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Nuclear Industry Lays Foundation for Comeback

Times Staff Writer

Along the streets of this economically depressed farming town, optimism is running high that a proposed nuclear power plant could bring in new jobs, give a boost to local retailers and increase taxes for schools.

The U.S. has not started a reactor project for 29 years, but President Bush is calling for a new era of nuclear power, saying it would reduce air pollution and dependence on foreign energy. If new reactors are built, the first could go into Clinton or two other possible sites nationwide.

For the record:

12:00 AM, Jun. 23, 2005 For The Record
Los Angeles Times Thursday June 23, 2005 Home Edition Main News Part A Page 2 National Desk 0 inches; 28 words Type of Material: Correction
Nuclear power -- An article in Wednesday’s Section A identified Andy White as general manager for marketing at GE Energy. White is president of GE Energy’s nuclear business.

“It is the best option for power,” says Stan Winterroth, a high school shop teacher in Clinton. “I don’t agree with President Bush on anything else, but I think he is right on the issue of nuclear power.”

To promote his program, Bush is to visit Calvert Cliffs Nuclear Power Plant in Maryland today. It will be the first time a president has stepped inside a nuclear plant since Jimmy Carter rushed to Three Mile Island in 1979 to calm public fears just after the reactor’s partial meltdown, industry officials say.

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The Senate, meanwhile, is preparing subsidies and incentives for utilities to build nuclear plants. The nuclear industry has poured hundreds of millions of dollars into new technology in recent years. And the Nuclear Regulatory Commission has hired scores of engineers to accommodate an atomic renaissance.

But the sober reality of nuclear power is that the U.S. will move slowly and cautiously, at best, because Wall Street financiers and the nation’s utility industry still have vivid memories of the legal, financial and regulatory debacles that resulted from the building binge of the 1970s.

Even with subsidies and other incentives, few expect any construction to start within five years, and only a handful of plants are expected to begin during the next 10 years.

Most utilities will wait to see whether the new regulatory system works as advertised before they begin a more ambitious construction effort. It could be two decades before additional nuclear power plants have a significant effect on the U.S. energy supply.

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“There is much more confidence in the new process, but not enough yet to make a new investment,” acknowledges Marilyn Kray, president of the NuStart Energy Development, a consortium of nine utilities preparing an application for a nuclear construction license. “Financiers are saying they are not yet comfortable.”

Still, the industry is taking preliminary steps under government sponsorship. Three consortiums of utilities are getting $539 million in taxpayer subsidies through the Energy Department to seek nuclear construction licenses under the new regulatory system. By going through the bureaucratic motions of applying for a license, the utilities hope to gain confidence in licensing rules intended to reduce delays and litigation.

Separately, three utilities have put in early site applications for reactors at existing plants, including ones in Illinois, Virginia and Mississippi. The early site approval system is another change meant to reduce risks that projects will become mired in delays.

Sen. Pete V. Domenici (R-N.M.), the Senate’s powerful energy broker and a big force behind new nuclear power, argues in a recent book that it is the only major source of electricity that does not contribute to global warming by burning carbon-based fuels.

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Largely unnoticed, existing nuclear plants have significantly increased their generating capacity in recent years, adding the equivalent of six plants of output, and have vastly improved their reliability. At the same time, natural gas prices have soared.

Existing nuclear plants already produce electricity more cheaply than coal or natural gas. A new nuclear plant would need to cost about $1.2 billion to compete effectively with coal, according to James K. Asselstine, a managing director of Lehman Bros. But the first wave of plants would cost an estimated $1.8 billion, assuming there were no legal or regulatory delays.

As a result, utilities and Wall Street want government guarantees and assistance, some of which are contained in a major energy bill now before the Senate. The legislation also includes a renewal of the Price-Anderson Act, which provides legal immunity in the case of a meltdown or other nuclear accident.

Utilities also need resolution of the nuclear waste problem. There are 50,000 tons of high-level nuclear waste spread across the nation, because the government’s plan for an underground repository in Nevada is tied up in political and legal knots.

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Another factor is electricity demand. In the 1970s, the Energy Department and utilities grossly overestimated electricity demand, expecting it to double every 10 years. The faulty estimates helped lead to massive overbuilding. Today, by contrast, they project that electricity demand will grow by 50% during the next 15 years.

The lower estimates mean there is not enough demand for basic generating capacity to justify new nuclear plants, Kray said.

No matter how hard the federal government tries to revamp regulations and encourage utilities, however, the events of the 1970s and 1980s are stark reminders that nuclear power is a politically and financially risky proposition, still opposed by many environmentalists.

“The industry is going to face just as much opposition to new reactors as it did in the 1970s,” said Kevin Kamps, an antinuclear activist at the Nuclear Information and Resource Service in Washington. “Everywhere the industry has talked about new reactors, new groups to oppose them have sprung up. There are going to be large numbers of people committing civil disobedience.”

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Though such protests hurt nuclear energy in the 1970s, the real problem was economic.

After the Three Mile Island accident, the NRC demanded new safety measures, stopping construction for years and triggering cost overruns that drove up plant costs fivefold in some cases. As the debt mounted, interest rates also soared to record levels. The industry had $18 billion in cost overruns that state regulatory commissions refused to pass on to customers.

“It was a confluence of the worst imaginable conditions,” recalls Richard J. Myers, senior director for business and environmental policy at the Nuclear Energy Institute, a powerful trade group for nuclear utilities.

By 1985, 28 nuclear plants under construction were canceled, according to Sam Walker, the regulatory commission’s historian. The Shoreham plant on Long Island completed construction but never generated a single watt of commercial electricity. The Watts Bar plant in Tennessee was under construction for 23 years.

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“What has changed is our confidence in avoiding cost overruns,” Myers said. “Today, we don’t sink a spade without having all of our regulatory approvals in hand.”

In 1992, Congress revised the nuclear plant licensing system. Under the old system, a nuclear utility first had to apply for a construction license and then seek a separate operating license after completing the plant. It gave protesters two chances to tie up a utility.

Now, a single license is granted at the beginning. But nobody is sure the new system will not get just as bogged down.

“You can always to go federal court, as you know,” commission Chairman Nils Diaz told a Senate hearing in April on the future of nuclear power.

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Joe Egan, a veteran nuclear lawyer in Washington, argues that the new licensing system is still untested in the courts. Under the new system, a utility must prove that a completed plant exactly conforms to the licensed design, a complex area of regulation that is likely to undergo legal challenges, Egan said.

One advantage held by the nuclear industry is its tremendous advance in technology.

The U.S. pioneered nuclear technology, building the first reactor at the University of Chicago in 1942, and it remains a leader internationally. General Electric Co. and Westinghouse Nuclear have sold or licensed plants in Taiwan, Japan, South Korea and Europe while the U.S. market was dead.

“You have to understand, this is not an industry that has stood still for three decades,” said Andy White, general manager for marketing at GE Energy.

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GE and Westinghouse have new reactor designs that they promote as safer and cheaper to build. They require at least 25% fewer pipes, valves, pumps and cables than older generations. And they rely more on natural circulation of water through convection and less on emergency pumping systems.

“We will see new nuclear plants,” said Ed Cummins, director of Westinghouse’s new reactor programs. “It will take 10 years before the first one is operating. If it is a success, then you will see others.”

A big question is whether the American public is ready. In Clinton, seat of DeWitt County, the giant blue containment dome at the Exelon Corp. plant looms on the horizon.

“It has been a long time since anybody has expressed concern to me about buying a home here because of the power plant,” said Jan Utterback, a real estate broker in the town square. “The majority of people in town see it as a positive.”

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Exelon is one of the few major employers left in town, according to Mayor Roger Cyrulik. In recent years, three factories have closed, eliminating 1,000 jobs. When the regulatory commission held a meeting in Clinton this year to gauge sentiment, locals were strongly supportive of a new reactor. But antinuclear groups brought in busloads of Quakers, student activists and Unitarians. The meeting dragged on for hours.

“The industry is careful in choosing economically marginalized places for new reactors and making it a local issue,” said Sandra Lindberg, a professor at Illinois Wesleyan University, who started the group No New Nukes. “This is much bigger than a local issue.”

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(BEGIN TEXT OF INFOBOX)

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Nuclear energy in America

About 100 nuclear reactors are operating at power plant sites in the United States, most of them east of the Mississippi River. There are no commercial nuclear reactors in Alaska or Hawaii.

Nuclear progress

The last successful application for a nuclear plant license was filed 29 years ago, but much has changed since then. Lawmakers and the nuclear industry think they have solutions to some, but not all, of the problems.

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Problem: The Nuclear Regulatory Commission had a two-step licensing system, one for construction and one for operation. Antinuclear activists used the system to cause delays, which added billions to the cost of plants.

Solution: Congress changed the system in 1992 and created a combined construction and operating license. Now environmentalists are supposed to get one shot at stopping a nuclear plant.

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Problem: Safety issues and bad construction practices added to serious delays, as well as a loss of public confidence. The Three Mile Island accident cast doubts on nuclear safety.

Solution: Reactor manufacturers created standardized designs that improved chances of staying on schedule and within budget. New reactor technology is simpler and relies on passive safety systems that reduce chances of human error.

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Problem: Utilities overestimated the growth in demand for electricity, and started more plants than were needed.

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Solution: The Energy Department has sharply scaled back projected growth in demand, and now utilities are more cautious about starting new construction.

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Problem: Storage for lethal nuclear waste is lacking.

Solution: The federal government has promised to take ownership of the waste, but about 50,000 tons remain spread across the nation. A proposed dump in Nevada is mired in legal and political disputes.

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Sources: Nuclear Energy Institute, Nuclear Regulatory Commission, Times reporting. Graphics reporting by Ralph Vartabedian


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