Legislatures are taking a strong role
Missouri, Oklahoma, and Kentucky are three states which will are grappling with the issue of nuclear energy in 2009. In Missouri, the fate of AmerenUE's proposal for a new nuclear power plant will likely be decided by the state legislature this term. At issue is whether the utility can recover the cost of construction while it is building a new plant. In Oklahoma legislators will look at whether building a new nuclear power plant as a regional energy resource is more expensive than anyone can handle. In Kentucky, a moratorium on construction of nuclear power plants may get a review because a state energy plan calls for building one.
A common theme for all three states is growing demand for electricity and the desire to move away from energy sources that generate greenhouse gases. There is no consensus among the various stakeholders in each of the three states. Here is a review of where things stand in three very different places.
The nuclear electric utility AmerenUE has filed a COL application with the NRC for a 1,600 MW Areva EPR. The plan for a second nuclear power plant in Callaway County, Missouri, 109 miles west of St. Louis, is up against a stiff challenge from a state law that bans recovery of construction costs while the plant is being built.
Cost estimates for the new plant could be as high as $6 billion. The small utility cannot get financing for a project of this size. If the plant is to be built, the state law must be overturned. This is AmerenUE's objective as the legislature opens its session this winter.
The utility has been lobbying state legislators to change the law. Also, it set up a political action committee before the November elections and contributed $325,000 to various election campaigns according to a report in the Kansas City Star.
As a first step, the utility wants the Missouri Public Service Commission to allow it to recover the costs of its NRC license application which are reported to be $51 million. Environmental and consumer groups have lined up to oppose the request. Melissa Hope of the Sierra Club told the Kansas City Star the new nuclear power plant is needed but that energy efficiency and renewable energy sources like wind will meet demand for electricity.
Mike Cleary, a spokesman for AmerenUE, responded, "Efficiency is a way of preserving and stretching energy supplies, but efficiency doesn't put out a single kilowatt."
The legislature knows the fight over AmerenUE's desire to over turn the law will be a big deal. State Senator Charlie Shields, the incoming senate president pro tem, told the Star energy independence, ability to attract business with amble electricity, and fairness to rate payers will be the key issues.
In the heart of the country's oil industry, some Oklahoma legislators want to look at the option of building a nuclear power plant to make the state a regional center for distribution of energy throughout the region. However, the state's largest utility doesn't want to hear about it and says no new power plants will be needed in the state until at least 2020.
According to a report in the Tulsa World Dec 23, Oklahoma House Speaker Chris Benge, R-Tulsa, toured a nuclear power plant in Arkansas to learn more about the technology. Rep. Mike Reynolds, R-Oklahoma City, has announced plans for legislation to streamline the state permitting process for a new nuclear power plant.
Despite these initiatives, a spokesman for the Oklahoma Gas & Electric Company (OG&E), the state's largest utility, objected saying, "It is much too expensive and much too great an undertaking for any one utility in the state."
He added that OGE, which generates 6,600 MW of electricity for 760,000 customers, is not big enough to bet the company on a project that could cost $5-6 billion.
The utility is a wholly owned subsidiary of OGE Energy (NYSE:OGE) with annual revenues in 2007 of $3.8 billion. The firm's stock showed a Jan 2 close of $26.68/share against a 52-week range of $36.23-$19.56. With 92.78 million shares outstanding, market capitalization stood at just under $2.5 billion.
Sen. Benge is not deterred by these objections. He told the Tulsa World, the long-term benefits of nuclear energy may outweigh the concerns about initial high costs. Rep. Reynolds put a sharper focus on the issue. He said pushing the envelope on investment in nuclear energy should be a priority.
"It is time for us to move forcefully to move this issue forward and do what we can to help companies that are capable of doing it. If we don't have any, then find some who can."
OG&E spokesman Brian Alford responded that if Oklahoma wants a nuclear power plant, "you really need to start today."
The State of Kentucky, which currently has a complete ban on construction of nuclear power plants, has just published a statewide energy plan that calls for one. The plan, titled "Intelligent Energy Choices," lists a series of strategies to meet the state's energy needs. One of them, which calls for a reduction in greenhouse gases, lays out the case for building a nuclear power plant.
Kentucky Governor Steve Beshear told the Associated Press, "We must begin the discussion now about whether nuclear energy should be part of our energy portfolio."
“The choice we face is to take no action and see large price increases in energy with limited economic security or to take prudent actions now for a better chance at smaller price increases, as well as increased economic security.”
The plan lays out a series of scenarios for energy demand and use in Kentucky through the year 2025. Under the mainstream "business as usual" case, the plan identifies projected increases in energy use in the state by more than 40% by 2025. The plan also calls for a parallel decrease in greenhouse gas emissions to a level in 2025 that is 20% lower than greenhouse gas emissions recorded in 1990.
These are very ambitious goals. How will they be achieved in so short a time? In an analysis of the plan, World Nuclear News points out it says,
"Nuclear power is one such option that deserves our full attention, as its technology and safety have significantly improved in the last three decades. It also is likely to become a national priority."
A suggestion put forward by the Kentucky plan is that "a moderate investment" in nuclear power (eight plants at four sites) could be considered as part of a strategy to diversity Kentucky's future electrical energy portfolio, reduce emissions. Taking a hypothetical case of building eight 1,000 MW plants by 2025, that would require an investment of $28-35 billion dollars in the next 17 years.
Value proposition for nuclear leads to coal
The value proposition is interesting. The plans says such an investment could position the state to take advantage of advanced coal conversion opportunities. Kentucky could utilize nuclear power to generate a significant percentage of the state's energy needs, with coal-based and nuclear power for electricity generation being roughly equal.
The plan proposes that nuclear power could provide the energy needed to develop a coal-to-liquids industry in Kentucky to replace petroleum-based liquids. Kentucky could develop a coal-to-liquids industry that will use 50 million tons of coal per year to produce four billion gallons of liquid fuel per year by 2025.
That's an interesting idea. It will be even more interesting if the coal industry, which has a very significant presence in Kentucky, takes the state up on it. It could be a path out of competition between coal and uranium as fuel sources to meet growing energy demand and lead to a win-win energy strategy.
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