Ameren calls it quits in Missouri and a top federal energy regulator says baseload power is dead
The U.S. nuclear industry had good reason to be spooked this week even though Halloween is still on the other side of the equinox. Two unrelated events that represent significant setbacks for the nuclear renaissance took place this week. In the first instance, a Midwestern utility announced it was walking away from building its second nuclear power plant, a 1,600 MW Areva EPR. In Washington, DC, a powerful energy regulatory official sent a signal sure to send shivers down the spines of anyone else thinking of build a new reactor. He said the nation doesn’t need them.
In Missouri, according to the St. Louis Post Dispatch, Ameren’s CEO told the state legislature to take their session and shove it along with plans to build a second nuclear reactor at Callaway, MO. The reason is the legislature killed a measure that would allow the utility to recover construction costs while the process of building the $6 billion plant, as long as six-to-eight years, was in progress.
In Washington, D.C., the head of the Federal Energy Regulatory Commission (FERC) gave a barn burner of a speech in which he said, according to a headline in the WSJ, “we don’t need no stinkin’ nukes.” The NY Times reports that Jon Wellinghoff said no new nuclear or coal plants may ever be needed in the U.S.
“I think baseload capacity is going to become an anachronism.” He said wind energy is cheaper than coal or nuclear.
Show me state shows Ameren the door
After long and contentious debate in the Missouri Senate and House, the state legislature killed off a bill that had initially been crafted by Ameren (NYSE:AEE) to overturn a 1976 state law the prohibits the utility from recovering construction costs while building the reactor is in progress.
Ameren did a number of things right, including building a business network of support, but also over-reached in some of the provisions of its bill instantly angering consumer groups and alienating its supporters including the Public Utilities Commission. By the time a revised bill was introduced in the legislature, opposition groups had taken advantage of the delay to mount a successful campaign against the legislative measure.
One of the key members of the opposition is one of Ameren’s biggest customers, Noranda, which owns and operates an aluminum manufacturing plant in Missouri. An a classic hardball play, the plant’s management said that if the legislature passed the measure, and Ameren significantly raised its rates, the firm would be forced to close laying off hundreds of workers. This threat seems to be more bark than bite since aluminum smelters often align with nuclear power plants because of their reliability in supplying electricity to meet baseload demand.
Ameren also came in for withering criticism for putting the cart before the horse in the timing of its request to the legislature. Missouri Gov Jay Nixon told a news conference on April 23 that Ameren would have better luck overturning the state law if it came to the legislature with an NRC license in its hand. Nixon said Ameren didn’t get it, or chose not to get it, in an aggressive quest to raise rates even before it breaks ground.
For its part Ameren said it has already spent $75 million of which $65 million is for submission of a license application to the NRC and another $10 million for orders for long lead time large forgings for the proposed plant.
Ameren CEO Tom Voss gave the news media a pretty good impression he was taking his bat and ball and going home. However, supporters and detractors alike think the utility is just headed into a cooling off period.
The most significant signal is that it did not tell the NRC to stop working on its license application. Second, there are two more legislative sessions before the utility gets a license from the NRC in 2011 which gives the utility plenty of time to figure out what went wrong and try again. Third, Ameren is not under any pressure to be among the nation’s “first movers” in building a new reactor. It can meet growth in demand for electricity in its service area with natural gas plants while it watches what happens elsewhere in the country with the first wave of new nuclear power plants.
FERC chairman swings away with controversial remarks
If FERC Chairman Jon Wellinghoff was playing outfield at Boston’s Fenway Park, right now he’d be so far from home plate that fans would rightfully assume he was hugging the green monster. Fenway Park’s left field boundary is marked by a 37-foot high green wall that sends hits that would be career making home runs in other parks bouncing back into play.
What sends Wellinghoff’s public profile into the center of a controversy about the Obama’s administration’s plans for nuclear and coal are remarks he made this week in which he said no new plants for either fuel type might ever be built. In doing so he planted himself in the political outfield going far beyond the views of other energy officials, including Energy Sec. Steven Chu, who says that nuclear and fossil fuel plants will continue to play an important role in the nation’s economy.
According to a report in the New York Times April 22, Wellinghoff spoke as though he had a “swing away” signal from the White House.
"I think baseload capacity is going to become an anachronism. Baseload capacity really used to only mean in an economic dispatch, which you dispatch first, what would be the cheapest thing to do. Well, ultimately wind's going to be the cheapest thing to do, so you'll dispatch that first."
"People talk about, 'Oh, we need baseload.' It's like people saying we need more computing power, we need mainframes. We don't need mainframes, we have distributed computing."
The nuclear industry was understandably livid over Wellinghoff’s remarks.
"If expansion of nuclear plants is the nation's policy, then Congress has to recognize that the U.S. energy companies cannot afford to do this alone," said Paul Genoa, policy director for the Nuclear Energy Institute.
The nuclear industry trade group also offered readers of its blog a strongly worded analysis of Wellinghoff's views. The blog post noted, "Baseload capacity also means reliable, constant power to meet the minimum load requirements. Wind, which is supposedly "going to be the cheapest thing to do," does not produce reliable, constant power.
The implications of Wellinghoff’s views, if shared at the White House, could be that they see the nuclear renaissance in the U.S. is over. It could also mean that Al Gore’s vision of an implausible ten-year moon shot for renewable energy technologies and smart grids has come front-and-center in the Administration’s thinking.
However, almost no one in the nuclear industry accepts those views as take-aways from from Wellinghoff’s speech. Instead, they looked to the White House for some clarification on these and broader energy issues.
"The president needs to show his cards on nuclear energy," said energy consultant Joseph Stanislaw, a Duke University professor, told the NY Times. "He cannot keep this industry, which must make investments with a 50-year or longer horizon, in limbo for much longer."
Nuclear bloggers want to send Wellinghoff to the showers
So far the White House has been mum about Wellinghoff’s speech. Meanwhile, Wellinghoff came in for a roasting in the nuclear blogsphere. To use another baseball metaphor, they pulled him from the lineup and sent him to the showers. At least that’s what they’d like to see the Obama Administration do. I would too.
- At Atomic Insights Rod Adams called Wellinghoff “dangerous.” He noted that before joining the federal energy commission in 2006, Mr. Wellinghoff, a lawyer, “focused exclusively on client matters related to renewable energy, energy efficiency and distributed generation,” according to FERC’s official bio.
Adams adds that Wellinghoff fails to understand how important it is to have reliable electrical power that is not dependent on the whims of the weather. At best, he notes, solar and wind work well about 30% of the time.
- At Blogging About the Unthinkable, Sovietologist used a pen warmed up in Cerekov radiation to say that Wellinghoff has “absolutely no idea what he is talking about.” He writes, “Wellinghoff is seriously confused, both in terms of the current status of renewable technology but also in that he's proposing technological frameworks that are currently wishful thinking.”
He closed with this assessment. “Wellinghoff is a technological fantasist who's determined to pick energy winners before they've been tested in the real world. It's rather akin to trying to pick the winning racehorse before it has been born.”
While Wellinghoff was playing to the Obama administration’s green supporters, in Congress Sec. of Energy Steven Chu told the House Energy & Commerce Committee,
“I believe nuclear power has to be part of the energy mix in this century.” He said the U.S. has to regain its lead in nuclear energy. “We are trying to start the American nuclear industry again.”
Mr. Wellinghoff needs to call the Energy Secretary and get his playbook up-to-date. Right now it is missing very important pages with the words “nuclear” and “baseload demand” in the headings.
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