Warren Buffett’s interest in nuclear power confirmed by Wall Street Journal and Nuclear Regulatory Commission

ByRod Adams

A couple of days ago, I shared a link to a comment from an Idaho blogger about how MidAmerican Energy Holdings Co., a company controlled by Warren Buffett’s Berkshire Hathaway, is investigating the possibility of building a new nuclear power plant on some pasture land located outside of Boise, Idaho.

On Friday, December 7, 2007, the Wall Street Journal picked up the story and and published an article on page B5 titled Berkshire Firm Weighs Idaho Nuclear Plant. The article describes how MidAmerican has formed a nuclear focused unit and hired William Fehrman, the former head of Nebraska Public Power District, the owner and operator of Cooper Nuclear Station. MidAmerican Energy Holdings has an interesting corporate history – it was once a regulated utility holding company, but in 1998, the entire company was purchased by CalEnergy, a non-regulated entity. Apparently it was the first such purchase, but it was certainly not the last.

One of the important things to understand about the Berkshire backed company, then, is the fact that the facility would be a merchant plant, one that is able to sell its power wholesale on the grid at a cost that is determined by the market, not by a public utility commission. There is no concept of “cost recovery” for this kind of plant, it will live or die based on its ability to produce power economically.

It is way past time to repeatedly challenge the anti-nuclear activists on their continued repetition of the idea that government sponsorship and monopoly market positions are required before investors will be interested in nuclear power. If MidAmerican decides to build and they decide to go with an MHI design, it is pretty obvious that the project will not be one of the first six new reactors and it will not be a reactor whose design certification has been sponsored by the Department of Energy. In other words, there will be few if any subsidies involved in the project, but you can be assured that there will have been plenty of investment due diligence supporting the decision to move forward.

One minor thing that the freeinidaho.com post titled Opportunity Knocks Again apparently got wrong was the size of the plant that may be built. It put the size in a range of 1100 to 1600 MWe, but the Wall Street Journal reported that MidAmerican is talking with Mitsubishi Heavy Industries (MHI) of Japan. The plant that MHI is marketing in the US is a 1700 MWe giant that is based on the company’s long experience in building pressurized water reactors, originally as a Westinghouse Licensee. The MHI design is scheduled to begin the NRC certification process within the next month.

I have made a number of comments on Atomic Insights based on stories in the Wall Street Journal and have regretted the fact that the articles are not available for links for non subscribers. In the past couple of weeks, the WSJ has opened its articles up a bit by putting a “Digg this” link on their site. As I understand it, if a subscriber thinks that the article is interesting enough to Digg, then the link on Digg will lead to the article. I decided to try that function for this story. If you are not a WSJ subscriber, do me a favor and go to http://www.digg.com/search?section=all&s=buffett+nuclear and try accessing the original version of the story. Let me know how it works for you.

One more item of interest that will not be obvious to the on line viewers of the article about Buffett’s nuclear interest. In the paper version, directly below the article was a three quarter page advertisement by PSEG. Once again, PSEG has paid for a advertisement with text that is a ringing endorsement of the idea that nuclear power is clean, safe and economical. I posted a copy of that ad on October 12, but think it is worth posting again:

We have good news for investors in the energy sector:
There can be green in going green.

Over the years, we at PSEG have shown that generating clean energy, such as nuclear power, can be very profitable. We’ve also been actively championing conservation and the expansion of renewable energy sources, like solar, to reduce carbon emissions. However, for the long term, the nation will need additional capacity for low- and zero-carbon electric generation, such as nuclear. Going green is simply what’s right for the environment and our customers and, at the same time, right for our business and shareholders.
Wall Street Journal 7 December 2007 Page B5

Rod Adams
Rod Adams

Rod Adams is Managing Partner of Nucleation Capital, a venture fund that invests in advanced nuclear, which provides affordable access to this clean energy sector to pronuclear and impact investors. Rod, a former submarine Engineer Officer and founder of Adams Atomic Engines, Inc., which was one of the earliest advanced nuclear ventures, is an atomic energy expert with small nuclear plant operating and design experience. He has engaged in technical, strategic, political, historic and financial analysis of the nuclear industry, its technology, regulation, and policies for several decades through Atomic Insights, both as its primary blogger and as host of The Atomic Show Podcast. Please click here to subscribe to the Atomic Show RSS feed. To join Rod's pronuclear network and receive his occasional newsletter, click here.

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