Two state legislators are spearheading the effort
- Update 10/17/07 below
- Another update 03/09/08
- Update 07/23/08 on "Blue Castle Project"
In a telephone interview last week Rep. Aaron Tilton, R-Springville, told me off -the-record, that he is an owner of Transition Power Development, a private equity group that has signed an agreement to secure water rights for a nuclear power plant. If approved by water regulators, the plant's cooling water would be supplied by the Kane County Water Conservancy District, whose executive director is Rep. Mike Noel, R-Kanab.
Noel told me that Transition Power has agreed to pay the conservancy district $1 million a year for almost 30,000 acre-feet of water once the plant starts producing power.
Now that the Utah newspaper has broken the story I can provide additional details.
Noel is chairman of the Legislature's Public Utilities and Technology Committee, and Tilton is vice chairman. Also, both men are members of the Public Utilities and Technology Interim Committee, which is co-chaired by Noel.
The interim committee has heard extensive testimony for and against nuclear power in its July and September meetings.
As verified by Tilton and Noel, Transition Power is considering building a nuclear power plant in Utah. Tilton told the Deseret Morning News that the plant's site is not confirmed.
According to the Desert News, Transition Power has already paid the district $10,000 upon signing the water agreement. The private equity group will pay $100,000 annually for five years until construction starts. Then, the payment becomes $500,000 a year until power generation begins, when it jumps to $1 million annually.
A bill to assist utilities in building nuclear power plants was discussed by the Public Utilities Interim Committee on July 18 and Sept. 19.
In last month's meeting, when speaking about the bill, Tilton said, "First, I ought to disclose that I do have business dealings in energy and specifically in power-generation projects. I'm not sure if some people know that or don't know that." He did not use the word "nuclear" or refer to nuclear power in the disclosure.
Tilton said he could not support the bill as written because it lacks some consumer protections. "We have some real needs" concerning power, he said. "Alternatives should be in place."
My Off-the-Records Notes are now On-the-Record
Here are my notes from my conversations last week with Tilton and Noel.
Utah state representative Aaron Tilton told me in a (10/08) in a telephone conversation that he will announce a new nuclear plant for Utah next Wednesday (10/17) following a legislative committee hearing on financing mechanisms. He confirmed several facts which I received from Utah state representative Michael Noel the morning of 10/8 also via phone. They are . . .
(1) A shell company called "Transition Power" has acquired rights for 70 years to 30,000 acre feet of water per year (one acre foot equals 325,851 gallons) in the Kanab, Utah area. A clerk named Jennifer *** at the water board which regulates such actions confirmed the transaction and the name of the firm. She specifically gave out Tilton's name and business phone number as the point of contact for "Transition Power" in relation to the water rights transaction. Tilton confirmed there is no SEC listing for the firm, but that he is the firm's business point of contact.
Mike Noel is the executive director of the Kane County, Utah, water district which is where the transaction took place. Noel confirmed the water is available having been previously reserved for a now defunct mine mouth coal fired power plant.
(2) "Transition Power" has hired a contractor to begin environmental assessments for NRC licensing. Noel declined the name the company.
(3) The potential customer for the Utah nuclear power plant, likely Rocky Mountain Power, will eventually apply for a combined construction and operating license from the NRC based on either the GE or Westinghouse reactor designs already approved by the NRC. (per Noel)
Noel and Tilton have been outspoken advocates in favor of a provision in a draft legislative proposal which would shift the burden to rate payers in terms of pre-construction financing for a new nuclear power plant.
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The report in the Deseret News (see link at top) has extensive coverage of the obvious conflict of interest questions which are raised by having two state legislators at the heart of the reactor proposal also working to modify the risk carried by ratepayers for construction costs related to the plant. Read the rest of the story at the paper's website.
Update 10/17/07 - Conflict of Interest Issues Arise
The Salt Lake City Tribune reports this morning that a principal in the firm of Transition Power is Nils Diaz, the former Commissioner of the Nuclear Regulatory Commission (NRC). Last week when I spoke with Utah Rep. Aaron Tilton he told me Diaz would be a witness for the interim legislative committee that is considering changing the way nuclear power plants would be financed in Utah. He neglected to mention to me that Diaz was a business partner. Tilton says he and Diaz will brief the interim legislative committee today on their nuclear energy venture.
The conflict of interest issues raised by the Utah news media brought a quick response from the environmental community. Vanessa Pierce, executive director of the Healthy Environment Alliance (HEAL) of Utah, which opposes nuclear power. "Both legislators have abused the public trust by failing to disclose their financial stake in a proposal to promote nuclear power in Utah - and they continue to betray that trust by denying this clear conflict of interest."
Diaz told the Salt Lake City Tribune, the company is focused on developing a suitable site for construction of nuclear power plants, "not on construction or operation."
"We are developing a site and that will be done with the utmost care to environmental issues, to the safety and security of the people of the community. It is too soon to say whether the company would seek to sell the license to a utility to operate a power plant."
This isn't the way the nuclear industry works and Diaz should know better than to issue a vague statement like that. A merchant plant sells its electricity on the grid and does not sell the plant, turnkey fashion, to a single utility. The only utility in the region which would be a customer is Rocky Mountain Power. The firm has been flirting with the idea of building a nuclear power plant on its own, but has not announced any firm intentions along these lines.
No one builds nuclear power plants as a speculative venture. The costs are measured in the billions of dollars. A plant requires upfront commitments from utilities and investors years in advance of the actual entry into revenue service with sale of electricity to customers. The combined construction and operating license could cost $25-50 million assumiung the reactor uses a design already approved by the NRC. Construction costs, if the plant were started this year, will be in the realm of $2,000 per kilowatt with a 1,000 MWe plant costing $2 billion to bring online within a minimum of five years after the NRC issues the license.
Tilton has been managing director and chief executive officer of TPD since February. He said the company's licensing efforts are "very preliminary." Until now Tilton had no known ties to the nuclear industry. The Tribune reports Tilton did not disclose his role in the company until last Friday, when he amended his House conflict-of-interest disclosure.
There are likely several sites being considered for the plant. Rep. Mike Noel told me on 10/8 an environmental firm has been hired from Denver to evaluate potential sites. Noel declined to name the company.
Legislators deny conflict of interest over nuclear plant
According to wire service reports on his Declaration of Conflict of Interest form, Rep. Mike Noel noted that he was associated with several groups: Michael E. Noel Environmental Consulting, Flood Canyon Ranch and Kane County Water Conservancy District.
On 10/15 he told a SLC newspaper it was not a conflict to co-chair the committee that is considering legislation involving a nuclear power plant. "Not at all," he said, when asked if that was a conflict.
"The district is a public entity, like a city, a community, leasing water to them," meaning the nuclear power plant. He added, "we're a public utility. I work for the water district as a paid employee."
Noel also says there's no conflict in chairing a committee that could determine Transition's financial fate, even though his employer stands to make millions if lawmakers support plant construction.
Rep. Aaron Tilton, who is the business manager of the nuclear plant proposal, also denied there was a problem. He told a SLC newspaper, "I really don't have a conflict of interest, because I'm not a regulated utility," he said, and the bill dealt with those utilities.
When the Deseret Morning News pointed out that the form was amended on Oct. 12, long after the interim committee meetings that took place in July & September, Tilton said the meetings did not involve a conflict of interest, because "I'm not a utility."
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More details as I get them.
4 comments:
Thank you so much for your comment on my blog. I hope my readers will follow the link to your blog post. I found this very interesting--particularly the off-the-record comments from Tilton. Very excellent reporting.
Not that I'm against nuclear power, because I actually support it, but I am terribly opposed to refuse like Tilton profiting from it and NOT thinking it's a conflict of interest. Of course it is.
Thanks for digging up the dirt on this.
Seems to me that Dr. Diaz is clean on this. As a former chairman and professor emeritus of nuclear engineering (he was my faculty advisor), he can certainly advise potential licensees about the process and the engineering. He can even be a principal at this stage.
A potential conflict MIGHT arise years down the road if he lobbied the NRC during the license application process or during operation. However, the project is certainly YEARS from that stage and I believe there is a temporal limitation of such restrictions.
Transition Power is talking about a new industry structure for nuclear where project developers get the ball rolling then sell the project to bigger money at some stage when the political risks are clearer and the economics can pass due diligence.
This business model happens all the time with independent power producers and especially with renewables. The guys in Fresno California and Boise Idaho are trying something similar with their nuclear projects.
I'll let Utahans judge the ethics of their own politicians!
The post about the Utah nuclear plant really doesn't address Diaz's role relative to conflict of interest. It raises the dissembling that took place by Rep. Aaron Tilton. He misrepresented Diaz's role by omission telling me he (Diaz) was a witness for a legislative hearing, but failed to identify Diaz as a principal for Transition Power.
I have no bone to pick with Diaz. He can contract with anyone he chooses without an issue of conflict of interest, politically speaking, since he is not an elected official.
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