Too Cheap to Meter – It’s Now True

“It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter, will know of great periodic regional famines in the world only as matters of history, will travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds, and will experience a lifespan far longer than ours as disease yields and man comes to understand what causes him to age.”

Lewis L. Strauss
Speech to the National Association of Science Writers, New York City September 16th, 1954.

As happens in the child’s game of telephone, as the above statement got digested and passed along, it morphed and took on a new wording. The common understanding is that Lewis Strauss said that nuclear power would be “too cheap to meter”. In the fifty years since that rather obscure speech, the morphed sound (and print) bite has been used hundreds, perhaps thousands, of time to damn nuclear technologists as either poor prognosticators or as liars bent on deceiving the American public.

Morgan Brown of the Canadian Nuclear Society wrote an excellent analysis that provides a number of contemporary observations from people both inside and outside of the nuclear industry. His article Too Cheap to Meter provides abundant evidence that few people in the industry in the mid 1950s really believed that nuclear power would be very cheap. In fact most of them believed that it would be a struggle for nuclear power to compete with fossil fuel, but that with time, it might be close enough.

The reality today is that the world has changed enough so that it is possible to build a profitable business model around the concept that atomic energy is, in fact, “too cheap to meter.” I do not even mind if I am quoted as saying so.

Of course, such a radical concept needs a little explanation, so I will endeavor to ensure that the context of that statement is always available for those curious enough to look it up. Here is what I mean.

The business model currently in place for electricity in most places is that it is a “natural monopoly” business where a single, government owned or government protected enterprise manufactures, transmits and delivers the product on demand to end users. Each customer uses a measurable quantity of electricity, which is recorded by a meter, and receives a periodic bill for that amount of use. There are other components to the bill – there is a basic service charge, a fuel adjustment charge, specified taxes and fees, and, in the case of many larger scale users, a capacity charge that varies based on the maximum amount of electricity used during peak demand times. (Actually, there are a few more complications that do not fit into the above summary, but I will try to hold your attention by avoiding too many details.)

The whole model is based on the idea that making electricity consumes a certain quantity of raw material, labor and other cost components that make it necessary and fair to charge customers for each unit of electricity that they use. Measuring, keeping records and issuing accurate statements for that use consumes a certain amount of company resources – in other words it costs consumers money – but, under current conditions, that is seen as a required cost of doing business.

The major reason why metering is necessary, however, is that the fossil fuels consumed to produce electricity represent between 60 and 90% of the production cost of that electricity. If the electricity is not needed, the fuel consumption rate can be reduced in almost direct proportion, so producing less electricity really does cost the utility company less money.

If the demand is low enough so that fossil fuel plants can be shut down, it is possible to even reduce the labor component of the cost, since a skeleton crew can keep the plant in a condition where it can be restarted once the demand returns. (The time scale needed for power restoration varies depending on the type of plant used and can vary from minutes for simple cycle gas turbines to hours or days for coal fired steam plants.)

In contrast, nuclear plants have fuel costs that are low enough to disappear into insignificance. They also have permanent crews that do not get much smaller when the plant is not running. In fact, it is often more expensive to maintain a nuclear plant in a shutdown than it is to operate it.

Because of those characteristics, measuring the actual use for each customer is not required; it would be more cost effective and fair if customers were charged a flat fee based on the amount of power that they wanted to have available at any one time. This capacity charge would be more like a cable bill or a local phone bill. The utility would know how much capacity it needed to have on hand and could invest wisely to ensure that it could meet its obligations and it would save money in its billing systems.

Utilities could paraphrase the old Dorito’s chip line in communications with its customers – “Use all you want, we’ll make more.”

There would be no need to install, monitor and repair meters; though there would be a need for devices that prevented more than the agreed upon power from flowing through the lines in order to make sure that would be cheaters did not sign up for less capacity than they really needed. Customers would gain predictability of a regular bill and not be surprised by the kinds of seasonal variation that is becoming more and more troublesome. They might even begin to understand that running the washer, dryer, oven, microwave, toaster oven, blender, big screen television, and three hair dryers at the same time in the evening might be a bad idea.

Atomic energy has reached the stage where it is cheaper to avoid meters than it is to keep close tabs on actual consumption. Strauss may have been a little ahead of his time, but he was not wrong about the technical and financial implications of producing power from fuel that is 2 million times more concentrated than its nearest competitors.

PS – Actually, when I think about it, Strauss may not even have been ahead of his time. I am old enough to be the child of one of the members of Strauss’s audience. I would certainly enjoy it if my local utility set up a program similar to the “green energy” programs available in some areas. If I could, I would choose to buy power only from their nuclear plant under a billing structure similar to that described above. In that way, Strauss’s statement would be literally true – “. . . our children will enjoy power too cheap to meter.” I am also young enough to be able to wait a few years for that arrangement to actually become available in the new nuclear era.

About Rod Adams

One Response to “Too Cheap to Meter – It’s Now True”

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  1. Matt J. says:

    This is interesting, but I see no sign in his description of the costs for one conspicuous cost: the cost of decommissioning a reactor and disposing of the radioactive waste. This cost is always high, but the ratio by which it is higher than the value of energy produced shoots up when an accident like Fukushima takes place.