Antinuclear activists often think they have a tossed a trump card into an energy related discussion when they misquote a phrase included in a 1954 speech by Lewis L. Strauss, the politically appointed head of the Atomic Energy Commission. According to people who are fundamentally opposed to the safe and economical use of atomic fission, Strauss made an unfulfilled promise for the industry by claiming that nuclear energy would be “too cheap to meter.”
Here is a more complete context of what Strauss said in that speech, made three years before the first commercial nuclear plant in the United States started operating.
“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.
Aside: As a matter of fact, that speech was made only a few months after the very first power reactor of any significant size started operating in the Idaho desert and several months BEFORE the USS Nautilus made its maiden voyage “underway on nuclear power.” End Aside.
The funny thing about that excerpt from a speech meant to inspire science writers is that it was actually rather prescient. Once you have paid off the mortgage from buying a nuclear fission power plant, keeping it running can be cheap enough that it does not make any sense to carefully measure each kilowatt-hour produced.
The cost of owning the plant is virtually the same as the cost of operating the plant, so it makes sense to crank it up to full power as often as possible and simply charge a fixed monthly fee to take care of the unavoidable cost of taxes and occasional maintenance. Even the fuel bill does not change based on actual use; nuclear plants refuel on a calendar schedule that is only loosely linked to the actual running time in between outages.
If you look through the data compiled by the Nuclear Energy Institute, you will find that the industry calculates an average cost per kilowatt-hour so it can compare its operating costs to its competition. If you dig deeply into the components of that calculation you will find that none of the numbers would change if the plant owners tried to economize by only running the plant when it was absolutely necessary. That mode of operation would simply impose additional maintenance costs; it would not save any operating costs.
That situation is completely opposite to the one that exists in plants that burn natural gas. In those plants, 90% or more of the total cost of operating comes from purchasing fuel. Whenever the power is not needed, the plants reduce their output in order to reduce their fuel bill. If market demand is low enough, they completely shut down to get rid of the fuel bill all together. They also send as many of the minimal staff off somewhere else so they can reduce the carrying cost to as low a level as possible. Since gas plants often have have a rapidly depreciating assessed value, their tax bills are pretty low, and they do not have to pay a regulator $4-5 million per year to keep inspectors on site.
Coal fired plants are not quite as tied to fuel costs as gas fired plants, but an average of 77% of their operations and maintenance bill comes from purchasing fuel. They will reduce power or shut down if there is no market for their power.
In many ways, owning and operating a well-maintained, mature nuclear plant is a bit like living in a house passed down through inheritance that is heated with wood from the trees on the property and cooled by a system using the stream running through the backyard. You still have to pay your taxes; you still need to fix the roof before it leaks; and it is a good idea to have the air conditioning system checked for leaks every year before operating it for the summer. On the plus side, there is no mortgage, and virtually no fuel bill to worry about.
There is no fixed time when an asset like that reaches the end of its useful life. There is no reason to retire it as long as the neighborhood does not deteriorate and as long as you regularly invest in the upkeep. Even if you are “too poor to paint and too proud to whitewash”, it is probably a better idea to sell the asset than to tear it down.
There is an interesting historical reason why nuclear power plants in the United States were initially licensed to operate for 40 years. When the federal government was debating the Atomic Energy Act, there was little disagreement about the fact that none of the states had the expertise necessary to inspect and ensure safety, so there was no disagreement about the need for a federal agency to license the plants.
When it came to a question about the length of the license, there was little information available on which to base the decision. There was a general agreement that the license should not last forever; the authors understood that would give businessmen too much incentive to run the plants into the ground and extract as much cash as possible. The Atomic Energy Act authors asked engineers how long the plants would last, and most likely received the correct, but occasionally frustrating technical answer of “it depends” on a variety of unknown factors like the care with which the asset is maintained during its operating life. No self-respecting engineer would make a longevity commitment for nuclear power plants in 1954 because they had no operating history on which to base such a prediction.
Next the authors turned to their regulatory colleagues and found out that hydroelectric dams were also given federal licenses to operate. Those licenses lasted for 40 years. They asked the power companies that had expressed at least some interest in nuclear energy if they thought that was reasonable. Technical experts most likely told them that they were confident that they could make the materials and equipment in a nuclear plant last at least as long as the equipment associated with a hydroelectric dam. The deal was done and the bill was passed with a 40-year license period – with the provision for 20 year extensions after an evaluation by the technical experts in the federal government, who would examine operating history and maintenance records.
Aside: I read that story in a history of the Atomic Energy Commission, but I cannot lay my hands on the exact source right now. I have misplaced the second volume of the story; the one on my shelf right now only covers the period from 1947-1952. Here is what the NRC tells the public on their history page “The 40-year licensing period for nuclear plants was a rather arbitrary compromise written into the 1954 Atomic Energy Act that was not based on technical grounds or operating experience.” End Aside.
There are plenty of people who would prefer not to compete against a large electrical power production facility that can operate at full power just as cheaply as it can sit around waiting for customers to want to purchase power. People who sell fuel would love for gas burning plants to operate more each year; fuel vendors capture 90% of the revenue associated with operating those plants.
People who sell wind turbines or solar panels would love to force emission-free nuclear plants off of the grid, especially now that politicians are recognizing the reality that nuclear energy is just as clean. People who design and build new nuclear plants also have some economic motives for shutting down old plants. (Disclosure: I happen to be employed as part of a team that is designing new nuclear plants, so I guess Ayn Rand would criticize me by saying I am not working in my own self-interest.)
There are even people who have built up businesses based on selling the notion that nuclear power plants can only last so long. Unlike decrepit factories or power plants that are long-time blights after they shut down, nuclear plant owners all have a legally imposed decommissioning fund that amounts to hundreds of millions of dollars. That money can only be spent on tearing the plant down; decommissioning can be a big business opportunity if you can force a steady stream of plants to shutdown and tear down as quickly as possible.
There is a famous antinuclear activist in Vermont named Arnie Gundersen who was once a senior vice president for Nuclear Energy Services, a firm with a significant business associated with nuclear plant decommissioning – at the time of his employment. In fact, that company was once hired by the DOE to write a handbook on decommissioning.
Though he tells the story differently, one of the reasons that particular antinuclear activist took a 75% pay cut and worked as a private school teacher for a decade was that the nuclear plant decommissioning business dried up in the early 1990s. That was when people like Don Hintz of Entergy recognized that restoration was potentially more profitable than destruction. Unfortunately, the former nuclear plant destruction expert found a more lucrative, $185-$300 per hour line of work as an expert witness and state-employed technical consultant trading on his NE degrees from RPI.
Historical Note: After writing my March 2005 article titled Too Cheap to Meter – It’s Now True, I received an email from a great-grandson of Lewis Strauss. Here is what he told me:
As the great-grandson of the speaker in question, I’d like to thank you for your fair treatment of the quote – oft misused. However, that particular talking point was in reference to fusion energy, not fission – he was talking about the potential development of a power source that didn’t (and still doesn’t) exist, although hopefully LLNL’s NIF and “eater” will change that soon enough.
The great-grandson is probably correct about the family history; Strauss would probably be surprised by the impressive economic performance of the atomic fission power plants built within just a few years of his famous quote. Interestingly enough, if you break down his literal words, we are still in the era to which Strauss referred in his visionary prediction. My father was 29 years old in 1954, plenty old enough to have been one of the science writers in the audience that Strauss was addressing. I am one of the children that Strauss was talking about when he said
It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter…
Though I am a grandfather, I feel reasonably young most days. I expect to be enjoying the power that CAN BE cheap enough to sell with the same “all you can eat” pricing model often used by cable television or internet service providers. Of course, my enjoyment of that low-cost, abundant, clean power is threatened by the actions of selfish people who cannot sell as much of their more costly product as they would like unless they succeed in forcing established nuclear plants off of the grid.
IBM apparently agrees that mature nukes produce cheap, reliable power. That product is so important to their business that the company has informed the state of Vermont that forcing Vermont Yankee to close may we be their signal to find a new home. IBM just happens to be the largest single employer in the entire state.
VermontTiger.com (January 27, 2011) Do You Hear Footsteps?
So, the inevitable has happened. IBM has finally spelled it out in plain American that if Vermont Yankee is shut down or even marginalized, they-are-out-of-here. Worse, for Vermont, is that they defined it simply in terms of energy costs which means that any policy that squeezes their bottom line due to ideological energy management dabble, or otherwise, will ease their decision to leave the state.
Hat tip to Meredith Angwin for pointing to this important story. Meredith is the pronuclear activist who produces the exceptional Yes Vermont Yankee blog. Meredith recently founded the Ethan Allen Energy Education Project to help teach her neighbors about the important role that energy supplies play in modern society. That project deserves your support if you are looking for a way to contribute to improving the human condition.