Vermont Yankee and B&W mPower – Victims of Wall Street Greed

Though it has been a little quiet here on Atomic Insights in the past few days, I have been working on some stories documenting financial maneuvers in the US energy industry — especially as it related to nuclear energy.

You might be interested in reading Save Vermont Yankee. If not you, who? If not now, when? on ANS Nuclear Cafe. Comments and discussion about ways to change the current planned reality would be greatly appreciated.

While you are thinking about the impact that closing Vermont Yankee might have on the reliability of the New England power grid and the cost of both electricity and natural gas, I’d like you to also read an opinion piece titled Enron-Style Price Gouging is Making a Comeback.

That opinion piece, written by David Cay Johnston, describes how a group of Wall Street bankers called Energy Capital Partners purchased three fossil fuel power plants from Dominion in August of 2013. Within 5 weeks of closing on that purchase, Energy Capital Partners decided to permanently close the largest of those three plants.

Johnston, by the way, is a Pulitzer-prize winning reporter, a visiting lecturer at Syracuse University, and the board president of Investigative Reporters & Editors (IRE).

There are dots here that need to be connected. Using skills developed as a geo plot evaluator, I’m working on determining course, speed and position of the target based on isolated and somewhat difficult to discern signals, so consider this to be a “teaser.”

Aside: If you do not understand the “geo plot evaluator” allusion, ask a friendly submariner. He might be able to help you. End Aside.

If you work for a company that has a subscription to Fuel Cycle Week, I also recommend that you find a copy of the May 8, 2014 (issued early this morning) issue and look for an article titled Greed Killed B&W SMR Project. The headline writer may have been a little premature in signing the death certificate, but the article is a fascinating look at a situation that is close to my heart and head. I can’t reveal any more right now in fairness to the publication that has purchased that article.

I apologize if you think that all information should be free, but not every publication can afford to do what we do here on Atomic Insights. It requires a fair amount of labor to develop stories, verify their accuracy and deliver and manage content. That labor deserves to be compensated.

Have a great day.

PS – Right after I hit the “Publish” button, I opened an email containing the following press release:


FOR IMMEDIATE RELEASE
Thursday, May 8, 2014

NuScale Power To Open Charlotte Office, Host Recruiting Events Expanded East Coast Presence To Support Company Growth and Vision

PORTLAND, Ore. – NuScale Power, LLC announced today that it is opening an operations and engineering center in Charlotte, North Carolina in June—establishing a presence in a major hub of the U.S. nuclear industry, complementing existing operations in Atlanta and Washington, DC.

The new offices will be co-located with Fluor Corporation’s Charlotte office, and will initially house approximately 70 engineering, project management, licensing, sales, marketing and business development personnel dedicated to supporting the rapid commercialization of the NuScale Power ModuleTM Small Module Reactor (SMR) technology. Fluor Corporation is the majority owner of NuScale.

“This is an important step for NuScale as we continue full speed ahead with the technology that our customers are demanding for commercial operation by 2023. NuScale was the first company to begin efforts to commercialize a Small Modular Reactor, in 2000, long before there were other entrants or the prospects of DOE funds. Our new location in Charlotte will enable access to, and continued recruitment of, top talent in the nuclear industry,” stated John Hopkins, NuScale Power’s chairman and chief executive officer. “This is a natural evolution in our objective to become the leading global supplier of small modular reactor technology, systems and services.”

In December 2013, NuScale Power was selected as the sole winner of the second round of the U.S. Department of Energy’s (DOE) competitively-bid, cost-sharing program to develop nuclear SMR technology. NuScale and DOE are currently negotiating a cooperative agreement that formalizes the public-private relationship and establishes milestones for the five-year funding program.
In advance of the office opening, NuScale plans to host recruiting events in Lynchburg and Charlotte over two to three days in mid-May.

For more information, visit our Career Page at www.nuscalepower.com/careers.aspx.

About NuScale Power, LLC

NuScale Power, LLC is developing a new kind of nuclear plant; a safer, smaller, scalable version of pressurized water reactor technology, designed with natural safety features. Fluor Corporation (NYSE: FLR), a global engineering, procurement and construction company with a 60-year history in commercial nuclear power, is the majority investor in NuScale. As the sole winner of the second round of the U.S. Department of Energy’s (DOE) competitively-bid, cost- sharing program to develop nuclear small modular reactor (SMR) technology, NuScale’s design offers the benefits of carbon-free nuclear power but takes away the issues presented by the cost of installing large capacity.

A nuclear power plant using NuScale’s technology is comprised of individual NuScale Power ModulesTM, each producing 45 megawatts of electricity with its own factory-built combined containment vessel and reactor vessel, and its own packaged turbine- generator set. A power plant can include as many as 12 NuScale Power Modules to produce as much as 540 megawatts. The reactor coolant is driven by natural circulation and can be shut down safely with no operator action, no AC or DC power, and no external water. NuScale power plants are scalable – additional modules are added as customer demand for electricity increases. NuScale’s technology also is ideally suited to supply energy for district heating, desalination and other applications. NuScale is headquartered in Portland, Oregon.

For more information visit: www.nuscalepower.com.


I suspect several Atomic Insights readers will be interested in NuScale’s announcement.

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About Rod Adams

14 Responses to “Vermont Yankee and B&W mPower – Victims of Wall Street Greed”

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  1. Eric_G says:

    Back around 2002 or so I had the opportunity to give a headend tour (cable company equivalent of a telephone central office) to a group of investment bankers. One of them asked about our connection to the Internet. I quickly answered that we had an OC-12 (622 Mbps), and were happy to have it since it seemed our customers were always saturating our previous connections. Prior to the OC-12 we added DS-3 lines at a rate of about 2 per year, always waiting on the local Bell to get their end of the work finished. This would allow for a lot of growth both in customer count and bandwidth/customer used. I also mentioned that it was riding on 100% company fiber to the regional data center (RDC) in Pittsburgh, not leased from the local Bell. He then asked how many Internet customers we had, which at the time was about 10,000, most of them college students. “Overprovisioned!” he shouted. I asked him what he meant. “You don’t need an OC-12, that’s way too much bandwidth for this size system.” I again explained that it didn’t cost any more than any lessor circuit since we owned the path to the RDC, so why not plan ahead? He was hearing nothing of that. Since I wasn’t there to justify my company’s business decisions I let it go, but I also got a little taste of what it might be like when companies go to Wall St. for funding. Scarcity is a way to control price, and “good management” insures you have only what is needed for today, not what will be necessary for tomorrow.

    BTW, these days the minimum installation for any size headend is 10Gbps, with multiple 40Gbps becoming the norm in large metropolitan areas.

  2. SteveK9 says:

    I’m not sure how we fix Wall Street. President Obama did nothing. If Hillary Clinton becomes President, she will do nothing. A Republican President will do less than nothing (i.e. make it even easier to steal money). On the local level there are a few people — Senator Warren, for example. I guess we just keep trying and hope.

    • Rod Adams says:

      @SteveK9

      I’m hearing lots of people mention Senator Warren as a possible contender. Ms. Clinton carries some serious baggage among the moderate to liberal wing of the Democratic Party – the one that is populated by people who like peace, not war and who like Main Street, not Wall Street.

  3. Rick Armknecht says:

    From the article: Enron-Style Price Gouging is Making a Comeback.

    Five weeks after the deal closed, Energy partners moved to shutter Brayton Point. Why would anyone spend hundreds of millions of dollars to buy the second largest electric power plant in New England and then quickly take steps to shut it down?
    Energy partners says in regulatory filings that the plant is so old and prone to breakdowns that it is not worth operating, raising the question of why such sophisticated energy-industry investors bought it.
    The real answer is simple: Under the rules of the electricity markets, the best way to earn huge profits is by reducing the supply of power. That creates a shortage during peak demand periods, such as hot summer evenings and cold winter days, causing prices to rise. Under the rules of the electricity markets, even a tiny shortfall between the available supply of electricity and the demand from customers results in enormous price spikes.

    So . . . the allegation is price fixing. The term “conspiracy theory” is thrown around as a pejorative, but there actually ARE such things as conspiracies. Assuming that it is a price fixing conspiracy, how do you PROVE it? Sadly, proving such a conspiracy requires more than reference to technical details of the plant and “Occam’s Razor”

    • Rod Adams says:

      @Rick Armknecht

      So . . . the allegation is price fixing. The term “conspiracy theory” is thrown around as a pejorative, but there actually ARE such things as conspiracies. Assuming that it is a price fixing conspiracy, how do you PROVE it? Sadly, proving such a conspiracy requires more than reference to technical details of the plant and “Occam’s Razor”

      I wondered the same thing until I read this excellent, if lengthy, summary of the meaning and interpretation of anti-trust laws in the US.

      http://www.kirkland.com/siteFiles/kirkexp/publications/2354/Document1/Business_persons_guide.pdf

      Note: If time is limited focus on pages 4-7 regarding price fixing and agreements to limit supply.

      • Rick Armknecht says:

        Thanks, Rod
        Looks like some whistle blowing is what is needed. I don’t think that antitrust penalties can provide a False Claims Act award to a whistle blower, though. Thus, a witness would have to be motivated by something other than money (simple decency would be nice, of course). Sen. Leahy has sponsored S.42, the “Criminal Antitrust Anti-Retaliation Act of 2013″, but Leahy has expressly noted that the legislation would NOT provide a financial incentive for whistle blowers.

        • Rod Adams says:

          @Rick Armknecht

          There may not be a whistleblower provision, but there is a provision for treble damages for entities with standing that can show material harm from the market manipulation. At least, that is what my amateur legal training and rapid reading program tells me.

          • Rick Armknecht says:

            Yes, Rod, treble damages are available in antitrust cases. Indisputable. Standing would not be as straight forward as some cases (probably a good candidate for a class action), but it would not be the big hurdle. Getting the evidence to win the case would be the hard part. You would need to show that the reason for the shut down of generating capacity was to raise electricity prices and not because of the Defendant’s song and dance about the decrepit state of the asset it had purchased 5 weeks earlier. That would most likely require a whistle blower.

  4. John T Tucker says:

    Its probably not going to be popular but if these plants are still viable for 5 or more years, and factoring in decommissioning to compensation, considering their environmental and strategic energy value, I think there is a good argument for at least temporary nationalization via eminent domain law. All things considered, probably an outstanding argument.

    That really should be the case for all energy assets.

    The market simply cannot be trusted to work in the timely, best interests of everyone and indeed in important matters it never really has been. In fact the market alone has a decided history of also working flat out against our best interests.

    Hopefully in the mpower case the feds had enough sense to acquire the patent rights for the amount of public funds invested and will make those public domain, at least. Worthless Wall Street types, living years off fed charity, certainly should not be able to walk in, ditch all the advancements and momentum gained from that hard work and cash that research in for personal profit when ever they please.

    • Marcel F. Williams says:

      Its time for a new age of public power projects, IMO.

      Instead of President Obama trying to privatize the TVA, the TVA needs to sell off all of its fossil fuel power plants in order to use that revenue to develop and produce small nuclear reactors including floating synfuel producing nuclear reactors for domestic use and for export.

      The TVA should also be allowed to purchase nuclear reactors anywhere in the country in order to stop the permanent decommissioning of nuclear facilities.

      Blindly trusting the corporations is a big mistake. They are using the leftist in this country as dupes to undermine the nuclear industry.The international Oil and Gas companies have no interest in seeing nuclear power succeed. And they are perfectly willing to put our coastlines underwater and acidify our oceans in order to make a quick profit.

      Marcel

  5. Wayne SW says:

    “The market simply cannot be trusted to work in the timely, best interests of everyone and indeed in important matters it never really has been. In fact the market alone has a decided history of also working flat out against our best interests. ”

    Good summary of a difficult problem. Not many people understand that “the free market” left to itself with no interference or restraint, seldom finds the optimum solution, all factors considered. In mathematical terms, the “free” market simply finds a local maximum based on the most heavily-weighted parameter. If that is price for a product or service, the market will move in that direction to the exclusion of all other factors unless there is a price weighting for those things, which isn’t always possible without the dreaded “interference with the invisible hand”. We’re seeing that scenario played out right now with nuclear plants, because there is no mechanism for placing a direct value on things like diversity of supply, reliability, energy security, etc. Another thing that gets out of sync are the time constants. Faced with a very elastic demand situation with relatively inelastic, brittle supply sources, price shocks and shortages are often inevitable.

  6. poa says:

    Thank you, Rod. I understand that they both had to go. It was worth it. Your blog doesn’t need nor deserve that kind of ignorant political slander, from either side.

  7. Eino says:

    To WayneSW and John Tucker:

    “The market simply cannot be trusted to work in the timely, best interests of everyone and indeed in important matters it never really has been. In fact the market alone has a decided history of also working flat out against our best interests. ”

    That is a potent statement. It would be tantamount to heresy in certain circles. Yet when I see what has happened over the years and what is happening, it’s hard to argue with.

    No mention was made of Kewaunee. This is another facility that had years left to operate. It would have cost a billion dollars to replace. Like Vermont Yankee, it provided clean energy, good jobs and excellent tax benefits to the local area. It was good for people. This and many other incidents throws great doubt in simply trusting that the market will make the best decisions for people.

  8. Wayne SW says:

    It is a potent statement, and true. Over the years I have found that those who espouse an almost cult-like belief in “the free market” fail to understand or acknowledge two basic truths. First, there are some things that transcend the free market. There is simply no way to place a price on some things that we all value and acknowledge to be necessary for us to continue as a free people. Second, there has never been a “free market” in the idealistic sense of the words. All economies have been a mixed bag to varying degrees. This country has always had an underpinning of regulation and direction, minimal at times but still present, mixed in with entrepreneurism and corporatism. The degree to which the various factors are weighted can be the subject of reasonable debate among reasonable people, but the fact remains that “the free market” has always been somewhat of an abstraction.