Energy Industry Eyes Nuclear Power

N E W   Y O R K, May 17, 2001 -- Nuclear power could be making a comeback — but not before the end of the decade.

That's one of the implications of the Bush administration's energy plan — to be released today under the direction of Vice President Dick Cheney — which seeks to make it easier for companies to construct new nuclear power plants.

The proposal advocates nuclear power as a cheap way of increasing the country's electricity supply, encouraging an industry that has not filed a new application for a nuclear plant since 1978, the year before the notorious Three Mile Island accident in Pennsylvania.

Nuclear Power Timeline

"A new dawn is here for the nuclear power industry," says Melanie White, a spokeswoman for the Nuclear Energy Institute, an industry-wide lobbying group in Washington.

But Bush's proposals also raise plenty of unresolved questions. Do energy companies think there are financial benefits to building multibillion-dollar nuclear plants, some of which effectively bankrupted power companies in the 1970s? If so, when would new nuclear plants be constructed? And would consumers benefit?

A Decade in the Making

Even for heavyweight energy companies, nuclear power is the ultimate long-term investment — and gamble, given the high cost and many years needed to build government-approved plants.

For instance, New York's Shoreham plant, on Long Island, was scheduled to open in 1978 at a cost of $77 million; a decade later, costs had multiplied tenfold, but the plant never opened and its owner, the Long Island Lighting Co., went out of business in 1998.

Federal regulators say that even if energy companies were to begin applying for permission to build new plants immediately, it could be nearly 10 years before any of them saw use.

"There's a lot of uncertainty," says Victor Dricks, a spokesman at the Nuclear Regulatory Commission, which must approve all plans for the construction of nuclear power plants. "The bottom line is, because nobody has built one here for 20 years, our expectation is it would take them five or six years."

The NRC has made changes to streamline its approval process, allowing companies to apply for building and operating rights at the same time. But Dricks still estimates that licensing, combined with construction, would make the total time needed to get a nuclear plant up and running anywhere from six to nine years: "Our expectation is the year 2010," he adds.

Pebble Plans

Mass-produced reactor technology and quicker licensing could be what the industry needs to start building again. In recent years, the industry has seen waves of consolidation, as companies have discovered the logic of running multiple nuclear plants: Capital investments like infrastructure, staff and emergency preparedness grow relatively smaller.

But construction has been nonexistent. So far, Chicago-based Exelon, the biggest player in the nuclear power business, is the only company to tell the NRC it intends to file a license application for a new plant at some point in 2002.

In turn, Exelon, which was formed from the merger of Unicom and PECO Energy and operates 17 reactors at 10 plants, mostly in Illinois, is pinning its future plans on the development of a new type of nuclear reactor. Based on so-called pebble bed technology currently being tested in South Africa, the new reactors will cost less to build, Exelon hopes. And because the new type of reactor is mass-produced, it could sail through the approval process more quickly.

"It would be built primarily at factory, and then shipped out and installed at a site, at less expense," says David Knox, a spokesman for Exelon's energy unit. "It would be quicker and cheaper in construction, and it should make it much simpler to license."

According to Knox, Exelon's huge nuclear plant in Byron, Ill., cost $4.5 billion to construct. But assuming the technology pans out, the pebble-bed reactors, which could be built in modular units, would be less expensive. A plant consisting of three of the new units would generate about 15 percent as much energy as the Byron plant, but at $450 million, a tenth of the cost.

In addition to Exelon, major players in the nuclear industry who could be gearing up to build new plants include Dominion Resources (located in Virginia), Entergy Corp. (which runs plants in Louisiana and Mississippi), and the Southern Company (operating nuclear plants in numerous Southern states).

Cheaper Electricity?

With lower building costs, energy companies say they will be able to generate cheaper electricity, long the main selling point of the industry. In 1954, when the Atomic Energy Commission was formed, its first chairman, Lewis Strauss, said nuclear power would provide energy "too cheap to meter."

That hasn't quite panned out yet, although according to the Nuclear Energy Institute, nuclear power costs from 2 cents to 2.5 cents per kilowatt-hour to generate, compared to 3.5 cents to 4.5 cents for power plants fired by natural gas.

But it's less clear that this efficiency will be passed along to consumers.

Tyson Slocum, a senior researcher on energy policy at Public Citizen, the Washington-based consumer group, says regions with a heavy dependency on nuclear power often see higher electricity prices — precisely because nuclear plants are so expensive to build in the first place.

According to Department of Energy statistics, electricity providers in Illinois, for instance, had revenues of 8.8 cents per kilowatt hour, while their counterparts in Kentucky, which is almost entirely dependent on coal-fueled power plants, averaged revenues of 5.3 cents per kilowatt hour.

"Under deregulation, we've scrapped this cost-based rate structure," says Slocum. "There's a lack of public accountability of energy companies."

And that's not even allowing for the main issue environmentalists still have with nuclear power: disposing of the 45,000 tons of nuclear waste that have been generated in the last 30 years.