Friday, February 13, 2009

More Nuclear Nuttiness and Nuclear Death Spiral

Not only Georgia, but now South Carolina is going nuts over nuclear.   Georgia's senate approved the bill to charge ratepayers for plants under construction.  South Carolina has done the same.   Ratepayers will be paying higher power bills to help finance the construction costs. 

Austin, Texas, however, has some sanity left and is not joining in the expensive expansion of the South Texas Nuclear Plant, in which they still own approximately 16 percent.  Austin was one of the owners that was burned badly when that plant cost more than 5 times the original budgeted amount, and was years behind schedule.  

What is disturbing is the quality of the consultants hired by Austin:  one apparently concluded that nuclear power is justified at 8 cents per kwh.  He has apparently not looked at the Severance cost analysis, that concludes new nuclear plants must charge 25 to 30 cents per kwh to justify their long construction times and very high construction costs.   I have carefully checked Severance's numbers and assumptions, and he is a bit low, if anything.  

If any of these proposed nuclear plants do get built and begin operation, watch for the nuclear death spiral to begin again, as it did years ago in Louisiana.  The death spiral occurs when power prices are increased so much that it becomes attractive for power customers to invest in their own generation plants, such as cogeneration.  The customers with cogenerated power are removed from the utility's rate base, so the public utility commission approves yet another rate increase.  The new rate increase is required to ensure the utility receives the annual revenue to maintain their return on capital invested.  But, the higher rates also makes it more attractive for another group of customers to go off the grid in favor of self-generation.   And the cycle continues.    Build-a-nuke, customers build cogen, raise the rates, more cogen, raise rates again. 

Ultimately, the ones paying the highest price for power are the poor, and those on fixed incomes.  This is wrong, no matter how one looks at it.    This is a form of social discrimination. 

Louisiana's industries did this in the 1980's, leaving the average small business and residential customers holding the bag, paying very high power prices.  The same thing will happen again, only this time, there are far more alternatives for self-generation.   In contrast to the 1980's, customers can now choose between solar panels, wind-generators, and gas-fired distributed generation plants.  

Utility planners, you build a nuke at your peril.  There are none so blind as those who will not see.  

If anyone is reading this, and can see where Severance is wrong, or where I am wrong on the true costs of nuclear power at 25 to 30 cents per kwh, I invite you to please leave a comment and show me. 

Roger E. Sowell, Esq.  aka energyguy

Mr. Sowell's legal website may be found here

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