http://www.powermag.com/nuclear/Regulatory-risks-paralyzing-power-industry-while-demand-grows_99.htmlJanuary 15, 2008
Regulatory risks paralyzing power industry while demand grows
Kennedy Maize and Dr. Robert Peltier, PE
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Nuclear is the most intensely political of generation technologies (although coal is making a strong bid for the lead), and the politics tend to be partisan. Democrats generally are averse to the atom, while Republicans as a whole are fond of fission.
This year we’ll watch the quadrennial political Super Bowl as the nation elects a president and vice president, all 435 members of the House of Representatives, and one-third of the U.S. Senate. At this early stage of the game, most political pundits are predicting that a year from now, the Democratic Party will have power it hasn’t had since 1993: one of its own in the White House and control of both the Senate and the House.
That’s not a given; plenty can happen between now and this November. But prospects don’t look good for the GOP, and that means they don’t look good for new nukes. The U.S. nuclear industry decided—even before the 2006 elections, which produced a Democratic majority in both houses of Congress—to bet the radioactive ranch on the GOP. The nuclear industry lobby was, to use a waterskiing and snowboarding term, “goofy-footed” by the Democratic tsunami—caught with its right foot in the forward binding.
Eight years of Republican control of the White House, and 12 of Congress, haven’t delivered for nuclear power. As one nuclear lobbyist, speaking anonymously for fear of losing his job, told POWER, “We’ve had the most pro-nuclear administration in 20 years. During its reign, not a spade of dirt has turned on a new plant. The schedule for the nuclear waste repository at Yucca Mountain has slipped another 12 years. The Department of Energy has been unable to turn the promises of the 2005 Energy Policy Act into realities. It’s a failure of monumental proportions.” Put Yucca Mountain in that same category (see sidebar, “Clinton, Obama agree: Death to Yucca Mountain”).
When Republican President Gerald R. Ford faced a different kind of energy crisis in mid-1970s (the result of the Arab oil embargo), he and the Democratic Congress worked together to serve up an attractive plate of goodies for new nukes. When Democrat Jimmy Carter took office in 1977, the menu instantly changed to gall and boronated wormwood. According to the anonymous lobbyist, the U.S. nuclear industry began melting down in 1976 with Carter’s election, not in 1979 with Three Mile Island. “I was there,” he said. “As soon as Carter made his selections for the NRC, the industry crashed.”
Nukes face stiff political wind
A new Democratic administration isn’t likely to push licensing of new nuclear plants. Indeed, the nuclear industry’s worst regulatory nightmare is very much a political possibility: NRC Commissioner Gregory Jaczko becoming the agency’s chairman. Jaczko, a very bright and sharp-elbowed political player, is considered “Harry Reid’s guy” at the NRC.
A PhD physicist, Jaczko came to Congress as a science fellow working for Rep. Ed Markey (D-Mass.), one of the most anti-nuclear members of Congress over the past 30 years. Jaczko decided he liked Washington and became Reid’s chief advisor on nuclear waste issues. Reid has vowed to kill Yucca Mountain, and he may be able to keep his promise come January 2009. Jaczko professes, no doubt honestly, that he is not anti-nuclear power.
But Jaczko has every reason to be anti–nuclear industry. The Nuclear Energy Institute tried, and failed, to block his initial appointment to the NRC when he won a recess appointment—as did Republican Peter Lyons, a former advisor to former Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.). That was a deal the White House and Reid negotiated, over the objections of the nuclear lobby.
Then the nuke reps tried to derail Jaczko’s nomination to fill a full term last year. They failed. Recently, the nuclear lobby tried to abort a second term for Jaczko. They were unsuccessful. Said our lobbyist, “We’ve tried to screw this guy three different times and failed. How understanding and helpful is he going to be when he runs the NRC?” There’s little doubt that if the Democrats reclaim the White House, Jaczko, the only Democrat on the commission, will become its chairman.
The industry’s political support in Congress has diminished substantially recently. Domenici, the nuke lobby’s leader in the Senate, is a spent force. He’s ill and sometimes unfocused, and he’s announced he’s stepping down at the end of 2008. The second-most-ardent nuke supporter in the Senate is Idaho Republican Larry Craig. His political career is apparently in the toilet. In recent years, the number-three supporter was Wyoming Republican Sen. Craig Thomas, a buddy of vice president Dick Cheney. Thomas died last year. There are no important nuclear stalwarts on the Democratic side of the House or Senate.
The politics of nuclear power will manifest themselves directly in financial markets. It won’t matter how badly a utility wants to build new nuclear capacity if it can’t convince lenders their investment is a safe one. No one is going to risk $5 billion or more on a new plant without assurance of at least capital recovery plus a return. For most generators, it’s a bet-the-company gamble.
So while the politics of new nukes look bad, their short-term financing outlook isn’t very promising, either. An October study of the U.S. industry by Moody’s Financial Services concluded that “there can be no assurances that tomorrow’s regulatory, political or fuel environment will be as supportive to nuclear power as they are currently.” The NRC’s 42-month COL process, Moody’s noted, “remains untested.” Opponents of nukes are likely to litigate NRC decisions, adding time, money, and doubt to the process.
Most ominously, Moody’s suggests that the current estimate of the average cost to build a reactor and start it up by 2015—around $3,500/kW of capacity—is pie in the sky. A more realistic all-in cost for a new reactor, says the bond rating agency, is in the $5,000 to $6,000/kW range. That’s considerably more than conservative estimates for new integrated gasification combined-cycle (IGCC) coal plants. American Electric Power (AEP) estimates its planned 600-MW IGCC plant will cost $3,500/kW.
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