Water Rationing Warning in Los Angeles

Well, not exactly rationing, but pay-for-use measures were proposed today by the Los Angeles Mayor Antonio Villaraigosa.  Watering lawns also is proposed to be restricted to 2 days each week, Mondays and Thursdays.  The pay-for-use would set consumption tiers, with the lowest tier priced low, next usage tier a bit more, then any water above the highest tier charged a higher rate.  

As I see them, the problems are these:  first, how will the tiers be set?  Will these be based on past years' consumption, so each metered user must cut 10 percent below that average to maintain no additional price?  This is not a fair solution, as some users have done nothing to conserve, while others have already done all they can to conserve.  In California, we have low-flow toilets, low-flow shower heads, water-smart clothes washers that weigh the clothes load then add water accordingly, motion-activated flush mechanisms on toilets and urinals, and the same on lavatory faucets, and lawn sprinklers on timers.  Those are just the engineered solutions. 

Then, we have the actions of residents.  Among these are turning off water while brushing teeth or shaving, only running the dishwasher when full, washing full loads of laundry, assuming one does not yet have a smart washer, washing the bed linens once per week, sweeping the driveway and sidewalk instead of hosing them down, not washing the car as often, and installing native landscape rather than lush green grass and shrubs.  

One can see the inequities already.  Where a conscientious citizen has done all he can do by purchasing the low-usage items, taking short showers, turning off the bathroom tap while brushing teeth and shaving, and replacing the grass lawn with rocks and native landscape, will he be unfairly punished with an across-the-board 10 percent reduction requirement?  Why will this citizen not be rewarded for past water savings, instead?  

Compare him to the profligate water user, one with a pool that has a slow leak, who waters his grass lawn each day even though the water runs off into the street, who has older toilets, or if he has modern toilets, flushes them twice each time just in case, washes dishes each night even with only a few dishes, takes a long shower twice each day with a standard flow shower head, and washes clothes and linens every day with only a few items in the wash.    Also, this profligate runs the kitchen faucet steadily while preparing meals, such as washing the veggies and fruits with gallons of water.   He may also have small children, who flush the toilet just to watch the water run, over and over and over.   

Similar conservation measures were implemented recently in the San Francisco Bay area, and residents came out in force to raise these and other issues before the local authorities.  

Allocating water is not an easy issue, for example, it might be wise to allocate a given amount of water per month for each person living in a residence, be it house or apartment or condo or townhome.   But then, privacy issues arise.  Does one really want the city water department knowing how many people live in your home?   And what do you do if you have a party?  Or your inlaws move in for a week?  Or your college age children return just for the summer?  Or you have a baby, or twins, and your washing needs go way up?

Compared to previous years, California is in a different position in this water crisis.  The population is much higher, and the internet is a factor where it was not in any earlier drought.   One can only speculate what would happen if internet-savvy citizens take a lesson from the Facebook flash dance crowd that overwhelmed a tube station in London very recently.  Apparently, one Facebook user sent a message to his friends, and they sent it to theirs, and so on, and many thousands of people showed up at the appointed time and place to sing, play music, and dance, thereby virtually shutting down the entrance/exit to the underground station.

The water crisis is here, and the politicians are beginning their moves.  As always, California will be fun to watch as this plays out. 

Roger E. Sowell, Esq.   

California Water Shortage - Drought in the South

President Obama's Energy Secretary, Dr. Stephen Chu, stated this week that global warming is causing California's drought, and that California agriculture will disappear.  He further stated he does not see how California cities will survive, either.  

This was posted on WattsUpWithThat.com, and I added a couple of comments.  The interchange with other commenters is instructive, and at times, a lot of fun.  Those guys/gals are smart, and witty.  

My comments, and a few others, are shown below, with additional commentary [in italics] from me.  

Sowell at (23:44:57): "Ya gotta hand it to California governmental bodies. Knowing for years that the lakes are dry or drying up, knowing that the Sierra snowpack is less than normal, knowing that the Colorado River flow is much less than years past, knowing that Lake Mead and Lake Powell are way below the full mark, these governments block construction of desalination plants at every turn.

One (count em, ONE) has been approved recently (late in 2008), in Carlsbad near San Diego. It will not produce fresh water until 2011, per the company’s website.

Another one sits idle, mothballed, in Santa Barbara.

A few more are in various stages of environmental review.

People get cranky when they get thirsty. There is a reason wars were fought over water in the Wild West.

Meanwhile, farms are not planting this year. No water, so why bother?

California’s state water page may be found here.

There is a spiffy section on Climate Change, and another on Drought.

Roger E. Sowell
Marina del Rey, California (where it is indeed raining tonight)" The raining tonight comment is a dig at the weather forecasters in UK, who infamously cannot get the weather forecast correct across the pond.  Our local weather guys did a pretty good job of predicting the current rain system.

This response came from Lee Kington, "Since it was mentioned…. I follow the data for Lake Powell and check it on a regular basis.

http://graphs.water-data.com/lakepowell/

http://snowpack.water-data.com/uppercolorado/index.php

The also have a searchable data base.
http://lakepowell.water-data.com/index2.php

Last year the lakes gained quite a bit…. then the decision was made to do a massive discharge (both Powell and Mead). It seems some fish downstream wanted to wash their teeth real well or something."

Then this from E.M.Smith (02:39:56) :

"THE problem in California is that we build as many houses as we can within the available water supply in the best, wettest, years then wonder why there is a water ’shortage’ due to ‘drought’ the other 80%+ of the time…

Oh Well…

BTW, the comment about Cities just shows he can’t do math. About 5% of all the water in California goes to cities. The rest goes to farms, washing trout teeth, whatever. You can run the cities at full water in the worst drought around and not notice it. Similarly, we can stop all water use in every city, send everyone to New Orleans, and it would not make any difference worth mention to the farmers of the state.

The whole “don’t flush for #1″ et. al. is just ginned up for political reasons. For ’sharing’ and ‘creating awareness’…

Of course, the thing that really frosts my shorts is the point made earlier. We could have all the water anyone could ever need at about the present rate for city water, technically… if only you could get a desalinization plant completed… Plenty planned and some started. Then the protests, red tape, et. al. begin…

Protests? Who would protest? Well, stop the water and you stop the housing, industry, people, etc… It is not accidental that water and oil are under attack.

(Shades of Dr. Strangelove! They are attacking our Precious Fluids!)"

Next, Smokey makes a very good point that the population increased while water supplies did not: Smokey (04:23:20) :

"It should also be kept in mind that since the last California drought in the 1980’s, the state’s population has grown ~50%. That means 50% more people competing for a relatively static and unpredictable water supply. Unfortunately, Cali’s state government seems more concerned with outlawing plastic shopping bags than planning for the future.

But do not be alarmed, Gov. Arnold Schwarzenegger has formulated a plan, which he explains in detail here: click"

Next, Rigel expresses his distaste for California: Rigel (04:41:23) :

"I view California in a very poor light. They spend there citizens money on vast, pointless and wasteful ways. Yet on things that matter, they block private enterprise and seem to expect to be subsidized by other states - examples oil, water, electricity - basic things. California is socialist and anti-capitalist.

I hate to seem harsh, but frankly, I would not shed too many tears if California dried up and blew away, or fell into the sea or simply left the United States. California does significantly more harm to the US than the benefits it provides.

California and it’s citizens are completely expendable to the health and well being of the United States, in fact, it would be desirable for it to go away."

This is worth some commentary from the energyguy. California does, IMHO, seem elitist and hypocritical regarding Environmental Justice issues when the state imports electric power produced by coal-fired plants, and by nuclear power plants, while banning the same plants in the state.  I also view some aspects of California in a poor light, such as failure to invest in infrastructure, chronic and out-of-control state budget deficits, along with many local deficits, poor education in the public schools, and many others.  My prediction for California is of demise, as the state refuses to cut governemnt expenditures but raises taxes instead.  This is a sure recipe for failure. 

Now, Rigel has not done a proper study on California's cost/benefit to the U.S., because that would show that the water, power, and oil that California consumes contribues mightily to the nation's grocery shelves, to purchasing automobiles, and we are doing it with roughly 60 percent of the electric power (on a per-capita basis) relative to the entire U.S.  I also suspect that California contributes in a large way to the national treasury, but likely receives at least some of that back.  On balance, I believe California is a net contributor to the IRS. 

Next, sonicfrog states that he and I chewed this over a few days ago, and gives a link: sonicfrog (05:23:04) :

"Both Roger Sewell [sic, should be Sowell] and I independently tackled the California water situation a few days ago.

My main point - we don’t have to wait for fifty or a hundred years for the water crisis…it’s already here!. In a nut shell, the state has not expanded its water infrastructure or storage capabilities since the 1950’s, due in part to resistance from the very powerful environmental lobby. We have overexerted our use of natural aquifers and, here in the San Joaquin Valley, an area roughly the size of Tennessee, the wells tapping into them are drying up. Because conservation has been the catch all / be all solution to every problem in the state, we have not built new dams or other water storage facilities to meet the demands of a population that has increased five fold since the fifties. Anyway, Here is the blog post I wrote.

PS. Google “flex alert” and learn it well. For some reason, other states admire what California gas [sic, likely meant has] done with its energy policy, which mirrors their water policy. Conserve to the point of near starvation during high demand. Don’t get me wrong. I’m all for conservation, but that can only get you so far." 

Skipping over a few posts, this one from Mike S drew a response from me: Mike S (09:02:40) :

"In response to the first comment post on this topic from Roger Sowell.
Your statement: “…knowing that the Colorado River flow is much less than years past, knowing that Lake Mead and Lake Powell are way below the full mark…”

This is sort of misleading. Overpopulation and over-use is why some of the lakes like Mead are only about 50% of full pool. And people forget, we live in a desert (I’ll spell that again: d e s e r t ) …which would otherwise not be so populated if it wasn’t for modern air conditioning and irrigation systems.

When I first moved to Southern California, I read a whitepaper from an expert who presented it to a city council contemplating what to do about the rapid growth in the San Diego area. The paper said we were just coming out of “a prolonged 30 year drought in Southern California”. That was 1986. We have had quite a few very wet years and very dry years since then. One of the lakes by my house that was half empty for about 5 years was suddenly filled up again two years ago because of excess rainfall. Again, this is a desert, and some of the farmers were shameful, when for years, they flooded their fields with un-metered (yes un-metered !) water for crops they had no business growing in this climate here in California.

But I would like you to visit http://lakemead.water-data.com/ and see that this year, the inflows have been running more than 70% above normal for Lake Mead and this has been consistent for more than 100 days…and last year wasn’t bad either. The problem is that the population siphons out way too much and wastes too much.

Oh, and last year, we were still snow skiing until it was almost summer… not sure where they take the snow measurements, but we had snow for skiing much later and longer than usual."

And, my first response to all these posts (I had been away a while): 

"Below is a link to a California Supreme Court decision that discusses water rights. The case is National Audubon Society v Los Angeles Dept of Water and Power, (33 Cal.3d 419 (1983)).

Click Here

Mike S. wrote:

“This is sort of misleading. Overpopulation and over-use is why some of the lakes like Mead are only about 50% of full pool.”

Apologies if I mislead anyone. The point is that population grew (and is growing!) and water resources actually fell — the Colorado River flow trend is negative per the USGS.

See this reference, and scroll down to Figure 3.

The shrinking flow in the Colorado, plus water re-allocation among the river pact states, leaves California more dependent on snowpack, which is rather unreliable. Alternatives that Governator Schwarzennegger proposed for building more dams to store more rainwater were shot down by the legislature (motivated by environmentalists) and at the ballot box.

Then a Federal judge ruled that perfectly good Sacramento river water must be diverted to the ocean rather than sent south to parched Southern California, in order to protect the delta smelt (a small fish that apparently is endangered, or about to be.)

So here we are. Inadequate Colorado river flow, diverted Sacramento river flow, unreliable snowpack, too few dams to catch the rainwater, and environmentalists blocking desalination plants.

Now the entire nation will pay the price, as California farms do not produce what they ordinarily would. Meat prices will likely rise, too, as cattle also require water to drink.

As I wrote before on WUWT, it would be great to see a massive federal project to build a water pipeline across America, from the Mississippi to the Colorado river. Now, that is one stimulus package project I could support. Anybody want to guess if that project is included?

Roger E. Sowell
Marina del Rey, California"

And this from me:  

"The Audubon case I gave above is fairly long and full of legal jargon especially at the top.

The part dealing with the history of water is found if one scrolls down to “1. Background and history of the Mono Lake litigation.”

E.M. Smith, absolutely correct about limiting growth by blocking expansion of water (and other necessary services). When some environmentalists are off the record, that is one subject I have overheard them talk about.

Roger E. Sowell"

And this from me, bringing up the water recycling plan in California (yuck, and double-yuck!):

"Another argument for desalination plants instead of what is currently practiced here in Southern California: waste water recycling.

This is not likely to increase real estate prices in Southern California, but….our water powers-that-be are now recycling treated water from the poop-processing-plants (P3). The treated P3 effluent water is allowed to percolate through the soil until it replenishes aquifers, then is drawn out again via wells into the potable water system. The idea is to conserve water by re-use.

The problem is that P3s do not remove some rather serious chemicals and biologically active compounds, some of which are endocrine disruptors. We are talking about synthetic female hormones here, among other baddies. And they are in the public drinking water. The amounts increase year by year as the water is recycled from well to household, unused medicines are flushed down the toilet, processed in the P3, then percolates back into the aquifer.

Perhaps this explains some rather odd behavior by many Californians?

Btw…the Los Angeles Dept of Water and Power drinks bottled water at their meetings…they were horrified when someone (a reporter!) asked why are they not drinking tap water?

At times, So Cal can be rather amusing….I drink and cook with ONLY bottled water.

Roger E. Sowell
Marina del Rey, California"

And this from me, responding to some earlier comments:

"Re: wave power:

Currently, and for the next week offshore California, waves are forecast at 14-21 feet (average of highest 1/3 of all waves), with individual waves at twice the average. Of course, we are having a significant weather system, too, with gale-force winds. (source: NWS)

There is an awful lot of potential energy in them thar waves…now, getting permission from the various state agencies…oh, never mind… [this agreeing with an earlier comment that wave power could run the entire state]

E.M.Smith, at least NorCal gets to drink fairly pure water from Hetch Hetchy…while we are forced to drink recycled sewage P3 effluent…can we allege discrimination over this? (I know, I know…I’m a lawyer…I should know this one…)

Tom in Florida, re Tampa’s desalination troubles: the same outfit is building the one in Carlsbad. We are hoping they learned some lessons from the Tampa site. I don’t think our ocean water in Carlsbad is warm enough to support grass, but there will likely be other stuff/critters to deal with.

Frank Perdicaro: poorly managed, indeed. Your idea has some merit, except that a 1976 law absolutely prohibits new nuclear power plants anywhere in California. Note the hypocrisy: California has no problem importing vast amounts of power from a triple-header nuke in Arizona, Palo Verde.

In any event, nuclear power has become prohibitively expensive, at $0.25 to $0.30 per kwh, as I noted in my blog.

Roger E. Sowell"

Next, from E.M.Smith (16:33:42) :

" "Roger Sowell (15:47:09) : at least NorCal gets to drink fairly pure water from Hetch Hetchy…while we are forced to drink recycled sewage P3 effluent…can we allege discrimination over this? (I know, I know…I’m a lawyer…I should know this one…)"

Um, only SF, and a few cities that they let have some, gets Hetch Hetchy water. Folks from places they don’t like, get to drink pond scumbay delta water or, as you pointed out, ‘ground recharge’ …

We have ground recharge where I live. I don’t think it has p3 in it, only surface run off… you know, oil, mercury, asbestos, lead, viruses, toxic sprays, … We have a domestic drinking water filter and I’m adding a whole house system with reverse osmosis. Can we be included in your SF suit? ;-)

(Sidebar: the mineral from which asbestos comes is common in the hills around here. I’ve sat on a big chunk of the stuff. We also have cinnabar that seasons a local river with mercury (fishing prohibited), that runs into the bay, that people fish in,…)"

Next, we hear from Retired Engineer thusly: Retired Engineer (18:21:00) :

"In Colorado, the only thing we like about southern California is that it is down stream. (when we flush) I still remember the Left coast suing us over water from the Colorado River. (so they could flush)

I have trouble sympathizing with a state that waters the medians of it’s freeways. If God wants our medians green, He makes it rain.

We do have our own nutcases. High plains desert and Blue grass do not mix. My neighbor spills more water down the storm drain whenever he waters his lawn than I use in a month. His yard looks better. My bank account looks better. See comment about green medians above.

Xeriscape. Green. Conservation. As in conserving small pieces of green paper with pictures of dead presidents and statesmen.

Too simple a concept for most politicians."  [I responded to the watering freeways crack below]

My response to E.M. Smith and Retired Engineer:  

"E.M. Smith, re

“(Sidebar: the mineral from which asbestos comes is common in the hills around here. I’ve sat on a big chunk of the stuff. We also have cinnabar that seasons a local river with mercury (fishing prohibited), that runs into the bay, that people fish in,…”

Yup, that asbestos is wicked stuff…I have some dealings with that as an attorney…mostly construction-related. Contractor goes excavating in dirt then hits some of that and people nearby sue just in case they breathed a little bit.

We also have people down here who fish in creeks where signs are posted saying do not fish-water is not clean; and people swim in lagoons near Malibu where the green scum is also brown…

Retired Engineer

I also wondered about why California wastes water on the freeway medians and sides when I first moved out here. Then found that it is part of that P3 recycling plan: the water is from a poop-processing-plant effluent. Also, it is used to water golf courses, and by law all dust-control watering during construction must use recycled water, if available. No kidding, folks. That P3 recycle is everywhere.

We had a construction job where the union workers threatened to walk off because they discovered that the dust-control water was P3 effluent. The owner caved and used potable water. The P3 effluent water is unmetered and free, but the owner had to pay for the potable water. The workers were concerned that they would get very ill from the water spray entering their eyes and lungs, and into shallow cuts that most construction guys have on their hands.

And all that median-watering helps to consume CO2 from our ever-warming atmosphere. In fact, the man-planted greenery in So Cal should make every warmist happy…we are doing our part to counter the deforestation in other parts of the globe. We have a town called Woodland Hills, with lots of trees. I met a lady whose dad developed Woodland Hills, and planted the thousand and thousands of trees where there was nothing before.

I wonder if we will see any increase at Mauna Loa’sCO2 measurements later this summer, as California grows zero crops due to insufficient water, and the CO2 remains in the sky. ;-)

Can we sue the State Water Department for failure to provide water, thus contributing to global warming? ;-)"

In short, a fascinating series of exchanges...and I did not include the other threads on Australian drought/heat wave, AGW vs Denier's burden of proof for their respective positions, white roofs or black on buildings, and others.  Truly, an absorbing blog.  

Roger E. Sowell, Esq.

Nuclear Plant Delayed - Finland

A Generation III nuclear plant under construction in Finland is delayed yet again, setting the new target for completion as 2012. Original startup date was 2009. Link below. Reasons for the delays are unclear to me, but it appears that "construction and safety problems" are the cause, rather than lawsuits brought by nuclear opposition groups.

From Energyonline.com, "The Areva-Siemens Consortium stated yesterday [January 13, 2009] that the Olkiluoto 3 nuclear power plant unit is now not scheduled for completion until 2012. The initial target for completing the Finnish project was 2009.

Finnish utility Teollisuuden Voima (TVO) stated that the Areva-Siemens Consortium, the turn-key supplier of the 1,600-MW nuclear power plant, filed an arbitration request over delays and overruns in the Olkiluoto 3 project and that the completion date has been delayed until June 2012."

My translation of the "filed an arbitration request" is that the owner, TVO, believes the contractor has breached some aspect or aspects of the construction contract, with the breach causing the delays and cost overruns.

Another source states the project cost now is €5 billion, approximately $6.5 billion U.S. This is a bit below Severance's stated cost of around $7 billion for a 1000 MWe plant. By the time the Finnish reactor is completed, it may well be more than $8 billion. Interest on construction loans adds up very quickly in the latter years of a nuclear power plant project.

UPDATE 1: (May 28, 2009) From the New York Times (of all places!) an update is in on the troubles at the Finnish nuclear plant. Two of the problems are improper concrete used for the reactor building foundation, and holes drilled in the wrong places in the containment shell. The concrete is too porous, and prone to corrosion. The schedule has slipped even further, as this quote shows:

"After four years of construction and thousands of defects and deficiencies, the reactor’s 3 billion euro price tag, about $4.2 billion, has climbed at least 50 percent. And while the reactor was originally meant to be completed this summer [2009], Areva, the French company building it, and the utility that ordered it, are no longer willing to make certain predictions on when it will go online."

The article has more to say about costs of new nuclear plants using that same French design, stating:

"Areva has acknowledged that the cost of a new reactor today would be as much as 6 billion euros, or $8 billion, double the price offered to the Finns." One assumes this price does not include construction screw-ups and delays they cause.

Finally, a similar reactor is under construction in Flamanville, France. It has serious construction issues, too, including cracks in the concrete foundation, and steel reinforcements placed in the wrong locations.

Roger E. Sowell, Esq.

Visitor Counter and Tracker

I recently added a nifty little gadget at the top left on Feb 3, a counter and tracking by country of visitors to energyguy's musings.  I had wondered if anybody was reading any of this!  A big THANK YOU to those who stop by.   Leave a comment, if you like. 

Recently there has not been much activity on townhall.com, at least in the energy arena, so I have been fairly inactive over there.  I have instead been reading a bit on wattsupwiththat.com, a site mostly concerned with global warming and the various weaknesses in the warmist's claims.  

As an engineer, and trained attorney, I am swayed to the sceptic side.  There are just too many issues I see in the data collection and massaging.  There are too many unexplained occurrences, such as record cold in the northern hemisphere being caused by global warming.  

I also did a run-through on nuclear power costs over at climate progress, and learned once again that true-believers in nukes are not convinced by logic, facts, and sound arguments.  Oh well.  I challenged one commenter to go to investors, ask them for the money to build a nuclear power plant, and show them his sales contract for the power produced, with a sales price of $0.03 per kwh.   Then, report back as to which investors are willing to invest money or banks willing to lend money on those terms.  I was called all sorts of names for suggesting this, including intellectually dishonest, and using fallacious economic models!  

U.S. Refining Update

I read this all the time: 'The U.S. has not built a new refinery in the last 30 years.' This comment was fairly prevalent last summer (2008) when gasoline prices were upward of $4.50 per gallon. The fact is that the U.S. refining companies have built no new, grass-roots refineries since 1976. But, as EIA data shows, refining capacity has increased steadily over the years. This is due to incremental capacity additions to existing refineries. Now, February 2009, there are a few major expansion projects underway, one of which is at Motiva's refinery in Beaumont, Texas. The project is having a bit of trouble lately, and on January 13th just past, they announced a layoff of certain construction workers and a re-evaluation of the schedule in light of the current low refining margins. Marathon, ConocoPhillips, Valero and Sunoco each said they are proceeding more slowly on refinery upgrade and expansion projects, according to an article Feb 4 in the Houston Chronicle. In Los Angeles, California, Alon has slowed its project to combine two refineries into one, and add a diesel-production unit. The engineering work is complete. The Alon refinery is to take advantage of relatively high diesel prices and demand, even during the current economic downturn. All these are predictable moves in an environment where refining margins are low, and gasoline demand is fairly weak. Another factor is international competition, from a very large refinery in Mumbai, India. The Reliance Industries refinery has a capacity of 580,000 barrels per day, and is slated for export. I do not know if the gasoline and diesel products from Reliance Industries meets US specs, or California specs, but there is a good chance that the flow of refined products will change. We may find it cheaper to import gasoline than to produce it ourselves.

Another interesting note affecting California refineries, is the lack of water in the state potentially causing a shortage of bio-fuel blending components for gasoline and diesel. Under California's Global Warming Solutions Act of 2006, aka AB 32, the state's refineries must blend increasing amounts of "low-carbon" fuel, meaning bio-fuel. What could be a good opportunity for California farmers will now benefit others as these blending components are purchased from other states.

Roger E. Sowell, Esq.

Nuclear Power Costs 2008

The price consumers must pay for the electricity from a new nuclear power plant is around $0.25 to $0.30 per kwh, according to Craig A. Severance, CPA, in his new study on the subject.  

I have carefully checked the assumptions and calculations and conclude Mr. Severance is very close, perhaps even a bit low.    The study may be found here. 

The result is based on a two-reactor plant, at 2000 MWe, using Generation III technology such as Westinghouse AP-1000 rated at 1000 MWe each.  The construction cost, excluding interest during construction, is approximately $15 billion.  Interest on construction is another $6.2 billion, for a total of $21.2 billion that must be converted to long-term debt or equity upon startup of the plant. 

Severance used a split of 55/45 for debt/equity ratio, which is conservative since a utility tries to maintain the debt at around 45 percent, not 55 percent, in order to obtain lower bond interest rates.  The equity cost from Severance is 15 percent per year, most likely in the form of preferred stock paying 15 percent annually.   The debt cost, most likely as long-term bonds, is at 6.25 percent annually.  

Severance did not provide for any delays by lawsuits, which would increase the cost by hundreds of millions, perhaps billions depending on the delay and timing. 

The result of this study is entirely consistent with published reports of new nuclear plants in the U.S., one being a 2200 MWe plant in Florida by Florida Power and Light, which was published as costing $17 billion.  This likely does not include interest on construction loans.  

Such high costs of electric power essentially put nuclear plants off the table in the U.S., as utilities will find it very difficult to pass on costs of $0.25 to $0.30  per kwh to their rate payers.  It is far better to build gas-fired combined cycle cogeneration plants. 

Roger E. Sowell, Esq. 

Natural Gas Glut

From Houston Chronicle: Jan 31, 2009

"As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Operators of these new facilities are unlikely to cut back production, however, so shipments of liquefied natural gas will most likely head to the deepest markets with the greatest amount of natural gas storage capacity — the United States."

Closing price of natural gas was $4.42 on Friday Jan 30.

As I have predicted for many months now, the world is awash in natural gas. It is one of the cheapest and most reliable forms of generating power. Combined Cycle Cogeneration is tough to beat in price, toxicity, load-following, short time to bring a plant on-line, reliability, and, for those who deem such things important, CO2 emissions.

Link is here.

UPDATE 1, July 24, 2009: Much more natural gas has been found with the Horn River Basin shale gas field in Canada announced by ExxonMobil in early July, plus the various shale gas formations in the Lower 48 of the U.S. LNG shipments are arriving in Europe and the US, plus new natural gas liquefaction projects are planned for Australia. Price of natural gas is still around $4, and some days is under $4 per million Btu. The Wall Street Journal features natural gas articles, and agrees (states in the article) that the world is awash with natural gas. Finally, the U.S. government may begin steps to make CNG and LNG vehicles more attractive, as T. Boone Pickens successfully lobbied to have more government assistance toward increasing CNG and LNG as an alternative fuel for vehicles.

Roger E. Sowell, Esq.