It was difficult to get utilities to spend money for dam safety and for environmental enhancements and mitigation for their generation projects under a regulated market when they were guaranteed rates to cover expenses. In a deregulated market dam safety is going to be like pulling teeth and environmental enhancements and mitigation is going to be something our kids are going to read about in their history books.

Years ago, New Zealand saw the problems wrought by deregulation with the extended blackout of their national capitol for months because of scrapping preventative maintenance and planned infrastructure replacement. It will be our turn. I'm not against deregulation but I'm against fairy tale politicians who think that deregulation is the answer to all our problems when it is really only the seed of innumerable problems to come because they didn't plan deregulation. They instituted it as a trial and error process--put it in place and fix the problems as they arise.

With deregulation you can kiss goodbye nuclear, wind, solar, geothermal, and any other generating resource that is not the absolute least costly at this moment. Deregulators are not planners, they believe in immediate gratification and for living today and to hell with tomorrow. They are the entrepreneurs who want to make a buck right now.

First, taxes on externalities. Nuclear gets taxed 1 mil per kW-hr for Yucca Mountain while dumping CO2, NOX, SO2 are free. Still, Congress has spent all the cash paid in so far to the Nuclear Waste Trust Fund, mostly on non-nuclear general fund expenditures. Almost all the actual construction costs will come from the general fund and current tax receipts. Where is the carbon tax?

Nuclear plants have 20 year IRS depreciation schedules last time I looked - wind mills have 3 or 5 years. That's a big tax disadvantage against nukes.

Nuclear power has never been a "get rich quick" industry. That seems to run counter to the tenor of the times.

value@volatilitymanagement.com

Let's talk Yucca Mountain for a moment. I've read the science and engineering report from the DOE (DOE/RW-0539) and I came away with two points - first, the Federal gov't is building the most lavish Brick Outhouse since the Pyramids. And second, fully half the cost (and volume) will be appropriated to our Cold War legacy of nuclear weapons and naval reactors.

The cost of waste disposal is properly accounted as an expense and not as a capital investment. (Just ask Worldcom.) Even with the full $100 billion accrued to 100 plants, over 60 years that's only $17 million a year. The first year of drug testing at a plant I worked at cost $1 million. Hence, nuclear waste is chump change. I only mentioned it in hopes that people will start talking about a carbon tax again. Fair's fair.

As to cost over-runs, our experience building and operating the first commercial fleet taught us that the cost risks were from two causes - technical pioneering and die-hard political opposition. We've got most of the technical risk squeezed out based on our hard-won experience so that, in countries with low political risk, firms ARE bidding new plants on a fixed price (with liquidated damages) basis - Taiwan and Finland to name two in my experience.

Of course, any major human undertaking will have risk. The federal government has taken steps in the last decade to reduce the political risk - certified reactor designs and pre-approved sites are two bureaucratic innovations that will certainly help any new domestic project. To some degree, operational risks are insurable. US owners have some risk-sharing arrangements operational today. With today's 90% capcity factors, forced outage risk should be managable.

As Mr. Lord has repeated pointed out, SOMEBODY (or everybody) has to pay extra to ensure reliable electricity. If a nuclear plant is a net contributor to grid reliablity, it should be so credited as a revenue to it's owners - there is certainly little fuel price or supply risk with uranium relative to natural gas, fuel oil, or hydro. Political risk for coal is just over the horizon. Build one in MY backyard over my dead body!

Frankly, with the market restructuring suggested in my article (short on details, I know), a new nuclear plant ought to look very attractive at the classic 10 to 14 % return on equity that investors in regulated utilities used to see. And that was before suggestions for the elimination of taxes on dividends. Widows and orphans could do a lot worst.

The US licensing process had been marked by a particular "openess" that allowed the proverbial "Little Old Lady in Tennis Shoes" to paralyze a multibillion dollar enterprise. The recent revisions to that process have closed the door on most of those interference plays - certification and site pre-approval will present opponents of a particular project pretty much a bureaucratic fiat accompli once it is announced. It has been quite clear that nuclear opponents have engaged in economic warfare against privately owned nuclear power where wasting enough of someone else's money was the way to prevail.

That said, we are nowhere near a complete acceptance of nuclear power in the US. However, there has never been a solid, stable majority opposed either - active opposition has always been very much a minority activity. Democracies have to deal with situations where the electorate is split - the majority must rule else paralysis results.

For example, look at the recent formal acceptance of Yucca Mountain. Nevada politicians and a probable majority of Nevadans opposed it yet it prevailed at the White House and in Congress. The DOE has decided to throw taxpayer money at in hopes of assuaging some of the technical concerns, hence it's high cost.

Opposition to nuclear power was always founded on fear. Will the fears of insecure oil supply and of global climate change trump that? The current political leadership and turbulent world events give me hope that Cheney's muscular energy policy can continue.

First, in addition to the above comments on Yucca Mountain, the right answer is reprocessing spent not burial. Second, even if the $100 billion number for Yucca Mountain is correct, that is now about the same cost that is being talked about for the Iraq War. And, no one gets killed building and operating Yucca Mountain.

Does anyone believe we would be in the Arab region at all if they didn't control our petroleum sources? If the USA committed to a policy of being an energy independent nation in 10 years (and meant it), we would see oil prices drop quickly. If the US stops or reduces buying Arab oil, prices will nosedive.

So, what is the better social choice -- being energy dependent on unstble supplies and governments or subsidizing indigenous power sources (as an alternative to periodic war costs). Remember, if we can generate cheap power, we can synthesize most of our chemical needs from other carbon sources such as biomass and trash. THen, we can sell the technologies to others instead of the massive balance of payments we now generate from oil purchases.

How did this great country get it so wrong?

Although energy data is plentiful, for some reason Energy Pulse does not have tables or graphs in its articles. It woud have been helpful if the author could supply graophs and tables of gas prices in the last two decades or so, since they were deregulated. I think they would prove my point about the roller coaster.

Energypulse has solicited participation in a teleconference on the "natural gas crisis". I find my response to this request may also be a relevant comment on your article about deregulation and nuclear power:

Steve:

Having grown up in the Northern Illinois Gas/ Peoples Gas distribution area in the 1950s, I participated in the conversion from coal to fuel oil to natural gas up close and personal. In those days, as gas service became available, I was employed by a contractor who supplied conversions from coal- and oil- fired furnaces and boilers to gas-fired units. Most electric generating stations remained coal- and oil-fired, but it was becoming clear that properly handled nuclear fission would one day replace these sources. Somewhere on the way to this destiny "properly handled" became "politically handled" and gas-fired boilers and gas turbines were thrown into the breach. Rather than the controlled expansion of natural gas use I had witnessed as a young man, wholesale construction of gas-fired electric generating stations was undertaken. To my way of thinking, little effort went into thinking about supply and storage. Even less thought was given to reserves and future costs. Why not? Natural gas was the cleanest and soon-to-be the cheapest of oxidizable hydrocarbons. The capital costs of gas-fired stations were dwarfed by those of coal-fired, oil-fired and, particularly, nuclear electric generating stations. With all the emphasis on short-term ROI and false expectations about decreased demand for electricity so stylish in the 1970s and 1980s, the die was cast for anyone looking ahead. I believe some folks foresaw what you call a natural gas crisis. Given the people who advocate driving fuel cells with hydrogen extracted from natural gas, the situation should become even more interesting. During the escalation to the current crisis, a funny thing happened to electric generation. The DOE's annual tabulations of cost for U.S. utilities to generate a kilowatt-hour of electricity began to show an inverse relationship to plant capital costs. Perhaps the cold, hard economics were starting to tell us that if we can not limit demand, we'd better start thinking more about long-term ROI and closing the nuclear fuel cycle. My generation and its predecessor (Edward Teller, et. al.) did not succeed in keeping the nuclear genie from becoming politicized. Until a generation comes along that does, crises and demand limits will abound.

As you've probably gathered by now, a teleconference on how to take short-term advantage of an intractable mess created by lack of foresight is not my cup of tea.

Sincerely yours,

Don Giegler

All of these things work in favor of well proven, highly efficient and relatively modular gas turbine based systems relative to more capital intensive alternatives with great regulatory, social and financial risks like nuclear power. Gas turbine systems can shift duty cycles over the course of a project lease, respond quickly to changing marketing conditions (gas and electric), have low capital costs, high efficiencies, have high salvage value (can be leased in some cases) and can even ultimately be shifted partially or fully to coal or biomass derived gases if careful fore thought is put into planning location and design of such gas turbine projects within an overall regional grid system.

In 1969 a man named Alex Gakner worked as a special technical assistant to the Chairman of the Federal Power Commission. He had been studying the state of electric power development and had concluded that America was headed for a disaster. The electric utilities were letting their long-term coal purchase agreements expire without renewing them because the middle east was flooding the market with cheap oil. Alex knew that once the coal contracts expired the coal companies wouldn't be able to keep their mines open and producing and would have to sell off all their equipment and shut down the mines. He knew that once that happened the mining companies would never have the capital resources to reopen. He knew that once America had become totally dependent upon mid-eastern oil the mid-eastern countries would jack the price up and America would be at their mercy.

Alex warned everyone he could about the pending oil crisis but of course no one would listen or even act as if they cared. It was only four years later in 1973 that all that Alex feared and warned America about came to pass. We remember it for the long lines at the gas pumps and the rules about rationing fuel.

It doesn't matter at all what makes sense in electric resource development in America because America doesn't rely on common sense in the actions it takes or doesn't take. We can only travel down the path our fearless, feckless leaders have chosen until we fall into a bungee trap or run into an immovable object.

Nuclear development may make totally rational sense, fuel diversification may make total rational sense, total dependence on mid-east oil and natural gas may make absolutely no sense, but none of these facts will affect the reality of how electric power resources will be developed in America. America is heading for crisis and there is absolutely no one who can avert the crisis or even convince America that there is a pending crisis.

I wrote a book to try to educate all Americans to the upcoming problems with deregulation and electric resource development. Knowing that knowledge is power I named my book, Power to the People." I have discovered, just as did Alex Gakner, that trying to educate Americans, or even the leaders, to a coming crisis is about at productive as pissing in the wind. Americans are like teenagers–they want or need to experience everything, including crises, first hand.

Rational thought has really nothing to do with national-scale American decision making. If it did we wouldn't be still trying to figure what to do with a megalomaniac in the midle east who can make Americans look like total fools by taking any action that will force them to attempt to come to a consensus.

I recall a survey done several years ago (1993) in which a simple question was asked of different groups. The question was something like: 'How important a role do you think that Nuclear Energy should play in meeting the future energy needs of America?" U.S. opinion leaders opined that 72% of them believed that it was important while 28% either did not, or did not have an opinion. When these same opinion leaders were asked what they thought the public believed about this question, they responded that they thought that only about 25% of the public would think that it would be important, while they said that they believed that 75% would think that it not be important. Now when the public was asked the same question - what they personally believed - about 73% of the public said that they believed that nuclear energy would be important, while only 27% thought otherwise. It is a pity that the loop was not closed by asking them what they thought opinion leaders believed.

Two things are obvious here. Politicians make the decisions they do because they believe the public to be relatively ignorant and backward, and not as smart as they are. The public lets them get away with this.

Obviously we need to educate our politicians about what most of us believe, rather than allowing them to be influenced by the very small consitutency that Spiro Agnew described as Nattering Nabobs of Negativism. The public recognises the need for nuclear energy. The opinion leaders recognize the same thing. Shouldn't we bring these two groups together rather than having them believe the wrong things about each other? John K. Sutherland.

Fuel diversity itself is not an economic value given the ability to hedge natural gas price risk. Reducing CO2 emissions, no matter how laudible, is not an economic value right now in this country. At the end of the day (this day, anyway), nuclear will succeed if it can compete on price, including transmission upgrades and fuel disposal.

Peter Evans New Power Technologies

Nuclear is ill-suited to peaking and intermediate load operation that gas turbines can excel at - just ask EdF what it's like to load follow with their PWR - nuclear and gas turbines look complimentary rather than competitive. One of the advantages of the pebble bed reactors could be penetrating the market niche (intermediate load/cycling operation) that light water reactors have not proved well suited for. Until then, nuclear will probably stay confined to the ghetto of base load.

The "take home" point of my article is that we must seize this opportunity to re-craft our electric markets through Federal regulation to make them more hospitable to our nuclear reactor technology. I don't think it will take much nor will it require any great sacrifice on the part of any but the most self-interested political actors in this country. The benefits will acrue to all - that's why it's government's job. Think where we'd be if we did not today make 20% of our electricity from nuclear power. Just maintaining that market share will require new plants sooner or later and I hope it's sooner.

Education is the key to the future of nuclear power. The majority of the public is still agnostic about the merits of nuclear power. Every owner and potential owner must make promotion and public acceptance of nuclear power a high priority. It is equally the responsibility of each of us in the nuclear industry to get the word out about the political benefits and environmental benefits of nuclear power being the right choice for the future of our country. Nuclear power is the “greenest” power option to meet the growth of demand for power. Environmentalists have been too much the grasshopper, too little the ant: focusing on short-term expedients, and neglecting the longer view. We who are in the nuclear power industry know that we have the answer to the longer view, in terms of the politics of being independent on foreign energy supplies and environmental issues. The destiny of nuclear power is not a matter of chance; it's a matter of choice. It is not a thing to be waited for; it is a thing to be achieved through choosing to educate the public on all of the benefits of nuclear power. It is time to advertise the benefits of nuclear power.

A major political problem for new nuclear is a lack of a powerful consituency willing to spend political capital in winning support. Current operators are happy to keep their heads down and their names out of the news. Why put out effort and assume risk to pave the way for someone else to build a new nuke? The vendors don't see much chance of making real money off of new orders. Environmentalists don't seem to recognize a good thing - long gone are the days of a Sierra Club endorsement.

As for educating the public - I'd write off the Boomers. They have gotten so they treat nuclear as they would a snake - instant fear reaction with no cerebral intervention. Gen X and Gen Y seem much more open to discussions about nuclear power.

As for traders, they're the guys we want to get away from! The output of a base load nuclear plant will be sold on very long term contract(s) for capacity, energy, and anciliary services and will contribute stability - not volatility - to the market. The traders are going to hate that.

Nukes have never been viable and they never will be. The sooner we stop subsidizing them and railroads and other tachnologies that have never stood alone without raising my taxes the sooner we can get on the correct path.

Not until old nukes get fully insured should we talk about new nukes.

And how, exactly, do nukes that never change load sell ancilliary services?

It is quite true that the operators of nuclear power plants treat them as if they were driving Miss Daisy - slow and steady and pampered. I suspect that the neighbors appreciate that - the regulators certainly do.

Your assertion that nukes "have never been viable" supports my point that the current method of economic valuation of nuclear power misallocates the costs and the benefits. We're embarking on our second war in 13 years to secure energy supplies from the Persian Gulf - we would be much more desparate if we still fueled our electrical grids with Bunker C rather than UO2. Is your son or daughter wearing a uniform? That might color your assessment. How exactly are we "subsidizing" nuclear waste storage and fuel? It seems to me that government is milking nuclear power as a cash cow rather than the other way around!

Likewise, externalities of CO2, SO2, NOX, and Hg emissions are not counted against the alternatives. I was once haranged publicly by an environmentalist for all the releases of heavy metals into the watershed from my nuke. My reply was simple - that was solely from the run-off from the employee parking lot.

Here in California, nuclear power is the cheapest available year-round electrical power - that's probably true elsewhere too. But then, the mortgages are paid off.

It is true that nukes are not going to be used for frequency control - they are based-loaded, after all, and that marginal megawatt is very cheap to generate. Power factor credit might be applied, especially if we design in more electrical margin into the generator. I will grant that energy and capacity are the money-makers for nukes - anciliary services are a trivial value relatively.

Well, you DO know something, and my refutation's a bit weak on one point:

>>How exactly are we "subsidizing" nuclear waste storage and fuel?<<

First, though maybe not a subsidy that comes out of my wallet, how about insurance on fuel transport and waste storage? We all know that plant insurance is nowhere up to the potential damage. Is insurance on the waste and fuel different? Or do waste and fuel companies also come up short in the potential damage department? Aren't fuel prices so muddled with smoke and mirrors that the TRUE cost is unknowable? I know there are studies that claim to include everything, but do they really? Isn't there a government step in the fuel pipeline that obscures the true cost? Don't processors have to "sell" their fuel to the government and then the feds sell it to operators and that selling PRICE is counted as the only COST? Isn't this federal "buy dear, sell cheap" a subsidy to the industry? Are there no grants or tax breaks anywhere in the nuclear power industry that do not exist elsewhere? Doesn't a tax break to a big industry raise my personal income tax (assuming government spending independent of my tax bill)? Isn't that a subsidy?

I'm open to the possibility that these subsidies don't come anywhere near the value of the free oxygen taken by thermal plant operators.

-Terry M

One area where some befuddlement exists is in our arrangements with the Russian government to import the highly enriched uranium from their nuclear weapons and submarine cores into the US and burn it in our power reactors. About 10% of all US electricity is now fueled by former Russian nuclear warheads and delivery systems. So far this includes only uranium; what to do with their plutonium is yet to be decided.

Frankly, I'd gladly pay a little extra in my taxes or on my electric bill to turn weapons of mass destruction that had been pointed at me and my family into electricity for our country. However, I still can't figure out whether we are doing so at a cost or at a savings - I don't think it matters much either way.

While nuclear power R&D was heavily subsidized in its early years ('50s and '60s), the last 20 years has seen minimal national investment in the nuclear power option. The payoff from that industrial policy has been huge, and I submit, a clear success story. Today, nuclear power is in the pay-back mode financially and in terms of global energy security. As I mentioned earlier, imagine today if we still made 35% of our electricity from imported oil as we did in 1972.

The next big challenge will be in developing nuclear reactors to produce the raw material of the Hydrogen Economy - hydrogen. There is no other real option but uranium and I suspect that Bush knows that.

Absolutely none of my taxes go towards nuclear fuel storage, even "indirectly"?

The actual numbers are difficult to decipher. In any case, the cost of nuclear fuel is a trivial part of the cost of electricity from US nuclear power plants.

Yucca Mountain will contain half commercial spent fuel and half government weapons and submarine waste. Your electric rates (assuming you use nuclear power) covers one and your taxes cover the other.

Spent fuel held at a reactor site are costs to be included in your electric bill but those operating costs are very small.

The weapons disposal aspect alone should be enough to support nukes, at any cost. So now will we see peaceniks and eco-elitists counterdemonstrating?

As long as there are enough nuclear plants to dispose of all warheads I still think nukes get too much special treatment to think about giving them any more, but maybe the actual dollar$ aren't obscenely higher than nuke pushers claim.

The 'external' costs of using any source of power are often not easily defined, but where some effort has been made to do so (Mauk Macamuk gave you a reference source - 'externe' - for these costs estimated in Europe), it was clear that they would add about 30% to 50% or more to the costs of electricity. Obviously, these external costs would be killers of jobs and industry, so they will continue to be ignored and avoided.

I doubt that anyone dare put a figure on the presumed costs which might arise from the alleged global warming (it might even be a beneficial effect rather than harmful, at least it would seem to be where I live). A carbon tax would most certainly be a social shocker and a killer of political ambitions, so it probably will never happen.

In contrast, the 'wastes' from nuclear power are of very small tonnage, and are 100% managed. And safely managed too! However, that does not stop anyone from alleging various problems that are unlikley to arise, or from playing the 'but what if...' games, that can easily sidetrack otherwise intelligent people.

http://www.radix.net/~bobg/faqs/scq.CO2rise.html

"Ice cores show that during the past 1000 years until about the year 1800, atmospheric CO2 was fairly stable at levels between 270 and 290 ppmv. The 1994 value of 358 ppmv is higher than any CO2 level observed over the past 220,000 years. "

"Overall, a natural disturbance causing the recent CO2 rise is extremely unlikely."

Other publications show clearly that the rise in CO2 levels since the beginning of the industrial revolution are currently almost exactly the same in magnitude as those which preceded the melting of the last Ice Age glaciation. The difference is that the current rise started from a base which was much higher already. That rise also took about 250 years to take its full effect.

I'm personally quite convinced that we are in the midst of an unprecedented global experiment where the likely outcome will be at least significant melting of Greenland and Antartic icecaps (waterfront property anyone?) and an advantage gain for CO2-preferring plant species (ferns/mosses over grasses/grains/deciduous). Does anyone who seriously reads what they find on google for "greenland ice CO2" actually disagree?

Lost Squadron Ices Global Warming From Greening Earth Society Thursday, March 15, 2001

WASHINGTON, DC — Greening Earth Society science advisor Robert C. Balling, Jr., examines the story of infamous "Lost Squadron" from World War II and in the process of recounting a tale of heroism and adventure discovers reasons why, as he says, "We should be skeptical of bold pronouncements permeating conventional wisdom about global warming."

In July 1942, twenty-five U.S. Army Air Corps crewman were forced to ditch two new B-17 Flying Fortresses and six new P-38 Lightnings on Greenland’s ice-cap when bad weather kept them from delivering the warplanes to Great Britain. Forty-six years later, Pat Epps and Richard Taylor joined the list of aviators who had long-dreamed of recovering the eight planes by managing to locate the treasures under 268 feet of snow and ice. Using "cold mining" techniques,

Epps and Taylor were able to retrieve one of the P-38s by bringing it to the surface one piece at a time in 1992. Dubbed "Glacier Girl," the airplane is being reassembled and carefully restored in Middlesboro, Kentucky and is expected to fly again within a few years.

What piqued Balling’s interest in the story is the fact the airplanes were located under so much ice and snow during fifty years when fossil fuel use grew astronomically, and when some global warming theorists predicted shrinking polar ice caps and claimed glaciers were melting around the world. "Apocalyptic stories of melting icecaps are a key ingredient of the greenhouse/global-warming debate," Balling writes in his report.

Many web sites provide other balancing information, including those of SEPP, Daly (australia), Idso, many others, and the recent report by McKitrick and McIntyre that demolished Mann's 'hockey stick' promotion, that grabbed the world's attention, was very enlightening. Hansen's (the person who started it all) retractions are also interesting.