This morning I found an article titled Builders pessimistic about new nuclear plants published in the Tampa Bay Times, one of my former hometown newspapers. (As a retired naval officer, I have about a dozen former hometowns.)
The author built his case about pessimism for new nuclear plant construction on the words of a single journalist for Nuclear Energy Insider and on the canned responses provided by several antinuclear activists who have a strong motive for raising doubts about the industry’s prospects for growth.
In Florida, both Duke Energy (which now owns Progress Energy, formerly known as Florida Power Corporation) and NextEra, which owns Florida Power & Light (which employed my Dad for 35 years) are collecting modest fees from customers in order to fund the preparatory work needed to build new nuclear power plants.
Neither corporation has committed to building new plants, but that does not mean that they are not serious about working through all of the obstacles along the way. It would not be prudent for any company to make a firm commitment to build a project costing tens of billions of dollars when there are many tasks to complete before they will even be given permission to start building. However, in rate-regulated environments, the companies have no real choice other than to make their planning case to the Public Utility Commission and obtain permission to charge existing customers.
Groups that want to halt nuclear energy development and deployment have filed a number of legal challenges to the fees that the companies are collecting. They have determined that if they can stop the fee, they can stop the planning for the four new reactors that the fee is currently enabling. If there is no planning, there will be no nuclear plants built.
Though the groups try to wrap themselves in a consumer protection mantle, the fee that any individual customer is paying for new nuclear plants amounts to less than the price of a cup of coffee every month. It might rise to as much as $20 per month by 2018, but only if the project is actually started construction by that time. The risk of electricity bills rising at a far greater rate due to fuel adjustment surcharges with a rapid increase in the price of natural gas is far greater. The historical volatility of natural gas prices is clear and irrefutable.
One of the current strategies being used by the antinuclear activists is to sow the seeds of doubt that the plants being planned will ever get built. The organized opposition then tries to incite public antagonism to the power companies by claiming that those “evil” utility companies are collecting fees for plants they never intend to build.
Aside: In some places, “the power company” is the largest company in town and is a natural target of animosity because they seem so faceless, yet are the monopoly supplier of a vital product. Since I grew up in a household where the head was a proud power company employee, I have always had a completely different view. Dad was one of the most moral and caring human beings I have ever known. His friends from work were equally impressive role models. I have also celebrated – more than a couple of times – when heroic linemen from the power company restored our electricity after a bad storm. End Aside.
Florida’s utility companies are being placed into a difficult position; for a variety of regulatory reasons, they are not allowed to make a firm commitment to construction. For perfectly legitimate business reasons they also have no desire to borrow money to fund work that may not be allowed into the rate base for a decade or more. Utility company leaders and their analysts know that the nuclear projects are a good long term investment because they have a much clearer understanding of the risk of natural gas price fluctuation than journalists and antinuclear activists and the public that they are working hard to incite.
I decided to respond to Ivan Penn, the author of the piece for the Tampa Bay Times, to let him know that there is not universal pessimism about the prospects for building new nuclear plants in the United States. (If there was, I think I would be forced to look for a new job.) The letter turned out well enough that I thought it would be worth sharing here.
Dear Mr. Penn,
I read your recent article titled “Builders pessimistic about new nuclear plants”. Quoting a single journalist’s opinion about the prospects for the industry does not provide your readers with an accurate picture of an industry that has the potential for solving some of the world’s most difficult energy supply problems.
It might be worthwhile for me to start with a brief introduction: I am the publisher of Atomic Insights, a web log that has been providing information about energy from an atomic point of view since 1995. I also produced The Atomic Show, a podcast that has been on the web since 2006.
After I retired from a career as a nuclear trained submarine engineer officer, I started working for The Babcock and Wilcox Company on the team that is designing a new style of nuclear power plant that is smaller than traditional models and built in modules. The idea is to develop a finished product that can be built in factories and shipped in a much more complete state to plant construction sites. I remain on the B&W mPower team as an engineer/analyst; I have no role in public relations. I do not speak for my company, all of the views expressed here are my own personal opinions.
The people I work with on a daily basis are excited about the prospects for our product, so are the people who have expressed interest in the possibility that our units will be excellent replacements for old coal plants in the US that are being forced to retire due to age and the costs of keeping up with changing regulations.
Our systems will eventually be able to be built on a 3-5 year timeline (the variation is largely a result of the variety of the extent of site preparation work needed). They will produce electricity that will be competitively priced, especially when the customer recognizes the value of stability and the competitive restraint on natural gas prices that a viable alternative like nuclear energy can provide.
In contrast to natural gas, nuclear energy is not just 50% better than coal from an emissions point of view; it is clean enough to operate inside sealed submarines. It is mathematically impossible to quantify the improvement in a percentage; division by zero results in an undefined number.
Based on communication with many colleagues in the nuclear industry that work for other companies, the pessimism that you describe in your article is overstated. Our employers keep investing in the work we are doing to develop new power plants.
Though we are all having some difficulty competing against today’s North American natural gas prices, many of us have long enough memories to recall the late 1990s. During the years from 1995-2000 the natural gas industry and its mouthpieces were loudly proclaiming that cheap gas was going to be around for a long time. During those years, natural gas cost about $2.00 per MMBTU. By the summer of 2008, it cost 7 times as much, averaging about $14.00 per MMBTU and spiking to far higher prices at certain times when the weather was bad. The gas industry tells customers that will not happen again; I hear a different story when I listen to major gas companies quarterly earnings calls with investors and analysts.
We are well aware of the fact that prices in North America are substantially lower than world market prices; we know that the natural gas industry is working diligently to develop the capability to move gas from one market to another to take advantage of those price differentials. That capability will inevitably result in a leveling of prices around the world; they may fall in some high-priced markets, but they are likely to rise in the low-priced North American markets. That is a simple concept that nearly everyone should understand.
Our potential customers have similar memories and similar understanding of the impact of market behavior. They are spending a lot of time learning more about what we are doing. Please do not sell your readers short by emphasizing one observer’s view of a complex, exciting and high potential industry.
Publisher, Atomic Insights
Disclosure: I have a soft spot in my heart for FP&L that has been there for a long time and is unlikely to ever disappear. The company treated Dad well, bought me and my siblings Christmas presents every year, and continue to provide regular pension and dividend checks to my widowed mother. Mom occasionally attends stockholder meetings to keep reminding FP&L decision makers that nuclear energy is a good investment. Wonder where she got that idea?