San Antonio: New Economy Leader or Nuclear Guinea Pig?
Photo: Mural at Construction site in beautiful downtown San Antonio, TX
September 19, 2009
by Craig Severance
SAN ANTONIO, TX -- San Antonio's new Mayor Julian Castro, in office just three months, has inherited a dilemma. The nation's 7th largest city is suffering from almost 8% unemployment. With limited resources, the Mayor and City Council are searching for ways to create local jobs. At the same time, the City, through its municipal utility City Public Service (CPS), is burning through hundreds of millions of dollars on just paperwork, to prepare to spend billions on a new nuclear power plant project some 200 miles away at Bay City, TX.
Should the Mayor and the City Council question the wisdom of rushing ahead with the nuclear project, or approve CPS continuing to spend hundreds of thousands of dollars a day to prepare applications for CPS to buy a 40% share of two new reactors proposed for the South Texas Project? CPS says the two new reactors, to be co-owned with NRG Inc., would help the utility meet power demands projected for 2020 and beyond -- over 10 years away.
$400 Million Bond Issue. The issue comes to a head next month, when the City Council must approve or disapprove CPS issuing $400 million in bonds to continue its spending on the project. The monies will not be used to actually begin construction --- that would be years away -- but to prepare the enormously complex engineering, design, and environmental applications required for a new nuclear power project.
Local citizen groups, however, say a far better use of such monies would be to help CPS fund aggressive energy conservation, Smart Grid, and solar energy programs to help citizens cut utility bills. Such programs would immediately create local jobs -- and cut electric growth so the nuclear projects would not be needed.
"First in U.S." CPS and NRG, Inc. are rushing the proposal, as they say the South Texas Project expansion will be the first new nuclear plants to be built in the U.S. in over 30 years. They hope to be first in line to receive Federal Nuclear Loan Guarantees under an $18.5 Billion program authorized by Congress.
Many San Antonions question the wisdom of rushing to be the guinea pig for the nuclear industry, which has a history of massive cost overruns. They challenge whether it is even a good idea to be first. Why not let someone else find out whether the nuclear industry has learned how to build plants on-budget?
Nuclear Debate Held Wednesday, September 16th. With so much at stake, San Antonio civic leaders have taken extraordinary measures to open up the process to public scrutiny. The San Antonio News Express , led by Editor Robert Rivard, has for months run articles on the nuclear proposal. Open meetings have been sponsored by the utility in many neighborhoods.
As a peak event in this public discussion, The San Antonio Clean Technology Forum, led by civic leader Michael Burke, organized a sold-out luncheon debate this past Wednesday, attended by 400 of San Antonio's leading citizens. Tables were sold to major companies and organizations, and all news media were invited.
The Clean Technology Forum invited myself and Dr. Arjun Makhijani, President of the Institute for Energy and Environmental Research, to debate the wisdom of the new nuclear project. Supporting the project were Steve Bartley, CPS Interim General Manager, and Patrick Moore, who is a paid spokesperson for the nuclear power industry. Mayor Julian Castro keynoted the event, which was gracefully moderated by Bob Rivard, Express-News Editor.
View the Actual Debate. The video of the full debate can be viewed here:
Click HERE to go to TexasVox site with Videos of Debate.
I encourage readers to view the full debate to hear the exchange for themselves, as it was quite lively. Each speaker had only 12 minutes, followed by audience Q&A and a 2 minute close, so it's not too long.
Click here to read entire article.
Nuclear Costs -- Who Has "Better Numbers"?
Who Pays if Things Go Wrong?
July 31, 2009
by Craig Severance
On July 10th I debated the Nuclear Energy Institute (NEI) in a head-to-head discussion in Washington. (See here for article on the "lively discussion".)
This week NEI published on its blog site NEI Nuclear Notes a very spirited critique (here) of my debate presentation. (My presentation was based upon my detailed study "Business RIsks and Costs of New Nuclear Power", published in January 2009 here.)
Now We're Talking. The NEI fight-back response is welcome in that we are blowing open the "Black Box" of hidden assumptions about the costs of new nuclear power. It is NOT a cordial discussion when one side won't disclose its numbers. I wrote about this in January:
It has unfortunately been the case over the last couple of years that some utilities have begun to claim that even rudimentary basics of their nuclear cost estimates must be hidden from the public as 'trade secrets". For instance, in the South Carolina Electric & Gas proposal to build two reactors now under consideration by the South Carolina PSC, there is literally a large "box" obscuring the bulk of the calculations....In a different case, Duke Energy claimed that it does not even have to disclose its new cost estimates for a proposed nuclear facility in Cherokee County, S.C. In the Duke case, C.Dukes Scott, South Carolina's consumer advocate... noted, "If the cost wasn't confidential in February," Scott said, "how is it confidential in April?"
We've come a long way since then, as we are now "duking it out" in a much healthier fashion.
Click here to read full Article.
Boiling The Frog Slowly:
Nuclear Optimism Hides True Costs Till It's Too Late
Image: purpleslog
July 24, 2009
by Craig Severance
There is a well-known story about how to boil a frog. If you try to throw a frog into a pot already boiling, he'll jump out. However, put a frog into a pot and slowly raise the temperature -- and you get frog legs for dinner.
The nuclear power industry seems to be pursuing this strategy, slowly releasing ever higher cost estimates for new nuclear power plants. If the public does not realize the true costs of a new nuclear plant, the industry can obtain political support for the Federal loan guarantees it needs. After the taxpayers are on the hook and a nuclear project is already underway, the full costs will become clear.
At that point, however, it may be too late for taxpayers and utility ratepayers to jump out.
The Frog Jumps: The Ontario Story. Last week the Ontario government put plans to build 2 new next-generation reactors on hold, after it received bids "more than three times higher than what the Province expected to pay", according to a story in the Toronto Star. The only "compliant" bid -- one where the supplier would be sufficiently at risk if costs exceeded the amount quoted -- was reportedly a $26 billion quote from Atomic Energy of Canada, Ltd, equal to roughly $10,800 per kW. (If this sounds familiar, recall my January 2009 study estimated a new nuclear project would most likely cost approximately $10,500/kW).
"It's shockingly high," the Star quoted Wesley Stevens, an energy analyst at Navigant Consulting in Toronto regarding the nuclear bid.
The Province had originally thought the two reactors would cost a total of only about $7 billion, which works out to about $2,900 per kW, according to 2007 estimates. The Star reports "During Ontario Energy Board hearings last summer, the power authority indicated that anything higher than $3,600 per kilowatt would be uneconomical compared to alternatives, primarily natural gas."
Rather than blindly accepting these estimates, however, Ontario authorities were wise enough to require nuclear vendors to submit bids accepting the risk of cost overruns. Once the suppliers were on the hook -- rather than ratepayers and taxpayers -- the true costs of new nuclear power became apparent.
Click here to read full story.
"Lively Discussion" with Nuclear Energy Institute
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July 23, 2009
by Craig Severance
On July 10th, I participated in a "Lively Discussion" with the Nuclear Energy Institute, represented by Leslie Kass, NEI Director of Business Policy and Program.
The Event, sponsored by the Foundation for Nuclear Studies, was structured as a luncheon in the House Rayburn Office Building, with the primary audience being Congressional staff members. The room was full, with perhaps 70-80 attendees.
It was a very cordial discussion and afterward we all shook hands and posed for pictures. Yet, the differences were sharp.
Is New Nuclear Power Competitive? The Foundation called me to Washington, to discuss the Question of the Day -- Is New Nuclear Power Competitive?
My full Power Point Presentation is
here. Some highlights:
Not Competitive if Begging for Subsidies from Taxpayers
The reason we were before Congressional staff in the first place is that the nuclear industry is asking for even more subsidies from taxpayers, in the form of hundreds of billions of dollars of Federal Loan Guarantees.
Wall Street rejected any thought of financing new nuclear power plants in 2007, when investment banks wrote the Department of Energy they will not fund any nuclear plants without full Federal Loan Guarantees. The private sector simply regards nuclear power as too expensive and hence too risky.
Four Choices if Your Industry is Not Competitive. The U.S. nuclear industry hasn't had a new order in over 30 years, because utilities have had more economical choices. There are four choices if your industry is not competitive:
1. Go Out of Business (which the new nuclear industry effectively did)
2. Change So You Are More Competitive
3. Become the Only Choice (Monopoly); OR
4. Ask for Taxpayer Dollars for Support
Click
here to read full article.
Nuclear, Solar Not Red or Blue
March 1, 2009
by Craig Severance
Within days of the well-publicized release of my new study Business Risks and Costs of New Nuclear Power in January by the Center for American Progress, the Heritage Foundation, the arch-nemesis of CAP, thought it necessary to respond with an article defending nuclear power. Their article, which also gained wide publicity, was entitled New Study on Staggering Cost of Nuclear Energy, Staggeringly Pessimistic.
My purpose in doing the updated nuclear cost study was to open up nuclear costs to public scrutiny, with a detailed cost analysis where all assumptions were clearly spelled out. It is now incumbent upon nuclear supporters to present specific analysis to the contrary. (None has been forthcoming).
Though the title of their article implied I was being "staggeringly pessimistic", Heritage did not actually challenge the assumptions in the Study. Instead they noted:
Aside from the cherry-picking of data and its clear tilt toward Big Green (the vast industrial complex and lobbying machine being built around global warming alarmism), its conclusions are potentially not that far off.
From the above quote, it seems Heritage is a bit paranoid of the green movement (currently being championed by such far-left institutions as Chevron, IBM, and Microsoft). The thrust of the Heritage "rebuttal" was to blame nuclear's staggering cost on environmentalists, and to call for measures to prevent the outcomes predicted in my Study:
The value of the CAP study is to demonstrate why a nuclear renaissance may never unfold unless something is done to ensure that the conditions set forth by the study never come to pass.
Oh, if it were only that easy! The nuclear industry has already achieved its political goals of streamlined applications, restricted intervenor rights, and government subsidies for nuclear power. The nuclear industry even carried off a masterful public relations coup in convincing a majority of the public and policymakers that it could be an important solution to global warming. Public opposition to nuclear power is now far lower than at virtually any time in the past several decades.
In the end, however, none of that matters. Though ideologues may see every issue as a political battle between Left and Right, Blue and Red - these are just power plant projects. They are not liberal or conservative, Republican or Democratic. And when the numbers don't add up, they don't add up. (Something about "lipstick on a pig" somehow comes to mind.)
Click here to read the full article.
Business Risks and Costs of New Nuclear Power: The Staggering Cost of New Nuclear Power
March 1, 2009
By Craig Severance
On January 5, 2009 the Center for American Progress published here my new study Business Risks and Costs of New Nuclear Power which projects that power from new nuclear plants will cost from 25 to 30 cents per kWh -- putting dramatic upward stress on electric rates and financial solvency for utilities which pursue these projects. (Image: Salon)
This staggering cost for new nuclear energy places nuclear power solidly in the "Trash Bin" category of new generation options.
Many will mourn the loss of nuclear power as an "easy" option to reduce carbon emissions, as nuclear has often been the "magic wand" waved by policymakers faced with finding energy solutions. (For further discussion of this point see here.)
The actual costs of new nuclear power, however, bring us face to face with a new "inconvenient truth" -- building new nuclear power plants will actually make global warming worse, because hundreds of billions (indeed, trillions) would be needed to build any substantial fleet of new reactors. If even a fraction of this money were instead spent on other low-carbon choices such as energy efficiency, wind, geothermal, and solar, vastly greater amounts of low-carbon kWh's and greenhouse gas reductions could be achieved.
At a time when the world climate is a "3 Alarm Fire", choosing to build new nuclear power plants is like buying a gold-plated garden hose, when with the same amount of money you could buy the fire engines we really need.
This analysis of new nuclear power's costs was sorely needed, because the nuclear power industry's glossy public relations campaign had succeeded in convincing the public and policymakers that nuclear power was a cheap and effective means to reduce global warming. However, when exposed to open scrutiny, the numbers just don't add up that way.
Open scrutiny is the goal of the Study, as I wrote to Center for American Progress Senior Fellow Dr, Joseph Romm, who is the editor of the ClimateProgress.org blog, which released the Study:
All assumptions, and methods of calculation are clearly stated. The piece is a deliberate effort to demystify the entire process, so that anyone reading it (including non-technical readers) can develop a clear understanding of how total generation costs per kWh come together.
As a former utility commission staffer, I find it very disturbing that utilities now proposing new nuclear power plants are actually succeeding (in PSC dockets!) in hiding basic assumptions about what the new nuclear plants will cost. Quoting further from my correspondence to Joe Romm:
In contrast to this transparency, many nuclear promoters have adopted a “Black Box” approach. It has unfortunately been the case over the last couple of years that some utilities have begun to claim that even rudimentary basics of their nuclear cost estimates must be hidden from the public as “trade secrets”. For instance, in the South Carolina Electric & Gas proposal to build two reactors now under consideration by the South Carolina PSC, there is literally a large “box” obscuring the bulk of the calculations in the SC E&G Exhibit which presents the utility’s projection of construction and financing costs for the proposed two-unit facility. In a different case, Duke Energy claimed that it does not even have to disclose its new cost estimates for a proposed nuclear facility in Cherokee County, S.C.. In the Duke case, C. Dukes Scott, South Carolina’s consumer advocate, who represents the public in utility rate cases, noted, “If the cost wasn’t confidential in February,” Scott said, “how is it confidential in April?”
Even when no effort to conceal information is apparent, the very terminology used when projections are presented can be confusing or misleading. For instance, in 2007 when a number of new nuclear proposals began to advance, it was common for “Overnight Cost” estimates to be quoted. For a project (such as solar or wind) whose construction period may be as short as several months, the difference between an “overnight” cost and the full cost to complete the project may not be significant. However, for a nuclear project that may typically take a decade to complete, cost escalations that occur during this long construction period, plus the financing costs during construction, may easily double the total cost of a project compared to its “overnight” cost. When the full picture is presented, some may perceive the total cost estimate has mysteriously doubled. However, it simply should have been stated clearly to begin with that major escalation and financing costs cannot be avoided when it takes a long time to complete a project. Failure to do so is tantamount to selling someone a house with “teaser” initial mortgage payments and failing to make clear that the mortgage payments will later reset to a much higher level.
Another mysterious “black box” presentation method is to fold the overall costs of the new facility into the general rate base of the utility, without ever mentioning what the generation costs per kWh of the nuclear unit will be. Instead, it is often only presented how total costs per kWh for all ratepayers will increase — which includes kWh’s generated by existing generation units. (For instance, if a nuclear unit is to supply 20% of the kWh’s for the utility when it comes on line, any cost increase per kWh appears to only be 1/5 as large because the additional costs are also spread over the 80% of kWh’s generated by other facilities, even though those other facilities did not cause the rate increase.) While it is important to know the impact on final overall retail electric rates, it is also important to know the generation costs per kWh from the nuclear facility. If this step is “skipped” in public presentations, the nuclear units (or any new generation power source that is more expensive than existing units) can appear far cheaper than their real impact.
The Paper takes the approach that it is best to lay out in detail “how you got that number” at each step of the way. All parties can then proceed to have discussions based upon real numbers rather than mysterious “Black Box” secrets.
The "Black Box" is now blown open. As Dr. Romm said in his Article on the Study:
Given the myriad low-carbon, much-lower-cost alternatives to nuclear power available today — such as efficiency, wind, solar thermal baseload, solar PV, geothermal, and recycled energy (see “An introduction to the core climate solutions“) — the burden is on the nuclear industry to provide its own detailed, public cost estimates that it is prepared to stand behind in public utility commission hearings.
Click here to read the full Article.
Do it ALL for Energy?
By Craig Severance
Posted: 08/14/2008 DenverPost.com
Lets do it all - everything. This is the politicians' new mantra to calm voters' gas pump anger.
Finally, our politicians realize how to get things done. Just do everything. So, lets get moving using this new principle.
Lets set up NASA right away to go again to the Moon, and to Mars, Venus, and Jupiter. Scientists have been waiting for decades to accomplish these important missions. Now we can do them all.
Afghanistan? Iraq? Iran? Russians in Georgia? Our military can handle it all.
Potholes? Bridge collapses? Amtrak and airlines in crisis? The DOT can fix it all. By the way, since we can do it all, what was wrong with that $300 Million "bridge to nowhere" in Alaska? I hear those 50 islanders could really use that new bridge so they don't have to wait for the ferry.
This all seems ridiculous, so why do we let our politicians get away with saying "do it all" when we ask for energy solutions? Is it because we ignored this problem for 30 years and now no one really knows what is the best thing to do?
Energy solutions are technological, but finding the best way to proceed isn't rocket science. Congress will have to do the same thing it did with the rocket scientists - develop cost effective principles and a budget.
On a budget you don't do it all - you do what works best.
Click here to read full article.
Nuclear Not Only Way to Generate a KWH
By Craig Severance
Posted June 12, 2008 www.opednews.com
Speaking to the nation about the energy crisis recently, President Bush proclaimed, "if there was a magic wand to wave, I'd be waving it". Bush then proceeded to wave the perpetual "magic wand" for energy, urging more nuclear power. Candidate John McCain followed suit in his speech on global warming, linking his carbon emissions cap-and-trade proposal to massive subsidies for the nuclear power industry.
We have seen this all before -- a powerful lobby promoting itself as our energy solution, and receiving Federal billions. Corn ethanol has now received these subsidies for decades, though experts warned it would do little but divert food crops to fill our gas tanks. Today's food price crisis is in part a fulfillment of these prophecies.
The nuclear industry has launched a major effort to convince Americans nuclear power is the solution to global warming. This public relations campaign can be traced directly to a 2003 MIT study, "The Future of Nuclear Power", which recommended it. Why would public opinion matter? The MIT authors noted, "Today, nuclear power is not an economically competitive choice. Moreover, unlike other energy technologies, nuclear power requires significant government involvement because of safety, proliferation, and waste concerns." They concluded nuclear power faced "stagnation and decline", without billions in new government subsidies.
The U.S. nuclear industry has in fact been in stagnation for 30 years. The last nuclear plant built in the United States was ordered in 1978. The industry blames environmentalists for its collapse, yet government policies have always favored nuclear power.
Utility executives, not environmentalists, halted nuclear power
's expansion decades ago, because of extremely high costs. According to the U.S. Energy Information Administration, cost overruns for nuclear plants for the years 1966 to 1977 ranged from 200 to 380 percent. The largest bond default in the history of the municipal bond market was a $2.25 billion bond used by the Washington Public Power Supply System to construct two nuclear power plants. Nuclear power failed because, in the end, it is just one of many ways to generate electricity. In comparison with other choices, nuclear power proved to be one of the most expensive ways to produce a kilowatt-hour.
Click here to read the full article.
