Author Archive

February 15, 2010

By Robert Alvarez
CommonDreams.org

When President Obama rolled out his proposed budget to Congress for the coming year, he said it would build "on the largest investment in clean energy in history." But Obama’s definition of "clean energy" includes a commitment to help companies garner billions of dollars in loans for nuclear reactor construction. And, unfortunately, nuclear energy isn’t safe or clean and it’s too costly for the nation.

The government’s role in the energy marketplace is clear in its loan-guarantee programs. This year, the Energy Department proposes to provide $166 billion in federal energy loan guarantees to aid the ailing auto industry and help finance nuclear, coal, and renewable energy projects. Sadly, the nuclear industry is slated to get the largest–and riskiest–share of that support.

Wall Street has refused to finance nuclear power for more than 30 years, rendering new construction impossible. The Obama administration, in a move to placate Senate Republicans, proposes to fund new power reactors with some $54.5 billion in federal loan guarantees. Because of the way the guarantees are structured, the actual loans will be made by the Federal Financing Bank out of the U.S. Treasury. Last year, the Government Accountability Office estimated that these loans have more than a 50-50 chance of failing. Because of skyrocketing costs, these loans might pay for five reactors–and merely expand the nation’s electrical supply by less than 1 percent.

Meanwhile, the Obama administration is moving to terminate funds for the Yucca Mountain nuclear waste disposal site in Nevada. After nearly 30 years of trying, disposal of high-level radioactive waste is proving to be extremely difficult, so Obama has convened a "blue ribbon" panel of experts to recommend what to do with it. The accumulation of spent power-reactor fuel poses new safety issues, which will be the reality for several decades to come. Spent fuel pools–which currently contain about four times what their original designs envisioned­are more vulnerable to terrorist attacks than reactors.

In 2004, a National Academy of Sciences panel concluded that drainage of water from a spent fuel pond by an act of malice could lead to a catastrophic radiological fire. A year earlier, my colleagues and I pointed out these risks could be greatly reduced by putting most of the spent reactor fuel into dry, hardened concrete and steel containers–as nations like Germany have already done.

Meanwhile, despite Obama’s rhetoric about reshaping America’s energy future, he’s asking for a budget that would have the Energy Department continue to spend 10 times more on nuclear weapons than energy conservation.

Even with economic stimulus funding, the department’s actual energy functions comprise only 15 percent of its total budget and continue to take a backseat to propping up the nations’ large and antiquated nuclear weapons infrastructure. In fact, the Energy Department’s proposed budget for the 2011 fiscal year, minus stimulus money, looks a whole lot like it did in the Bush administration, and as it has during several presidents’ tenures.

More than 65 percent of our energy budget covers military nuclear activities and the cleanup of weapons sites. Its single largest expenditure maintains some 9,200 intact nuclear warheads. Even though the department hasn’t built a new nuclear weapon for 20 years, its weapons complex is spending at rates comparable to that during the height of the nuclear arms race in the 1950s.

There’s currently a 15-year backlog of discarded nuclear warheads. Yet, Obama’s proposed budget would halve spending on weapons dismantlement over the next five years. The physical elimination of nuclear weapons continues to have a low priority in Obama administration because it competes for funds to build a new weapons production complex–a "holy grail" of the nuclear weapons establishment.

The Energy Department faces a brave new world in which, for the first time, it is being called on to employ millions of Americans to create a new energy future for the United States. It doesn’t appear that the Obama administration will meet this challenge. Instead, more of the nation’s tapped-out treasure is going for costly nuclear power, and nuclear weapons we don’t need and could never use.

Robert Alvarez, an Institute for Policy Studies senior scholar, served as senior policy adviser to the Energy Department’s secretary and deputy assistant secretary for national security and the environment from 1993 to 1999.
www.ips-dc.org

February 15, 2010

Citibank ranks nukes potential ‘corporate killers,’ but CPS still wants a taste

Greg Harman
San Antonio Current Queblog

Thursday morning, San Antonio Council members are expected to vote on increasing electric and gas rates for CPS customers. Though the 6.5- percent and 7.5-percent increases – the first of an anticipated decade of rate hikes the utility says it needs to keep up with capital development projects and the area’s growth – do not include future payments for the expansion of STP nuclear complex.

It’s no wonder some San Antonio residents nearly messed themselves when a small-town newspaper editor published a story suggesting San Antonio was about to recommit itself to the planned expansion of the South Texas Project nuclear complex. It turns out that when
cover-ups over increased cost estimates were souring the public here in San Anto, none other than Citibank was warning off potential investors in the United Kingdom.

In a starkly titled financial assessment, "New Nuclear – The Economics Say No,’ Citibank reps suggested in November that any number of hurdles to construction of new plants represented "corporate killers." Though the clarion call followed just announced commitments to new nukes in the UK, it could now be applied in the United States. President Obama said earlier this month he hopes to pony up $54 billion in federal loan guarantees to kick off a new wave of nuke construction.

Daniel Weiss cites San Antonio’s sticker-shock experience – and the lack of Wall Street enthusiasm – as he picks apart Obama’s move for Climate Progress.

Julio Godoy at the Inter Press Service (reposted by Infoshop News) writes:

The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.

The risks include high construction costs, likely long delays in building, extended periods of depreciation of equipment inherent to the construction and operation of new power plants and the lack of guarantees for prices of electricity.

Adding to these is the global meltdown and the consequent cautious behaviour of investors as also fiscal and revenue difficulties of governments in the industrialised countries, say the studies.

In the most recent analysis on the feasibility of new nuclear power plants, the Citibank group concludes that some of "the risks faced by developers … are so large and variable that individually they could each bring even the largest utility company to its knees financially."

Citibank concludes these enormous challenges will result in soaring costs. It’s the same position local opponents of the STP expansion have been making for two years, though they are rarely credited for their foresight by the elected leadership or in local media.

While some jumped when they read an error-choked Bay City Tribune article predicting a San Antonio "resolution backing STP Units 3 & 4 – possibly within the next few days," they needn’t have. The current Mayor and Council have all but washed their hands of the expansion. However, there is a lingering residue – an irrepressible hope to gain a share in the project in return for the millions CPS has already spent – that could keep the City in thrall to the planned new units for years to come.

A better plan, suggests Karen Hadden, director of the SEED Coalition: "They should get out. They should get out clean right now." Take the money and run.

SEED was key to bringing some of the earliest numbers that suggested the nuke expansion would be far above the $5 billion, as NRG first suggested.

Now with the project about to break down, the state of Texas is showing its hand as an interested party for the first time. Public Utility Commission Chairman Barry Smitherman (with Governor Perry’s "full support") sat the squabbling CPS Energy interim GM and NRG Energy CEO down for a four-hour talk last week. More meetings are expected.

CPS wants to withdraw from the planned two-reactor expansion at Bay City but still benefit from a share of ownership commensurate with the value of its land and water rights at the site and the $350 million already paid in. A district judge ruled recently that CPS should be compensated if it withdraws and suggested the two get back to the bargaining table.

But where was the state and Smitherman during all those months the SA community was being sold on the project with fictitious numbers?

When talk turns to rate hikes, Hadden says CPS is just not ready.

"They haven’t fixed the problems at CPS Energy. They haven’t gotten better accountability. They haven’t done an outside independent investigation. They don’t have a line-item proposal. They haven’t withdrawn from the nuke," she said.

Without stricter oversight, CPS could potentially take the rate-hike cash and turn around under a more receptive Council and reengage with the STP project, Hadden suggested. "This is a backdoor for nukes."

(Citibank’s full report is below.)

February 4, 2010

By TOM FOWLER
Houston Chronicle

Unit 1 of the South Texas Project nuclear power plant remained off line Thursday as workers tried to determine why one of the 57 control rods used in the unit failed to operate properly.

The problem was discovered Wednesday afternoon as crews conducted a monthly control rod test and surveillance procedure, South Texas Project spokesman Buddy Eller said. He wouldn’t specify the exact nature of the problem but said another control rod had what appeared to be a similar problem last month during the same test.

Operators decided to shut down the unit Wednesday night to evaluate the problem, Eller said.

Unit 1 was last shut down in October 2009 for a routine refueling, when some of the spent uranium fuel rods are removed and replaced.

The reactor’s vessel head was replaced then as well, for the first time since the unit started up in 1988. Eller wouldn’t speculate as to whether the control rod problems were related to the new equipment.

The plant’s two reactors produce 2,700 megawatts of power, enough for about 2 million homes, the company estimates.

tom.fowler(at)chron.com

January 30, 2010

Columns: Harvey Wasserman
Free Press

Amidst utter chaos in the atomic reactor industry, Team Obama is poised to vastly expand a bitterly contested loan guarantee program that may cost far more than expected, both financially and politically.

The long-stalled, much-hyped "Renaissance" in atomic power has failed to find private financing. New construction projects are opposed for financial reasons by fiscal conservatives such as the Heritage Foundation and National Taxpayers Union, and by a national grassroots safe energy campaign that has already beaten such loan guarantees three times.

New reactor designs are being challenged by regulators in both the US and Europe. Key projects, new and old, are engulfed in political/financial uproars in Florida, Texas, Maryland, Vermont, New Jersey and elsewhere.

And 53 years after the opening of the first commercial reactor at Shippingport, Pennsylvania, Department of Energy Secretary Steven Chu is now convening a "Blue Ribbon" commission on managing radioactive waste, for which the industry still has no solution. Though stacked with reactor advocates, the commission may certify the death certificate for Nevada’s failed Yucca Mountain dump.

In 2005 George W. Bush’s Energy Bill embraced appropriations for an $18.5 billion loan guarantee program, which the Obama administration now may want to triple. But the DOE has been unable to minister to a chaotic industry in no shape to proceed with new reactor construction. As many as five government agencies are negotiating over interest rates, accountability, capital sourcing, scoring, potential default and accident liability, design flaws and other fiscal, procedural and regulatory issues, any or all of which could wind up in the courts.

In 2007 a national grassroots uprising helped kill a proposed addition of $50 billion in guarantees, then beat them twice again.

When Obama endorsed "safe, clean nuclear power plants" and "clean coal" in this year’s State of the Union, more than
10,000 MoveOn.org members slammed that as the worst moment of the speech.

The first designated recipient of the residual Bush guarantees may be at the Vogtle site in Waynesboro, Georgia, where two reactors now operate. Georgia regulators have ruled that consumers must pay for two proposed new reactors even as they are being built.

But initial estimates of $2-3 billion per unit have soared to $8 billion and more, even long before construction begins. Standardized designs have not been certified. On-going technical challenges remind potential investors that the first generation of reactors cost an average of more than double their original estimates.

The Westinghouse AP-1000 model, currently slated for Vogtle—and for another site in South Carolina—has become an unwanted front runner.

Owned by Japan’s Toshiba, Westinghouse has been warned by the Nuclear Regulatory Commission of serious design problems relating to hurricanes, tornadoes and earthquakes.

The issues are not abstract. Florida’s Turkey Point plant took a direct hit from Hurricane Andrew in 1991, sustaining more than $100 million in damage while dangerously losing off-site communication and power, desperately relying on what Mary Olson of NIRS terms "shaky back-up power." Ohio’s Perry reactor was damaged by a 1986 earthquake that knocked out surrounding roads and bridges. A state commission later warned that evacuation under such conditions could be impossible.

Long considered a loyal industry lap-dog, the NRC’s willingness to send Westinghouse back to the drawing board indicates the AP-1000’s problems are serious. That they could be expensive and time-consuming to correct means the Vogtle project may prove a losing choice for the first loan guarantees.

South Texas is also high among candidates for loan money. But San Antonio, a primary partner in a two-reactor project there, has been rocked by political fallout from soaring cost estimates. As the San Antonio city council recently prepared to approve financing, it learned the price had jumped by $4 billion, to a staggering $17-18 billion. Angry debate over who-knew-what-when has led to the possibility that the city could pull out altogether.

In Florida, four reactors have been put on hold by a plummeting economy and the shifting political aims of Governor Charlie Crist. Crist originally supported two reactors proposed by Florida Power & Light to be built at Turkey Point, south of Miami, and two more proposed near Tampa by Progress Energy. State regulators voted to allow the utilities to charge ratepayers before construction began, or even a license was approved.

But Crist is now running for US Senate, and has distanced himself from the increasingly unpopular utilities. With votes from two new appointees, the Public Service Commission has nixed more than $1 billion in rate hikes. The utilities have in turn suspended preliminary reactor construction (though they say they will continue to pursue licenses).

At Calvert Cliffs, Maryland, the financially tortured Constellation Energy has committed to the French AREVA’s European Power Reactor, now under serious challenge by regulators in France, Finland and Great Britain. An EPR under construction in Finland is now at least three years behind schedule, and more than $3 billion over budget.

Meanwhile, at Entergy’s 30-year-old Yankee reactor In Vermont, a series of radiation and information leaks have severely damaged prospects for re-licensing. The decision will soon be made by a deeply divided state legislature. "It would be better for the industry to let Vermont Yankee die a quiet death in the Green Mountain state," says Deb Katz of the grassroots Citizens Awareness Network. "With radioactive leaks, lies and systemic mismanagement, Entergy is no poster child for a new generation of nukes."

Meanwhile, New Jersey may require operators of the aging Oyster Creek reactor to install sizable towers to protect what’s left of the severely damaged Barnegat Bay, which the plant uses for cooling. Though the requirement may not be enforced for as much as seven years, the towers’ high cost could prompt a shut-down of the relatively small plant.

This unending stream of technical, financial and political downfalls could doom the "reactor renaissance" to history’s radioactive dump heap. "President Obama needs to remember what Candidate Obama promised: no more taxpayer subsidies for nuclear power," said Michael Mariotte, executive director of the Nuclear Information and Resource Service. "Renewables and energy efficiency provide both greater carbon emissions reductions and more jobs per dollar spent than nuclear. Unlike nuclear power, they are relatively quick to install, and are actually safe and clean."

Indeed, despite Congressional and White House support for these latest proposed loan guarantees, the grassroots fight over both old and new nukes grows fiercer by the day.

In the long run, this alleged "nuclear renaissance" could prove to be little more than a rhetorical relapse.

———-

Harvey Wasserman’s SOLARTOPIA! OUR GREEN-POWERED EARTH is at www.harveywasserman.com, along with his HISTORY OF THE US. He is Senior Advisor to Greenpeace USA and the Nuclear Information & Resource Service, and Senior Editor of www.freepress.org, where this article first appeared.

February 3, 2010

"Ugly" Field of Four Bailout Candidates Present Huge Taxpayer Risks With Rising Cost Estimates, Delays, Flawed Reactor Designs, and Credit Downgrades; January One of Worst Months Ever for Industry.

Download this press release in pdf format for printing.

WASHINGTON, D.C.// What if the federal government held a beauty contest for taxpayer-backed nuclear reactor loan guarantee bailouts … and no reactor project "beauties" could be lined up for the runway?

According to experts from around the United States, that is precisely the situation the U.S. Department of Energy (DOE) faces today with the extraordinarily weak crop of four reactor project candidates vying for loan-guarantee bailouts. The four proposed projects at the top of the list for $18.5 billion in federal bailout support are: the Southern Company’s Vogtle reactors in Georgia (widely believed to be the current front runner); the NRG reactor project in Texas; the VC Summer reactors in South Carolina; and the Calvert Cliffs reactor in Maryland.

The local experts are far from being alone in their negative assessment of the viability of the four bailout candidates. According to the independent Taxpayers for Common Sense, the four finalists all exhibit some combination of "rising cost estimates, delays related to reactor designs, and credit downgrades." Making matters even worse: The four deeply flawed reactor projects are reputed to be the best of the options available, which means that there are no viable candidates in the pipeline to justify the tripling to $54 billion in nuclear reactor bailouts proposed under the White House budget released this week.

This is the latest bad news for the setback-plagued nuclear power industry, which is coming off of one of its worst months ever in January 2010, including: a major court room squabble between NRG and the City of San Antonio over a surprise $4 billion estimated cost increase for two proposed reactors in Texas; the rejection of $1 billion in rate increases by Florida regulators that has caused the two state utilities to announce a slowdown on their nuclear projects; and a growing scandal in Vermont over carcinogenic tritium leaks into the water supply that threaten to derail state approval of the extension of the Vermont Yankee reactor.

Sara Barczak, a program director with the Southern Alliance for Clean Energy, addressing the proposed Vogtle reactors in Georgia, said:

"It is difficult to fathom how the Vogtle project, which was a poster child for cost overruns in the original nuclear ‘boom’ and bust in the United States, could be the front runner for taxpayer-backed loan guarantee bailouts. Vogtle’s proposed Westinghouse AP1000 reactor design is not even approved by the Nuclear Regulatory Commission as safe from hurricanes, tornadoes and earthquakes. In fact, even if Vogtle got the loan guarantee go-ahead tomorrow, it could still face years of costly delays in order to make the reactor design safe or to gain license approval. This situation puts taxpayers squarely behind the eight ball in terms of increased risk from the very outset."

Barczak continued:

"The bottom line here is that extremely powerful and financially savvy utilities, such as the Southern Company, have already found a way at the state level to shift the risk to those who can least afford to pay for costly new reactors and now they’re hoping for even more handouts — this time at the expense of the U.S. taxpayer. How much more burden can be piled on to the shoulders of hard working families and small businesses in Georgia?"

Karen Hadden, executive director of the Sustainable Energy and Economic Development (SEED) Coalition, addressing the embattled NRG reactor project in Texas, said:

"The fact that NRG’s South Texas Project is considered a leading candidate for loan guarantees shows just how flawed the selection process is. This project may very well be doomed at this point, given the enormous recent cost increase of $4 billion that was kept from the San Antonio City Council, and the resulting legal wrangling between the utilities proposing to build the project."

Hadden continued:

"The South Texas Project is a perfect example of how the hope of loan guarantees is the only thing propping up reactors that otherwise would not be built. Even with the loan guarantees, the San Antonio City Council has signaled to their municipal utility that ratepayers can’t afford the increasingly expensive energy from the reactor. NRG said they would not proceed with the reactor without the loan guarantees. If anyone can explain why sinking billions of taxpayer dollars into such a risky project makes any sense at all, it would be interesting to hear it!"

Tom Clements, Friends of the Earth, addressing the proposed VC Summer reactors in South Carolina, said:

"The VC Summer project is ripe for major delays and huge cost overruns. The NRC has confirmed that the AP1000 reactor design as currently being reviewed is not ‘certified’ safe, contrary to claims by the utility SCE&G. Key reactor components, including the reactor pressure vessel, will have to be made overseas, and 90 percent of the uranium for fuel would come from foreign sources, belying the notion of ‘home-grown power,’ as is now incorrectly being touted by some SC politicians. The approval by the South Carolina Public Service Commission (PSC) for the project in February 2009 and the law forcing rate payers to pay in advance (even if the project fails) is being challenged by Friends of the Earth before the SC Supreme Court, with a hearing likely in March 2010."

Clements added:

"SCE&G, which is a small utility with limited assets, has low-balled the reactor cost, still claiming that its 55 percent share of two units would include a gross construction cost of about $6.3 billion, for a total cost of about $11.5 billion for the two units, well below the estimated cost of other reactor projects. SCE&G has admitted in quarterly filings with the SC PSC that the cost had at one point increased $500 million. The PSC made it clear in a January 2010 ruling that, although it allowed an 18-month construction delay in its original decision, it will restart the delay clock every time SCE&G requests a new schedule for construction milestones. This, coupled with an almost-certain delay in issuance of a license by the NRC, is a warning sign that the project is facing great schedule and cost uncertainty."

Michael Mariotte, executive director, Nuclear Information and Resource Service, addressing the proposed Calvert Cliffs reactor in Maryland, said:

"The proposed EPR reactor at Calvert Cliffs is the most expensive reactor design ever put forward for the U.S. Constellation Energy admits costs of $10 billion (not including financing) for Calvert Cliffs, whereas PPL Electric Utility projects a cost of $13-15 billion, including financing, for an identical reactor in Pennsylvania. PPL’s estimate works out to approximately $9,000 per kilowatt-about double the cost of wind power along Maryland’s Atlantic coast."

Mariotte added:

"Serious questions remain about the unprecedented level of foreign involvement in Calvert Cliffs. UniStar Nuclear is a 50/50 project of Constellation Energy and the French utility, Electricite de France (EdF). EdF is the largest single shareholder of Constellation (about 9 percent) and has recently purchased 49.9 percent of Constellation’s existing reactors. Most of the construction money will go to EPR manufacturer Areva. Both EdF and Areva are 85 percent or more owned by the French government. UniStar Nuclear hopes to complement the loan guarantee with financing from the French government’s Export-Import Bank. The NRC Commissioners have ordered that hearings on the foreign involvement issue be held before an Atomic Safety and Licensing Board. This foreign control is pertinent since Areva’s first EPR construction – Olikulioto-3 in Finland – is well over three years behind schedule and 75 percent over budget. The second EPR, being built by EdF at Flamanville, France, is at least 20 percent over budget after only two years of construction."

BACKGROUND INFORMATION: OPPOSITION TO THE NUCLEAR BAILOUT

Widespread opposition has emerged to proposals to award currently authorized taxpayer-backed loan guarantee bailouts, as well as President Obama’s proposed $54 billion tripling of such bailouts.

As the Center for American Progress pointed out yesterday:

"One down side of the president’s budget is that it includes a misguided expansion of nuclear loan guarantees. The Obama administration proposes to triple funds for nuclear loan guarantees from $18.5 billion to $54 billion. This huge growth exposes taxpayers to billions of dollars of potential liability if the nuclear debtors default on their loans. The Congressional Budget Office found that nuclear investments are very risky, stating, ‘CBO considers the risk of default on such a loan guarantee to be very high-well above 50 percent.’ Even if this risk factor is cut in half, one in four nuclear power plants would default on their loans due to cost overruns or other factors, leaving taxpayers to pick up the tab. And there are already indications that this could occur. Taxpayers for Common Sense found that none of the four "top-tier" project proposals for the existing loan guarantee program inspire confidence. All have "rising cost estimates, delays related to reactor designs, and credit downgrades." The proposed tripling of the nuclear loan guarantee program burdens taxpayers with additional financial risk."

In a Monday article titled Obama’s nuclear loan guarantees draw opposition, USA Today wrote:

"In a letter to Obama, four groups — the National Taxpayers Union, Taxpayers for Common Sense, the George Marshall Institute and the Non-Proliferation Policy Education Center — oppose an expansion of loan guarantees for new nuclear plants: ‘With hundreds of billions in bailouts already on the shoulders of U.S. taxpayers, the country cannot afford to move forward with a program that could easily become the black hole for hundreds of billions more.’ …

At the conservative Heritage Foundation, David Kreutzer, a senior policy analyst in energy economic and climate change, warned against expanding loan guarantees in a recent post: ‘This authorized $18.5 billion in loan guarantees will help build a handful of new nuclear reactors but any expansion of subsidies, tax credits or loan guarantees is a bad idea for taxpayers, consumers and long-term industry competitiveness. Continuing subsidies reduce the incentive to contain costs, create government dependence and stifle competition and technological development within the nuclear energy industry.

Another scholar, economist Dr. Mark Cooper at the Institute for Energy and the Environment at Vermont Law School, authored a report in June that found it would cost $1.9 trillion to $4.1 trillion more over the life of 100 new nuclear reactors than it would to generate the same electricity from a combination of more energy efficiency and renewables.

Peter Bradford, a former member of the Nuclear Regulatory Commission, writes …: ‘Of 26 new nuclear reactor license applications submitted to the Nuclear Regulatory Commission since 2007, nine have been canceled or suspended indefinitely in the last 10 months. Ten more have been delayed by one to five years. The Tennessee Valley Authority has canceled plans to revive a partially built unit.’"

For additional background on the huge risks facing U.S. taxpayers from increased loan-guarantee bailouts for the nuclear power industry, see tinyurl.com/yzdm6f6 and www.cleanenergy.org/index.php?/Press-Update.html?form_id=8&item_id=155.

CONTACT: Leslie Anderson, (703) 276-3256 or landerson@hastingsgroup.com.

EDITOR’S NOTE: A streaming audio recording of the news event will be available on the Web as of 5 p.m. EST on February 3, 2010 at www.cleanenergy.org/index.php?/Podcasts.html.