Tuesday, October 16, 2007

FLASH - Nuclear power plant planned for Utah

Two state legislators are spearheading the effort

  • Update 10/17/07 below
A nuclear power plant is being proposed for Utah according to a report published today (10/16/07) in the Deseret News. The story has been under wraps for at least the last 10 days, but is now out in the open. Two influential Utah state representatives are involved in a project to build a nuclear power plant in Utah.

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.

* * *

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."

* * *

More details as I get them.

Sunday, October 14, 2007

Japan moves on advanced LWR reactor designs

Time to market issues drive a $520M initiative

Japan announced this week it will craft an independent strategy for the design and production of advanced light water reactors with deployment set for the 2020 time frame. A consortium of government agencies, utilities, and manufacturers of nuclear reactors will begin full-scale development next year with a goal of having the resulting reactor designs become international standards. The move has profound implications for the so-called nuclear renaissance in the U.S. and the Department of Energy's Generation IV and NGNP nuclear R&D programs.

Japanese reactor manufacturers are playing a key role in the expected construction of as many as two dozen new nuclear reactors in the U.S. For instance, Toshiba is a key supplier for NRG's just announced South Texas Project units #3 & 4. If Japan meets its self-imposed deadline for the new designs, U.S. utilities could be buying them instead of the products of current DOE R&D designs.

Japan is a key member of the Generation IV International Forum, but clearly has decided it can't wait for the U.S. government's leisurely R&D pace. Japan's impatience is based on the fact that Generation IV reactor designs are not slated to come into commercial use until mid-century. The implications are that by the time the U.S. completes its R&D initiative, the Japanese could own the international export market for light water nuclear reactors.

The Japanese effort has established a project time line of completing the design work by 2015 at a cost of $520M (US). Two designs will result from the effort. One will be a boiling water reactor (BWR) and the other will be a pressurized water reactor (PWR). Each will be capable of producing 1,700-1,800 MWe. Currently, the largest reactor on the global market is AREVA's EPR which produces 1,600 MWe. One is under construction in Finland.

The manufacturers involved in the effort are Toshiba, Hitachi-GE, and Mitsubishi. Their first customers for the new reactor designs are 11 Japanese utilities which are part of the consortium and which are looking to replace a number of aging reactors by 2030. Additionally, the Japanese government has designated Mitsubishi Heavy Industries as the lead player in developing a new generation of fast reactors.

Key feature of the new Japanese reactor designs include;
  • Use of 5% enrich fuel reducing the amount of spent fuel and extending the time period between reactor fuel outages
  • Standardized earthquake protection structures
  • Use of new materials and different water chemistry to establish an 80-year plant life
  • Development of innovative construction methods to bring reactors online faster
  • Digital control systems which will enhance uptime and safety
DOE Seeks NGNP Designs

While Japan has put its next generation of commercial light water reactor designs on the fast track, the U.S. Department of Energy announced a request for expressions of interest in design work on the Next Generation Nuclear Plant (NGNP). The program has lagged in recent years from diminished budget and was sidelined by the Global Nuclear Energy Partnership (GNEP) as part of a closed nuclear fuel cycle. The announcement in July had the effect of putting some wind back in its sails.

DOE's announcement July was a request for expressions of interest from prospective industry teams capable of providing engineering design services for the conceptual design phase of the NGNP. That's not an RFP to build anything. It's just a fishing lure tossed in the water to see if anyone will bite. The reactor design is for a high-temperature gas-cooled reactor (HTGR) is based on research and development activities supported by the Generation IV nuclear energy systems initiative at DOE’s Idaho National Laboratory (INL).

The NGNP design is expected to result in a high temperature reactor capable of producing hydrogen, electricity and/or process heat. Once expressions of interest are received and evaluated, a request for proposals (RFP) will be issued to develop the conceptual design, expected to begin in FY2008. DOE said in a press release that during this phase, the NGNP reactor’s performance, safety and functional requirements will be defined in detail as well as estimated cost and schedule for its construction and operation.

The RFP will contain real money and will be the subject of intense interest by engineering firms capable of doing the work. A decision to build an NGNP reactor at Idaho will give the lab an anchor facility which will be a magnet for R&D funding for decades to come. The reactor is expected to be a 300 MWe HTGR capable of generating electricity and putting it into the Pacific NW grid. It will also use process heat to produce hydrogen. The expected cost of construction is about $2B. DOE seeks to complete the design and construction of a prototype NGNP at the INL by 2021.

On the commercial side, the design will also provide the basis for subsequent analyses and design details leading to the submittal of a NGNP license application to the Nuclear Regulatory Commission. Commercialization of the NGNP design will drive U.S. exports in the global nuclear market. The question is whether the designs and licensing will take place in time given the competitive drive from other countries. While the INL will be completing construction of an R&D reactor for the NGNP project in 2021, in 2020 Japan will be deploying its new LWR designs to commercial markets.

The political outlook for that kind of capital construction in Idaho was dimmed last month with the self-inflicted demise of the influence of Idaho Senator Larry Craig, a member of the Senate Appropriations Committee. Mike Crapo, Idaho's other, simply doesn't have the same level of influence over energy-related funding decisions. Craig's expected replacement, Idaho Lt. Governor Jim Risch, has little knowledge in nuclear energy issues.

While DOE moves ahead with its NGNP project, South Africa and China are pushing hard towards commercial deployment of so-called Pebble Bed reactors which are also high temperature gas-cooled reactors. Like the situation with Japan, it may turn out that by the time the U.S. completes its R&D work, other nations will have addressed the time-to-market issue and will be selling reactors based on this design to the global nuclear market.

DOE Awards $16M for GNEP design studies

DOE completed cooperative agreements on October 1st with four industry consortia to receive $16.3 million for technical and conceptual design studies to advance the Global Nuclear Energy Partnership (GNEP) facilities. They include spent fuel reprocessing, advanced fuel fabrication, and new fuel R&D initiatives.

Funding under the cooperative agreements is as follows:

AREVA AND MITSUBISHI HEAVY INDUSTRIES, LTD. ($5.6 Million) -- Principal Team Members: Japan Nuclear Fuel Limited; Battelle Memorial Institute; BWX Technologies, Inc.; and Washington Group International

ENERGY SOLUTIONS, LLC (ENERGY SOLUTIONS) ($4.3 Million) -- Principal Team Members: The Shaw Group and Westinghouse Electric Company. Additional members: Atomic Energy of Canada Limited (AECL); Booz Allen Hamilton; Nexia Solutions; Nuclear Fuel Services; and Toshiba.

GE-HITACHI NUCLEAR AMERICAS, LLC (GE-HITACHI) ($4.8 Million) -- Team Members: Burns and Roe; Ernst & Young; Fluor Corporation; International Business Machines (IBM); and Lockheed Martin.

GENERAL ATOMICS (GENERAL ATOMICS) ($1.6 Million) -- Team Members: CH2M Hill; United Technologies Corporation - Hamilton Sundstrand Rocketdyne Division (UTC); a Russian consortium led by OKB Mechanical Engineering (OKBM); Potomac Communications Group; LISTO; and KAERI.

Note that both the AREVA and ENERGYSOLUTIONS teams also submitted siting studies for GNEP facilities. The team led by AREVA is associated with the Idaho National Laboratory. The team led by ENERGYSOLUTIONS proposed a site in Idaho near the INL, but also hedged its bets by proposing GNEP sites in New Mexico and South Carolina.

The prospects for GNEP in Idaho are limited by a Settlement Agreement over waste issues that bans import of commercial spent fuel to the state. A scenario that looks plausible, sans competition from other states, is that Idaho could get a fuel fabrication plant, and an advanced fuel R&D center, but not a fuel reprocessing center. The odds-on favorite candidate for the fuel reprocessing center, under this scenario, is South Carolina. However, there are 13 candidate sites for GNEP plants and their respective congressional delegations will weigh in on their behalf.

Getting back to DOE's announcement about the GNEP studies, what's interesting about them is the concept of a closed fuel cycle that does not send spent nuclear fuel to Yucca Mountain.

“These studies will contribute to the analysis and inform the research that DOE is conducting to further the Global Nuclear Energy Partnership,” Assistant Secretary of Nuclear Energy Dennis R. Spurgeon said. “These awards enable DOE to benefit from the vast technological and business experience of the private sector as we move towards the goal of closing the nuclear fuel cycle.”

The consortia will provide conceptual design studies, technology development roadmaps, business plans, and a communications strategy in 2008 supporting decisions regarding the GNEP proposal for a nuclear fuel recycling center and advanced recycling reactor. The advanced fuel R&D center isn't addressed by this round of studies.

The announcement is part of $60 million in funding opportunities announced by the Deputy Secretary of Energy Clay Sell in May to engage industry experts in the conceptual designs for proposed GNEP facilities. The $60 million in funding opportunities includes the current funding of $16.3 million and planned future funding of $44 million in 2008 that is expected to be made available through September 2009, subject to congressional appropriations.

Congress has not been supportive of the Bush Administration's efforts to build GNEP facilities. Although a House/Senate conference committee has not yet been scheduled for the FY2008 appropriation for DOE, total GNEP funding is likely to be in the range of $150-200M compared to a request of more than twice that amount.

Will competitive intelligence drive strategy?

When you look at the work going on in Japan, Generation IV, and NGNP, it seems clear that nuclear energy will play a role in meeting energy demand for the world's economies in the 21st century. The amount of R&D money slated to go into various reactor designs indicates the world will be building new nuclear power plants in the decades to come.

If the U.S. considers exports to the global market for nuclear reactors to be in the nation's interest, it is going to have to do several things.

First - step up the pace on nuclear reactor R&D. Complete an R&D prototype of a high temperature gas cooled reactor by 2015 and deploy a licensed commercial version by 2020.

Second, DOE should stop defaulting to letting Idaho do all the heavy lifting with Congress and put real government commitments in place that aren't subject to political whims. If the U.S. is going to have a global nuclear presence, it needs a long-term national commitment to get there.

Third, recognize that nuclear energy is a key to solving the global warming problem, and the more reactors you build instead of fossil fuel plants, the less CO2 you put in the atmosphere. This is about saving the human species from turning into crispy critters. The environmental community has to become part of the solution and stop throwing spanners in the works.

Rant off. Have a nice day :-)