWRs (57 in the U.S.) have replaced steam generators Kewaunee, Vermont Yankee shut down because of adverse market conditions.

11 Market Issues At a Glance Price signals inadequate to support operating capacity, or investment in new capacity except gas-fired Prices suppressed by RTO policies and actions, and by state and federal mandates and subsidies Fuel/technology diversity is taken for granted and undervalued Failure to address problems will: - Compromise resource adequacy and reliability - Expose consumers to increasing price volatility - Frustrate efforts to reduce carbon emissions

12 Efficient Markets Do Not Make $70 $60 $50 $40 $30 $20 $10 $0 $50.86 Small singleunit nuclear plant Inefficient Economic Decisions $46.60 $50.10 ($ per MWh) $53.70 $57.30 $60.80 $64.40 Gas at $3.50 Gas at $4.00 Gas at $4.50 Gas at $5.00 Gas at $5.50 Gas at $6.00 New combined cycle gas plant Kewaunee capacity factor: 95% Vermont Yankee capacity factor: 90% Nothing wrong with the plants; something wrong with the markets Sources: average total generating cost of seven small (approx. 600 MW) nuclear plants from Electric Utility Cost Group (EUCG). Gasfired combined cycle plant costs from NEI financial model: Debt at 5.0%, 15% return on equity, debt/equity structure of 50/50. Capital, O&M and fuel cost assumptions for natural gas are from the Energy Information Administration s Annual Energy Outlook 2013.

13 All Electricity Is Not The Same Basic economics - Markets can only allocate efficiently goods that have a price - Goods will only be produced when markets assign a price to them Different forms of electricity have different attributes: Every kilowatt-hour has a pedigree Those attributes have varying degrees of value to the market Merchant markets do not recognize or monetize valuable attributes of nuclear plants

14 Nuclear Energy: A Solid Value Proposition Safe, Reliable Electricity 24-by-7-by-365 Plus Supports Grid Reliability Provides Price Stability Provides Clean Air Compliance Value Contributes to Fuel and Technology Diversity Avoids Carbon Emissions Anchors the Local Community: Jobs, Tax Base

15 Fukushima Response

16 Response to Fukushima: Major Focus Areas Improved ability to cope with extended loss of AC power Additional spent fuel storage pool instrumentation Reliable containment venting External hazard (seismic and flooding) re-evaluations Enhanced emergency planning for multi-reactor events Nuclear Regulatory Commission graphic

17 FLEX Approach Enhances Safety FLEX will handle those extreme, unexpected scenarios that are beyond the plants design basis Focus on maintaining key safety functions Each nuclear plant site maintains backup portable safety equipment Regional response centers being developed and equipped in Memphis and Phoenix

18 A Tale of Two Nuclear Power Plants Fukushima Daiichi Fukushima Daini Only six miles from each other but a world apart in coping with the tsunami. At the Daini plant, operators responded with something like the U.S. nuclear industry s FLEX strategy, saved all four reactors.

19 New Plant Construction

20 VC Summer Units 2 & 3 Steve Byrne Chief Operating Officer, SCE&G

21 Safe Harbor Statement / Regulation G Information Statements included in this presentation which are not statements of historical fact are intended to be, and are hereby identified as, forward-looking statements for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements concerning key earnings drivers, customer growth, environmental regulations and expenditures, leverage ratio, projections for pension fund contributions, financing activities, access to sources of capital, impacts of the adoption of new accounting rules and estimated construction and other expenditures. In some cases, forward-looking statements can be identified by terminology such as may, will, could, should, expects, forecasts, plans, anticipates, believes, estimates, projects, predicts, potential or continue or the negative of these terms or other similar terminology. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: (1) the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment; (2) regulatory actions, particularly changes in rate regulation, regulations governing electric grid reliability and pipeline integrity, environmental regulations, and actions affecting the construction of new nuclear units; (3) current and future litigation; (4) changes in the economy, especially in areas served by subsidiaries of SCANA; (5) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial markets; (6) the impact of conservation and demand side management efforts and/or technological advances on customer usage; (7) the loss of sales to distributed generation, such as solar photovoltaic systems; (8) growth opportunities for SCANA s regulated and diversified subsidiaries; (9) the results of short- and long-term financing efforts, including prospects for obtaining access to capital markets and other sources of liquidity; (10) the effects of weather, especially in areas where the generation and transmission facilities of SCANA and its subsidiaries (the Company) are located and in areas served by SCANA's subsidiaries; (11) changes in SCANA s or its subsidiaries accounting rules and accounting policies; (12) payment and performance by counterparties and customers as contracted and when due; (13) the results of efforts to license, site, construct and finance facilities for electric generation and transmission; (14) maintaining creditworthy joint owners for SCE&G s new nuclear generation project; (15) the ability of suppliers, both domestic and international, to timely provide the labor, secure processes, components, parts, tools, equipment and other supplies needed, at agreed upon prices, for our construction program, operations and maintenance; (16) the results of efforts to ensure the physical and cyber security of key assets and processes; (17) the availability of fuels such as coal, natural gas and enriched uranium used to produce electricity; the availability of purchased power and natural gas for distribution; the level and volatility of future market prices for such fuels and purchased power; and the ability to recover the costs for such fuels and purchased power; (18) the availability of skilled and experienced human resources to properly manage, operate, and grow the Company s businesses; (19) labor disputes; (20) performance of SCANA s pension plan assets; (21) changes in taxes; (22) inflation or deflation; (23) compliance with regulations; (24) natural disasters and man-made mishaps that directly affect our operations or the regulations governing them; and (25) the other risks and uncertainties described from time to time in the periodic reports filed by SCANA or SCE&G with the United States Securities and Exchange Commission. The Company disclaims any obligation to update any forward-looking statements. During this presentation, certain non-gaap measures (as defined by SEC Regulation G) may be disclosed. A reconciliation of those measures to the most directly comparable GAAP measures is included on our website at in the Investor Relations section under Regulation G Information.

22 $8 $7 New Nuclear Projected Costs (in billions) $6.875 New Nuclear Total Projected Costs (SCE&G 55% Share)* $6.313 $6 $5.787 $5.755 $5.651 ~$633M $5.680M $5 $4 $3 Order No (A) Order No Order No Order No November 2013 BLRA Report February 2014 BLRA Report Capital Cost, 2007 Dollars AFUDC Escalation Note: Reflects new nuclear projected costs as filed February 2014 in BLRA Quarterly Report; SCE&G 55% share * SCE&G s additional 5% ownership interest in the new nuclear project does not impact the BLRA projected cost calculation

23 Billions $7 $6 Overview of Project Status SCE&G's 55% Share of Total Project Costs (Includes AFUDC, Transmission and Escalation) $5.8B Projection $5 $4 Budget $3.0B $5.7B Budget $3 $2 Actual $2.4B $1 $ Budget Projection Note: Reflects nuclear capex as filed February 2014 in BLRA Quarterly Report * SCE&G s additional 5% ownership interest in the New Nuclear project does not impact the BLRA Projected Cost Calculation

24 On Hook Date Summary Module Description Location of Construction On Hook Date CA-20 CA-01 CA-03 Auxiliary building module that will be located outside and adjacent to the containment vessel Steam generator and refueling canal module that will be located inside the containment vessel Southwest wall module of the containment refueling water storage tank inside of the containment building VC Summer Q Lake Charles Q Pegasus Steel Q4 2014

25 CV Assembly Switchyard HLD Turbine Building Training & Storage Unit 2 Unit 3 MAB Contractor Support Personnel Cooling Towers

26 CA20 Assembly Map

27 Unit 2 Module CA20 ~70 ft ~45 ft

28

29 Unit 2 Turbine Building Layout CH81C CH82 Upper C CH81B Upper B CH81A Upper A CH80 Set Complete In progress Lower C Lower B Hydro Support Steel Lower A GERB springs and Dampers

30 CH 81B Unit 2 Turbine Building Progress CH 81A CH 80 C Upper Condenser B Upper Condenser A Upper Condenser C Lower Condenser B Lower Condenser A Lower Condenser

31 Cooling Tower 2A

32 Unit 3 Basemat Pour 7,000 cubic yards 43-hour continuous pour No construction joints

33 Video: SCE&G Completes Nuclear Island Basemat Placement for V.C. Summer Unit 3

34 SCE&G Generation Mix 100% By Dispatch 100% By Capacity 90% 80% 70% Nonemitting 62% 90% 80% 70% Balanced Portfolio 60% 60% 50% 40% 30% Alt. Resources Coal 50% 40% 30% 20% 10% Gas 20% 10% 0% % Alt. Resources 1% 1% 1% 1% Alt. Resources 1% 1% 1% 1% Coal 45% 34% 23% 23% Coal 41% 33% 28% 27% Gas 26% 22% 12% 14% Gas 32% 30% 27% 27% Nuclear 24% 39% 60% 58% Nuclear 12% 22% 31% 32% Hydro 4% 4% 4% 4% Hydro 14% 14% 13% 13% Note: Reflects SCE&G s Preliminary Estimate for the 2014 Integrated Resource Plan to be filed February 2014.

35 M Tons 21 SCE&G CO 2 Emissions Actual Projected 1995 Actual 2005 Actual Note: Reflects SCE&G s Preliminary Estimate for the 2014 Integrated Resource Plan to be filed February 2014.

36 Vogtle 3 and 4 Steve Kuczynski Chairman, President and CEO Southern Nuclear Operating Company

37 Forward Looking Statement Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning projected cost and schedule for the completion of construction, rate adjustments, regulatory filings, benefits of ongoing construction projects, ad valorem taxes, job creation and operational readiness. Georgia Power Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Georgia Power Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Georgia Power Company's Annual Report on Form 10-K for the year ended December 31, 2012, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; ability to control costs and avoid cost overruns during the development and construction of the Plant Vogtle expansion, to construct facilities in accordance with the requirements of permits and licenses, and to satisfy any operational and environmental performance standards; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; regulatory approvals and actions related to the Plant Vogtle expansion, including Georgia Public Service Commission approvals, Nuclear Regulatory Commission actions, and potential U.S. Department of Energy loan guarantees; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; and the ability of counterparties of Georgia Power Company to make payments as and when due and to perform as required. Georgia Power Company expressly disclaims any obligation to update any forward-looking information.

38 Focus: Safety and Quality Our uncompromising focus is on safety and quality. Focusing on safety and quality will ensure this investment improves Georgia s communities and neighborhoods for generations to come.

39 Schedule IRP / PSC Certification Prepared ESP Application NRC Review Design Certification Revision Prepared COL Application NRC Review Unit 4 Complete Unit 3 Complete Pre-Construction and LWA Construction

40 Economic Impact and Benefits Even more beneficial for customers today than it was at GPC certification Largest infrastructure project in Georgia that will employ approximately 5,000 people during peak construction Create 800 full-time, highly skilled and highly paid careers Pay a peak of $60M - $70M in ad valorem taxes for Units 1-4 once the new units are online Produce electricity to power 500,000 Georgia homes and businesses

41 Certification vs. Forecast In-service cost, $ in millions, Georgia Power ownership $6,000 $5,000 $4,000 $4,799 $4,418 $381 $3,000 $2,000 $1,000 $- Certification Forecast Capital Only Current Forecast Capital Only

42 Customer Impact and Benefits Rate Impact Remains between 6 and 8 percent with benefits Benefits CWIP in rate base Production tax credits Low interest rates Expected DOE loan guarantee CWIP Construction Work in Progress DOE Department of Energy

43 Progress in 2013 Unit 3 Nuclear Island January 2013 December 2013

44 Progress in 2013 Unit 3 Turbine Building January 2013 December 2013

45 Progress in 2013 Unit 3 Cooling Tower January 2013 December 2013

46 Unit 4 Nuclear Island

47 CA20 Module

48 Unit 3 Nuclear Island 2014 Activity Waste Tanks Current View CA-04 CB-65 CA-03 CA-01 Auxiliary Building Walls to Elevation 82 6 CA-20 CA-02 (Inside Vessel) Projected Year-End View Auxiliary Building Walls to Elevation 100 Middle Ring Lower Ring Shield Building Panel Installation CA-05 (Inside Vessel)

49 2014 Operational Readiness Continued training success Fully loaded simulator for training Begin integration of site

50 Vogtle Construction Monitoring Vogtle 3&4 represents the best economic value over available alternatives today Costs for actual EPC remain stable and represent a lessthan-1-percent increase in the certified capital costs Verification and approval of all capital cost ($2.21B) to date Combined 9 th /10 th VCM to be filed on February 28, Covers the period of January 1, 2013, through December 31, 2013 EPC: Engineering, Procurement and Construction VCM: Vogtle Construction Monitoring

51 ILT Initial Licensed Operating Training 51

52 2014 and Beyond

53 Nuclear Energy Education Campaign Broad-based, highly visible, sustained campaign: Ensure that federal, state and local policy-makers, political leaders, opinion leaders, the public understand: - strategic value of nuclear plants as part of diverse portfolio - value of fuel and technology diversity - some existing nuclear generating capacity at risk Create a political environment that can lead to the necessary policy changes

54 Taking a Longer-Term Perspective Electricity demand will grow as the economy recovers - EIA forecast: 0.6% per year or 28% by 2040 (297,500 MW) 100 GW of fossil capacity retired , most by % of coal-fired fleet shut down by 2020 (without carbon limits) Natural gas price volatility will continue Power Plant Shutdowns Since 2010: Not Just a Nuclear Issue (generating capacity in megawatts) Energy Source Total Percent of Total Coal 19, % Natural Gas 12, % Oil 6, % Nuclear 3, % Hydro % Biomass, Waste % Source: Ventyx

55 Nuclear Energy 2014: Status and Outlook Annual Briefing for the Financial Community February 13, 2014