Nuclear Power Too Pricey?

Jan 7

So they are double dipping on corporate welfare. What would you do if somebody paid off all your morgage. You'd borrow agaisnt value of your house like hell getting all the grown up toys you only dreamed of and paying for your kids college eduation. I think most nuclear plant do the same. Why not pick a boat load of bonds based on the value of the plant and property? I think they done that.

January 07, 2015

 

Playing chicken with Illinois' electric rates won't improve the climate

By: PETER BRADFORD

The recent demand by Illinois' nuclear power plant owner, Exelon, for a breathtaking $580 million per year in rate increases to keep running its plants raises serious questions as to wise ways to fight climate change and assure energy security. Illinois customers have paid dearly to bail these same reactors out of past economic peril. They should understand that bailing them out a second time will be more expensive and less effective than charging for the emissions that cause climate change.

When Illinois turned power generation from a monopoly to a competitive industry in the 1990s, the nuclear plants seemed too costly to compete effectively. Illinois legislators and regulators included measures assuring that customers, rather than investors, would bear the risk that reactor costs could not be recovered under competition.

Consequently, the nuclear units needed only to recover their relatively low operating costs through competition to be profitable. For a decade, the reactors did so well that many in the industry trumpeted them as “cash cows” producing cheap electricity in an expensive marketplace.

Good-bye to all that. Nuclear economics have gotten so shaky that yesterday's cash cows are said to be today's vulture bait.

The U.S. nuclear industry has benefited immensely from government expenditure ever since the Manhattan Project gifted it with reactors, fuel enrichment and trained personnel. It also has the advantages of a limit on liability for accidents and the unique governmental commitment (as yet unfulfilled) to take its most radioactive wastes.

The $580 million in rate increases sought by Exelon amounts to several hundred dollars per customer, much of it paid in the electric bill, some of it in the cost of other goods and services.

THE RIGHT ANSWER

The price of putting carbon into the skies must reflect the reality of climate change.

This reform will raise the price paid for the natural gas-fired power that has undermined nuclear profitability. Nuclear profits will increase, but so will those of all other low-carbon measures, especially energy efficiency and renewable energy. The lowest-cost measures will win out. They may include the existing reactors, but—given the lower costs of energy efficiency and some renewables—they may not.

Targeting subsidies to reactors instead of taxing carbon may well pay too much for too little climate improvement. The claim that nuclear reactors provide unrewarded reliability benefits does not reflect the reality of today's power markets, which are capable of providing round-the-clock electricity in other ways. As to jobs and property taxes, paying higher-than-necessary electric rates merely transfers jobs and taxes from electricity-consuming companies and other power producers to nuclear power plant sites. This will not improve Illinois' economy.

Closing many nuclear plants abruptly is not in the climate's best interest, but neither is lobbying-induced subsidy panic in Springfield or Washington. Charging to use the sky as a carbon sink protects the environment while preserving reliable power markets. That's the reform worth enacting.

articlePara

Peter Bradford is an adjunct professor at Vermont Law School, former commissioner of the U.S. Nuclear Regulatory Commission and former chair of New York's and Maine's utility commissions.

 

Do you believe these guys...I believe nothing they say is true. Nobody enforces truth-telling in our electric sector.

Is this relevant for the nuclear industry also: 

(WSJ Jan 6)American oil and gas companies have gone heavily into debt during the energy boom, increasing their borrowings by 55% since 2010, to almost $200 billion.

Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55% since last June. 

The fuel cost of a nuclear power plant is very small. $400 million dollars is cheap for the purchase price of a large power plant. Most older nuclear power plants should have payed off their new construction mortgage. Basically a older nuclear power plant just pays for upkeep and fuel. Electricity should be very cheap coming out of these guys...pure profits.

So Vermont Yankee and Ginna were once owned by local or state corporations until about 2003….Central Vermont Public Service and Rochester Gas and Electric. These companies were more directly controlled by the state legislators and the state grid authorities. The state officials were more directly in communication with the plant official.  Is this a flaw in the model with selling nuclear power plants to far flung mega corporate owners…the local politicians were getting the same cut as before and they became more mistrusting of distant corporate owners? I know it was the state who would not take a long term contract from Entergy.

Course, CVPS might have dumped VY in order to get taken over by  Gaz Metro.

I believe if we subsidized these poor boy nuclear plants, most of the money would get sucked into utilities bureaucracy and onto the politicians...very little of it will translated into pouring monies into upgrading these ancient plants. Later as the utilities waste this subsidization, there just go back to the trough begging for a increase of the subsidization. Then everyone who is a  losers in competition will want to copy the nuclear industry model. 

They are plowing savings from fracking into their stock price...not into cheaper rates for the consumers and businesses.

The Utilities sector surprised many by posting the best price performance in the market in 2014. Electric utility companies were a particularly strong subset of the sector, posting an average gain of 31% during the course of the year.

Below is a table showing which stocks in the group are the most undervalued:

click to enlarge)
Source: QuantifiedAlpha.com

I got an idea, this is getting just too complicated. Lets just pay anyone who produces electricity for the grid $100 per megawatt-hour. This is what our electric systems would looks like without a credible referee and totally dysfunctional government. And you know most of well off and powerful will be paying a lot less for electricity than the middle class and poor. A dysfunctional system like this always forces the poor and powerless to subsidized the electricity and utilities for the rich.    

Believe me, in recent times we lost the word of competition in the electricity industry. Mostly is is all collusion with all the players to jack of the price of electricity. So I think the mega utility model is failing...basically they are sucking the blood out of the ratepayers and our nuclear system to bolster the failing  model of our electricity system and the utilities. This is only going increase as the average age of the nuclear plants increase.  

Do you remember the days when you had to pay long distance charges on you phone bill? Now it is a standard rate if you talk locally or to California. Long distance charges are a thing of the past. I think this stagnant and brain dead electric system model is the reason why electricity doesn't serve us more efficiently like our telephone and cell phone system. These rich and powerful utilities and like minded colluded together and basically got our political system captured...they no longer serve the interest of the country. But there are some drawbacks phone systems. We no longer have telephone booths. Everyone now has cell phones and many young people don't have primary home telephone lines. Why isn't the electric system like that. 

What if the coal, natural gas and green electricity blackmailed us like the utilities are doing now with the nuclear plant systems. i think we could invent a much more efficient and inexpensive nuclear system...but the forces blocking this now are the ones making money hand over fist and who gain enormus status over this frozen system. i get it, they mostly destroyed the positive image with the nuclear industry in the last three decades.  

Once the utilities serve the greater interest of our nation, our families and societies...serve a greater cause than themselves such as bulwark against the savages from afar lands. Now they primarily serve these modern mega corporation structures, their rich executives, CEOs and mostly serve these monstrous Frankenstein institutional players.  Basically our electric system of years back was in a socialist model...their purpose was to reliable serve society and the greater cause of increasing modernity and as "the" model to the rest of the world as the USA was the best country on the planet. In years back, electrification was the worldwide model of development and modernity...justice for us all tracked the development of electric system. Now all we are is financial clerks and we serve these monstrous soulless corporations without hearts. Remember when the world trembled at our greatness, the business class served a much smaller role there, we were the image to the world you can't go wrong if you model and develop your country like the USA. 

I telling folks most of the big utilities are a libertarian and the anarchy type models. They rather destroy us in their independence, than belong to something great...instead of being just a piece of something great. They hate everything the USA stands for...mostly they hate national centralized codes and standards. They are out to destroy democracy and truth telling. They will push out any false image to throw your opinion towards their direction...they will make sure they secretly obscure the facts so you won't know what direction you are heading. Most of these CEOs want to be dictators...they want their own standards and morality. They want deeply in their hearts to make the USA and the world severe their selfish ideals and causes. King and gods over the lands with their own special ethics and morality...I telling you, they want to own your souls.

So here we are with most of us being so disfranchised we don't vote or pay attention to government...we never had such a pervasive media news presence and they being so shallowly corporatized. The default with most of us, we want to pay to feel better (booze, drugs, status, entertainment). We don't got the guts like our forefathers, to make a world that would inspire all of us with its beauty! 

It is like with our modern interconnectivity (cell phones, computers, internet among others), we collective chose not to use any of it because we are afraid of change and the future. We should be ashamed of yourself!         

New York reactor's survival tests support for pricey nuclear

By Naureen S. Malik and Jim Polson, Bloomberg NewsBloomberg

NEW YORK — Exelon Corp., the biggest U.S. owner of nuclear reactors, needs to almost double power prices to keep a New York plant running in a move that promises to show just how far regulators will go to keep uneconomic plants operating.

After recording losses that exceeded $100 million from 2011 to 2013, Exelon will need to charge about 83 percent more than wholesale prices to earn a profit at its Ginna plant, based on company cost estimates. State regulators have set a Jan. 15 deadline for a new power contract that's rich enough to keep the Rochester-area plant running.

Last month, Entergy Corp. shut Vermont's only operating reactor citing low power prices. Ginna is one of 10 other nuclear plants that can't compete in current markets, Moody's Investors Service said in November. Retiring the reactors, which account for 10 percent of the nation's nuclear output, would undercut a push to produce power without greenhouse gases as renewables such as wind and solar are just emerging.
"Ginna nuclear power plant is an important asset in the state's generation fleet," Patricia Acampora, a commissioner for New York's Public Service Commission, said at a Nov. 23 meeting. "It's important, reliable, carbon-free energy."

Exelon acquired the plant when it bought Constellation Energy Group Inc. in 2012. Constellation paid Rochester Gas & Electric $401 million for the plant in 2004 and agreed to sell power back to its former owner at $44 a megawatt-hour for 10 years. The average wholesale power price in the Rochester area was $38.83 a megawatt-hour during the past five years, according to data compiled by Bloomberg.
Power prices have dropped as booming natural gas production from shale cut costs for competing power stations that burn the fossil fuel.

"The two game changers have been the shale gas and the distortive effect of subsidies" for renewable energy projects like wind, said Joseph Dominguez, Exelon's senior vice president for governmental and regulatory affairs and public policy. "Those things really started to seriously impact the economics of plants probably around 2010."

Exelon won regulatory approval in November to begin talks with Rochester Gas on a new contract with the utility, which is owned by Iberdrola and serves about 371,000 homes and businesses in nine counties.
Exelon isn't alone in its struggle with at-risk plants. Four U.S. nuclear reactors were shut in 2013 because they weren't profitable or needed repairs that owners decided were too costly. Entergy's Vermont Yankee was closed after it failed to find a buyer. The company blamed "artificially low" power prices for the shutdown.

A single-unit reactor like Ginna needs as much as $71 a megawatt-hour to earn an 11 percent return and $56 to $64 to break even, based on 2016 forecasts, Exelon said.

The average Rochester Gas customer probably will pay an additional $18 more a month to keep Ginna operating, based on figures provided by Exelon in its state filing, said Tim Judson, executive director of the Nuclear Information and Resource Institute. The group estimated the operating costs for the Alliance for a Green Economy, an antinuclear group.

"Ginna will likely request a contract approximately $80 million a year greater than the market cost of electricity," said Jessica Azulay, program director of the Syracuse, New York- based Alliance, in a filing. "This is an extraordinary amount of money to be demanded of ratepayers to prop up a private company that has become uncompetitive in the market."

The 581-megawatt Ginna nuclear reactor produces power without heat-trapping carbon dioxide. Closing it "presents potentially serious reliability problems for New York," the Independent System Operator, which runs the state power grid, said in a filing.

Retiring nuclear stations that produce power without greenhouse gases would undercut President Barack Obama's plan to cut emissions. The United States and China, the world's largest greenhouse gas emitters, last month pledged to reduce climate pollution in an effort to curb global warming.

Other plants at risk of closing include Exelon's Clinton station in Illinois, Entergy Corp.'s Pilgrim station in Massachusetts and FirstEnergy Corp.'s Davis-Besse plant in Ohio, according to Moody's. All three are single reactors, where costs can be higher than at multi-unit plants.

In Ohio, state regulators are considering FirstEnergy's proposal for 15 years of customer subsidies to keep the 908- megawatt Davis-Besse reactor and some coal-burning plants in service.

"Markets have not, and are not, providing sufficient revenues to ensure continued operations of the plants," Donald Moul, a vice president for commodity operations at FirstEnergy, said in Aug. 4 testimony. While prices eventually will rise, "the plants may not survive long enough to see the higher prices."

Illinois legislators in May ordered agencies to propose "market-based solutions" that would keep Exelon's nuclear plants open in the state. The company expects to hold off any retirement decisions until May 2015, awaiting any new laws, Chief Executive Officer Christopher Crane said Oct. 29.

A new power contract to keep Ginna open would be an "interim measure" to meet reliability needs, Paul Elsberg, a spokesman for Exelon, said in an e-mail. It would also maintain 700 jobs as Exelon seeks "longer-term, market-based solutions for its nuclear fleet," he said.

Other power generators in New York, including NRG Energy Inc. and Entergy, owner of the Indian Point nuclear plant, oppose the premium contract, saying competitors should be allowed to offer alternatives to Ginna. Options include adding power plants or power lines from existing plants to supply the Rochester area, NRG said in a filing.

"For what Exelon is asking to keep Ginna running, we could replace this plant with lower cost sustainable energy, like efficiency, like wind and like solar," said Judson, whose group opposes nuclear energy.
Rochester Gas is reviewing six alternatives, said Daniel Hucko, a spokesman for Iberdrola, declining to identify the proposals.

"It's about reliability," Hucko said in an emailed response to questions. "We will work in the best interests of our customers with considerations of cost at the forefront while recognizing the importance of continued network reliability and reaching reasonable terms for all parties."