A story titled GOP House candidate Bill Flores backtracks on loans for nuclear power plants caught my eye this morning. It tells the story of Bill Flores, who is running for congress in the Texas district that includes the Comanche Peak nuclear power station. Luminant, the current station owner, has been working for a number of years to design and license two additional units for the site.
The local population, like most of the people who live near currently operating nuclear energy facilities, are quite supportive of their largest local employer. Many of them are looking forward to the increased economic opportunities that will come when the plant construction finally begins. They know that the project financing is a difficult challenge; it has been the topic of conversation for several years. They also know that the prospects for adding Comanche units 3 and 4 depend to some degree on expansion of the federal loan guarantee program to reduce the cost of the financing by reducing the perceived risk for a first of a kind project. Luminant is working to obtain a combined license (COL) referencing Mitsubishi Heavy Industry’s 1700 MWe US-APWR.
Luminant has not yet committed to the project but it submitted its COL application on September 19, 2008. Mitsubishi Heavy Industries submitted the Standard Design Certification Application on December 31, 2007.
It is with that background that a flurry erupted in the campaign for the local congressional seat when Bill Flores, the Republican candidate, was accused of failing to support the federal loan guarantee program. According to Chet Edwards (D-TX), the current congressman for the 17th congressional district in Texas, Mr. Flores made the following statement to indicate that he was opposed to the job and clean, reliable energy production project at Comanche Peak:
It’s not the federal government’s responsibility to be building those plants or even to be loaning the money for those plants or to be guaranteeing the debt on those plants.
The Flores camp initially denied the accusation and said that Flores was not opposed to nuclear energy development. Unfortunately for Mr. Flores, we live in an era full of recording devices. The Edwards campaign released the audio recording of Mr. Flores making the statement, which had been captured at a Tea Party event held in Waco, Texas in February. It became difficult for Mr. Flores to continue denying his position, so his campaign issued a statement indicating that he supported some loan guarantees and inclusion of nuclear energy as part of a national energy policy. Even after the Flores camp issued that statement, Chet Edwards (D-TX) made the following comment:
With friends like Mr. Flores, nuclear power and our communities who benefit from it hardly need enemies.
This whole story can be understood as a somewhat uncharacteristic battle between Republicans and Democrats with the Democrat in the pro-nuclear role. It can also be described as an ideological battle between anti-big government Republicans and big government Democrats. However, I noticed one more potential aspect that was mentioned, but not pursued.
The race between Edwards and Flores, a retired Bryan oil and gas executive, is likely to be Texas’ most competitive congressional contest.
It is possible that Flores was not speaking just to anti-big government Tea Partiers when he spoke about not assisting nuclear energy projects to get off the ground. He may have been talking to his former colleagues who are likely to be be a major source of his current campaign funds. In Texas, about 47% of the electricity comes from burning natural gas (Source: Energy Information Agency state generation tables 2008).
Selling natural gas to electric power producers is a lucrative market that would be reduced in size by about 630 million cubic feet per day when 3400 MWe of nuclear energy enters the market. Selling that amount of natural gas provides a revenue stream of $3.2 million per day at a price of $5 per million BTU. Every month of delay for the new Comanche Peak units puts nearly $100 million into the pockets of Texas based gas suppliers. That is a powerful financial motivation for efforts to raise barriers to entry or to prevent existing barriers from being torn down.
That is why this story qualifies as a smoking gun.