EDF Pegs Nuclear Upgrade Cost at $13 Billion

Tuesday, January 3, 2012

PARIS—France's nuclear-safety watchdog ordered immediate upgrades to nuclear reactors to guard against natural disasters, which Électricité de France SA said could require €10 billion, or roughly $13 billion, in additional costs.

In a review following last year's Fukushima nuclear accident in Japan, the Autorité de Sûreté Nucléaire concluded that no plants needed to be shut down immediately but that steps should be taken as "soon as possible" to improve safety at France's 58 reactors.

Tuesday's 500-page report was the latest sign of how the post-Fukushima environment is posing new regulatory challenges for nuclear power globally. The issue is particularly charged in France, which gets 75% of its power from nuclear energy. The ASN report, which came amid debate on nuclear power ahead of the French presidential election in May, also raised the issue of who will foot the bill for the upgrades.

André-Claude Lacoste, the agency's chief, said he envisions an upgrade that would likely cost "several billion euros."

The agency wants EDF, which operates France's nuclear plants, and nuclear-engineering group Areva SA by June 30 to outline measures to reinforce "core" safety at its reactors.

EDF must build diesel pumps in special bunkers to ensure that all its reactors can be cooled during a massive natural disaster, the report said. The agency also called for the creation of a rapid-response team that could be rushed to any disaster site and for measures to reinforce the security of the pools that hold spent nuclear-fuel rods.

"There will be a before and after Fukushima," Mr. Lacoste said.

He said it was difficult to imagine that the cost of this upgrade won't affect the cost of generating nuclear power in France. It wasn't clear how the changes would affect retail prices, which are regulated in France. The country has lower retail electricity prices than many of its neighbors do.

"This will take time and money," Mr. Lacoste said. "We are not asking the operator to make these investments. We are telling them to."

EDF, 84% of which is owned by the government, had estimated the cost of extending the life span of its French nuclear plants to 60 years at €40 billion. Following the latest safety regulations, this could rise to as much as €50 billion, said Jean-Marc Miraucourt, EDF's head of nuclear engineering.

"Most of the investment was already planned, it will simply have to be implemented faster," he said. The requirements could push the cost of nuclear electricity production in France to €50 a megawatt hour from €46, he said.

An Areva spokeswoman said the company was studying the recommendations.

French Energy Minister Eric Besson said he plans to meet with EDF and other French nuclear-power companies Monday to discuss the report.

The ASN's recommendations and the conclusions of other stress tests across the Continent will be presented to the European Commission. The commission, which is the executive arm of the European Union, will then analyze and compare those conclusions before publishing its own report in June.

The French agency's report came as the country's political consensus on nuclear power has begun to crack ahead of the presidential election. France's Green and Socialist parties recently formed a tentative pledge to cut the country's share of nuclear energy to 50% from 75% by 2025 through the gradual closure of 24 reactors. The parties also said they would shut down France's oldest nuclear plant immediately, if Socialist candidate François Hollande is elected president in May.

The proposals have been met with outrage by France's ruling UMP party, which says nuclear energy is critical for the country's economy and for independence from foreign fossil fuels.

French President Nicolas Sarkozy has continued to champion nuclear power, even as neighbors such as Germany, Switzerland and Belgium have retreated.

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