Skip to main content

Investing in Powerhouses

raymond-scott The Washington Post tried a front page story about nuclear energy – and if you develop a higher profile, as nuclear energy has done, then newspapers are going to take a closer look at you. We expect that and in truth the story isn’t bad.

For nuclear energy followers, the news isn’t very new at all:

In states such as Georgia, Florida and South Carolina, utilities have won permission to charge customers for some of the cost of new reactors while construction is still in progress -- a financing technique that would save utilities a couple of billion dollars for each reactor. Previously, utilities had to wait until power plants were in operation before raising rates, as they still do in most states.

This is CWIP, or Construction Work in Progress, approved by legislators in some states and not in others. The salient point behind it is that a utility can recoup interest charges and thus not suffer interest on top of interest – and thus, its customers don’t suffer it either. The Post gets to this, though much later in the story:

Southern Co. said the [CWIP] law passed in 2000 will help its Georgia Power subsidiary shave nearly $2 billion off the cost of the two new nuclear reactors at its Vogtle site -- and Georgia Power owns only 45 percent of the project.

That’s only to the good. One could argue that companies should shoulder the burden alone, but with utilities, it never works out that way – the ratepayer will see the cost one way or another. Finding a way to contain interest charges is, in our view, a net good – certainly arguable from multiple perspectives, but in sum, a deal for the ratepayer.

The cost of a plant is really the focus of the Post article, but there’s really nothing new about that – to us, that is – though it provides interesting material to the general reader. We found its attempt at balance a bit funny:

"It's a terrible idea," said Jim Clarkson, a consultant with Resource Supply Management, a Georgia firm that advises companies on how to reduce electricity use. "We've had decades of subsidies for nuclear plants and all sorts of preferential treatment. They still require loan guarantees because the smart money won't touch them."

"Nuclear power is very important," says John W. McWhirter, who represents the Florida Industrial Power Users Group. "We just wish consumers could be protected."

As David Bradish pointed out here awhile ago, subsidies (if you define them fairly broadly) flow across the energy spectrum and not overwhelmingly to nuclear energy projects. Making it seem unique to nuclear projects really isn’t honest – and that’s even if we let loan guarantees into our definition of subsidies.

---

In a way, what we’re doing is living on borrowed infrastructure, last built out during construction of the national freeway system 60 years ago, and providing for subsequent generations relatively inexpensive public works – including energy plants. Consider the following:

Demands for energy, wood, minerals, cement and cars [go] up and up. … This growth has placed intense demands on China’s highways, which the government is dealing with by spending 9 percent of GDP on modernizing infrastructure.

Contrast that 9 percent with the less than 1 percent of GDP the United States invests (and most of that through the states) and ingenious solutions for putting up a few plants – like CWIP – gain considerable appeal. If the United States means to remain an economic powerhouse (allowing for the developing and developed status of China and the U.S.), it needs to invest – or make it plausible for private capital to invest - in some actual powerhouses.

Raymond Scott (1908 – 1994) was a bandleader, composer and tinkerer in electronic instruments. His music had a novelty-like appeal to it, being lively and original if also quite eccentric. Probably his best known piece (to modern audiences) is the two part Powerhouse and that’s because both parts were used very frequently to score Warner Bros. cartoons, often to represent factories working along (notably baby factories staffed by drunken, mis-delivering storks.) You can learn more about Scott and hear his version of Powerhouse here.

Comments

Sterling Archer said…
The biggest subsidy in the energy industry is how coal weasels out of responsibility for the thousands of Americans its emission kill and maim each year. Is Robert Byrd still alive?

Popular posts from this blog

Knowing What You’ve Got Before It’s Gone in Nuclear Energy

The following is a guest post from Matt Wald, senior director of policy analysis and strategic planning at NEI. Follow Matt on Twitter at @MattLWald.

Nuclear energy is by far the largest source of carbon prevention in the United States, but this is a rough time to be in the business of selling electricity due to cheap natural gas and a flood of subsidized renewable energy. Some nuclear plants have closed prematurely, and others likely will follow.
In recent weeks, Exelon and the Omaha Public Power District said that they might close the Clinton, Quad Cities and Fort Calhoun nuclear reactors. As Joni Mitchell’s famous song says, “Don’t it always seem to go that you don’t what you’ve got ‘til it’s gone.”
More than 100 energy and policy experts will gather in a U.S. Senate meeting room on May 19 to talk about how to improve the viability of existing nuclear plants. The event will be webcast, and a link will be available here.
Unlike other energy sources, nuclear power plants get no specia…

Making Clouds for a Living

Donell Banks works at Southern Nuclear’s Plant Vogtle units 3 and 4 as a shift supervisor in Operations, but is in the process of transitioning to his newly appointed role as the daily work controls manager. He has been in the nuclear energy industry for about 11 years.

I love what I do because I have the unique opportunity to help shape the direction and influence the culture for the future of nuclear power in the United States. Every single day presents a new challenge, but I wouldn't have it any other way. As a shift supervisor, I was primarily responsible for managing the development of procedures and programs to support operation of the first new nuclear units in the United States in more than 30 years. As the daily work controls manager, I will be responsible for oversight of the execution and scheduling of daily work to ensure organizational readiness to operate the new units.

I envision a nuclear energy industry that leverages the technology of today to improve efficiency…

Nuclear: Energy for All Political Seasons

The electoral college will soon confirm a surprise election result, Donald Trump. However, in the electricity world, there are fewer surprises – physics and economics will continue to apply, and Republicans and Democrats are going to find a lot to like about nuclear energy over the next four years.

In a Trump administration, the carbon conversation is going to be less prominent. But the nuclear value proposition is still there. We bring steady jobs to rural areas, including in the Rust Belt, which put Donald Trump in office. Nuclear plants keep the surrounding communities vibrant.

We hold down electricity costs for the whole economy. We provide energy diversity, reducing the risk of disruption. We are a critical part of America’s industrial infrastructure, and the importance of infrastructure is something that President-Elect Trump has stressed.

One of our infrastructure challenges is natural gas pipelines, which have gotten more congested as extremely low gas prices have pulled m…