Nuclear Industry Sells Out for Public Subsidies

delaware riverkeeper - Jim Willis reports

Jim Willis
Editor & Publisher, Marcellus Drilling News (MDN)

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The nuclear industry has sold out. It seeks to survive against unsubsidized natural gas by feeding at the public trough in a disgusting display of cronyism.

 

Back in January, MDN highlighted a developing issue in Ohio that potentially impacts Utica/Marcellus shale in the region. Three large utility companies — FirstEnergy, American Electric Power, and Dayton Power and Light — are behind an effort to re-regulate the electric power generation industry in Ohio. This nuclear industry is initiative is pure cronyism at public expense; a disaster.

The electricity industry is a complicated industry, with some some power producers operating as “regulated” and some operating as “unregulated.” Regulated power producers have their rates, and rate of profit, set by government regulators — which limits but also guarantees profits.

nuclear industry

First Energy nuclear power plant near Cleveland, Ohio

Unregulated power producers, on the other hand, do not have the safety net of the government forcing ratepayers to pony up — they operate in the free market, taking all of the risks, and reaping the rewards if those risks prove worthwhile. Many (most?) of the new natural gas-fired electric plants getting built, like those we have focused on in Ohio, are of the unregulated kind.

If Ohio rolls back the clock 18 years to re-regulate, it would likely spell the end of billions of dollars of investments in unregulated/shale-powered electric plants. A disaster. The latest tact companies like FirstEnergy are using to force through a rotten piece of legislation is to claim without it, their nuclear power plants will close down. And precious “diversity” of sources to generate electricity is needed.

The legislation proposed (Senate Bill 128 and House Bill 178, same language) is actually a $5.4 billion bailout for FirstEnergy. So says Clean Energy Future CEO Bill Siderwicz. Clean Energy is in the middle of investing $4.5 billion in five new shale-fired electric plants in Ohio. That investment and those plants will disappear if this disastrous “bailout FirstEnergy” bill becomes law. Here’s are some excerpts from a story in the Youngstown Business Journal:

Executives and organizations that support the development of independent energy production are calling two bills introduced in the Ohio General Assembly nothing less than a $5 billion bailout for utility giant FirstEnergy Corp. that will saddle residents with higher energy costs.

FirstEnergy says the bills, collectively called the Zero Emissions Nuclear Resource Program, help to preserve nuclear energy as a vital, reliable power source that provides electricity to millions of Ohioans each day, not to mention hundreds of jobs in the industry.

The debate essentially pits large utilities such as FirstEnergy against smaller, independent, non-utilities such as Clean Energy Future, which plans to invest more than $1 billion in the region to build two combined-cycle energy production plants in Lordstown.

“We really can’t find one organization that supports FirstEnergy’s program,” says Bill Siderewicz, president of Boston-based Clean Energy Future. “It’s a mirage that is underhanded and devious.”

Siderewicz says that FirstEnergy’s program – encapsulated in Senate Bill 128 and House Bill 178 – essentially grants the utility a bailout akin to $340 million annually over 16 years, or $5.4 billion over the life of the program.

At issue are FirstEnergy’s two aging nuclear power plants, the Davis-Besse Power Station in Oak Harbor, just east of Toledo, and the Perry Nuclear Generating Station in Perry, 30 miles east of Cleveland.

In February, FirstEnergy announced its intention to exit the power plant business and sell or close both of its nuclear plants in Ohio. They have lost money because new, more technologically advanced generation plants have entered the market and can produce electricity at a lower cost and provide power to consumers at a reduced rate. Plus, since Ohio is a deregulated market, it allows for competitive bidding through the PJM system, which manages the electrical grid in Ohio, 12 other states and Washington, D.C.

FirstEnergy is seeking zero carbon emission credits from the state. But unlike the renewable energy credits once granted to the solar and wind power industry, the zero emission credits would be paid for directly by consumers through an increase in their monthly bills.

Siderewicz says the $340 million is based on the premise that FirstEnergy’s two plants combined generate 18 million megawatt hours per year. However, he says, Davis-Besse and Perry produce about 15 million megawatt-hours of power annually, well below the estimate FirstEnergy provided. Therefore, Siderewicz says Ohioans would be subsidizing plants based on power that isn’t being produced at both sites.

“It’s bogus and deceitful,” Siderewicz charges. “It’s beyond words, really.”

Moreover, subsidies for FirstEnergy would jeopardize Clean Energy Future’s efforts to construct new, cost-efficient plants across Ohio, Siderewicz says. The Lordstown Energy Center is now under construction, and between 400 and 500 construction workers are at the site building the plant. But plans for a second plant in Lordstown – the Trumbull Energy Center – are in jeopardy should this legislation be enacted, he says.

Siderewicz has lobbied heavily against the bills, just as FirstEnergy has lobbied organizations and legislators to back the subsidies. In a letter to the Western Reserve Building and Construction Trades Council dated April 21, Siderewicz explains that his company’s projects have delivered 4.8 million man-hours of union work to Ohio through the construction of plants in Lordstown, Oregon and Fremont.

In his letter, Siderewicz warns that these subsidies would “throw ice water onto new non-utility investment in Ohio. Such bailout laws send false signals into the marketplace indicating that two new Lordstown-size gas plants are not needed in northeastern Ohio, when in fact they are desperately needed.”

Here is the full, extensive, very well written story, including an update on the two bills and their chances in their respective chambers.

Editor’s Note: The nuclear industry rip-off is much bigger than Ohio. It’s also occurring in New York State under the leadership of Governor Corruptocrat, as this story about his Zero Emissions Credit scam indicates. A lawsuit has been filed by non-subsidized energy producers in that instance to stop it. They note the subsidies to nuclear will artificially  lower wholesale electricity costs while sticking to ratepayers and taxpayers in other ways and forcing out non-subsidized generators:

“In the long term, with non-subsidized generators forced to exit the market, lower prices will deter potential new generators – including generators of renewable sources of energy – from entering the market. The result will be reduced supply and increased prices for local utilities, and thus for the homeowners and businesses that they serve.”

The program, in other words, like most government initiatives, will have completely opposite effects compared to what is promised. Even renewables will feel the pinch from the crony subsidization of nuclear. And the response of New York State Public Service Commission? Well, it’s predictably pure smugness those who insist they know better, even as their boss moves to close down the Indian Point nuclear power plant in his own backyard:

In a statement, PSC Chair Audrew Zibelman called it a “frivolous lawsuit” and the “fossil fuel industry’s playbook to deny and thwart actions to combat climate change.”

Zibelman said the state is fully within its rights to protect the environment and therefore, the welfare of its citizens. 

There’s also New Jersey where the nuclear industry is profitable but confronted by low natural gas prices that make it difficult to compete. There the Public Service Energy Group (PSEG), with the support of archetypical cronyist Christine Todd Whitman (the former governor and Rockefeller ally) is proposing the state emulate New York and give the nuclear industry and PSEG a helping hand:

Still, for PSEG and nuclear supporters the writing is on the wall: natural gas is dirt cheap and solar energy is getting the lion’s share of subsidies. That leaves nuclear, a relatively clean energy source, in danger of getting muscled out. 

“Since 2013, economic pressure [nationally] has led eight nuclear plants to shut down or be scheduled for early retirement, and four additional nuclear plants have announced that they also are at risk of closure,” said PSEG communications director Kathy Fitzgerald in an email. “If that trend continues or worsens, our nuclear plants could cease being economically competitive which may cause us to retire such units prior to the end of their useful lives. It’s important to get ahead of the issue here in New Jersey before we reach a point of no return.”

Whitman argues the cost of nuclear power is relatively affordable compared with other power production. 

“Once up and running a nuclear reactor on a per-kilowatt basis is about the least expensive form of power that we have,” she said. 

Moreover, until renewable energy like wind and solar are operating on the same level with more traditional power sources, nuclear has to be recognized for providing emission-free energy. 

“This is a real issue. Human health is a real issue,” she said. “If New York was to close its nuclear generation they’d have a terrible time reaching their goals on clean power.”

What I take from this babbling is that the nuclear industry is only competitive if it doesn’t have to account for its capital costs and should, therefore, receive a subsidy from other ratepayers and taxpayers. And, the excuse? Well, it’s cheap if we don’t count capital and face the fact renewables can’t compete either. This is utter nonsense, of course, and what makes it even worse is that the rationale is the need to meet some arbitrary government established “clean power” goals that are already being accomplished by natural gas and faster rates than anyone ever expected. And, finally, what is this about “human health” being the issue. Does Whitman not know CO2 is not a human health issue? Does she not realize what natural gas has done to clean the air of New York City and so many other places.

Well, of course, she does. These are just words to justify the crony raid on the treasury and the special interest politics of her and her gentry class friends. This is what our country is coming to as such people seek to satisfy their greed by turning a free-enterprise energy sector into a public enterprise where they can profit at the expense of consumers.

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