The Wealth of Nations, by Adam Smith, is often considered to be the seminal work on free markets. In Wealth, Smith had a lot to say about monopolies and competition. Here is one quote that I like to keep in mind as I try to comprehend John Rowe’s somewhat confusing position on new nuclear power plants.
(Note: For those of you that are not as big of an energy industry groupie as I am, John Rowe is the CEO of Exelon, the owner and operator of the largest fleet of nuclear power plants in the United States.)
To widen the market and to narrow the competition is always the interest of the dealers… The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.
Companies that own current means of supplying energy have the most direct interest in keeping out new suppliers of energy. The more successfully they discourage anything that increases the supply of the commodity that they sell, the more profit they will make from each unit that they sell and the more likely they are to hold on to the market that they currently supply.
Using the lens provided by Smith’s explanation is the only way that I can logically understand the closing passage from Robert Manor’s Exelon boss still shopping, published on 23 September 2006 in the Chicago Tribune.
Manor expends a good deal of virtual ink describing Exelon’s relentless pursuit of acquisitions of other companies that own and operate nuclear power plants. At the end of the article, however, Manor describes Rowe’s attitude about new nuclear power plants with words that could just as easily describe the position held by the leadership of the Union of Concerned Scientists as that of the leadership of a successful nuclear power plant owner.
Although Rowe has led Exelon to success in part by fixing nuclear plants, and is willing to acquire more nuclear generation if the price is right, he is negative about the U.S. building new nuclear plants.
He says the utility industry likely will build several new nuclear plants in the foreseeable future, probably in a Southern, Republican-voting state, where demand for electricity is rising rapidly and the political winds are favorable.
“I can’t fully get over the waste issue,” he said. The nation still has no permanent repository for the many thousands of tons of highly radioactive waste that has accumulated over the decades.
Rowe said he would not build a new nuclear plant until a permanent solution to the waste problem is found. “I feel strongly about that,” he said.
Rowe is a well-educated, well-informed person who is unlikely to ever make a comment to the news media without advice from his lawyers and speechwriters. He has to know that such a statement makes great material for groups that make their living by fighting nuclear power developments.
Despite his inability to “fully get over the waste issue”, Rowe does not seem to worry much about creating new used nuclear fuel from the plants that his company already owns. He is also aggressively seeking other opportunities to purchase existing plants from other companies. Actually building new plants and improving the nation’s ability to function and respond to new market demands, however, might put his company’s profit margins at risk by driving down the price at which electricity would be sold.
As Smith counsels, I am suspicious of any attempts by owners of existing power plants to discourage the construction and operation of new power sources. They have a lot to lose; their actions and motives are not always what they seem to be.