Tuesday, January 8, 2008

Hope Dim For Nuclear Power In State

December 1, 2008


Reactors Popular In South, But Few Policy-Makers In Connecticut Support Them, Even As Emissions Cap Looms.

Like other elected officials, Waterford First Selectman Dan Steward can tick off the challenges Connecticut faces when it comes to electricity, from some of the country's highest rates to a growing reliance on natural gas to generate power.

What's different is his solution.

Steward wants more nuclear power built in Connecticut and sees his coastal community as the best place for the first new reactor in the state in two decades. Sounding more like a Southern pol than a lifelong Yankee, he says the state should encourage Dominion Resources Inc. to expand its Millstone Nuclear Power Station, ensuring that there's enough electricity to meet demand for decades to come.

"It would certainly be in Connecticut's best interest to get in line," said Steward, a grandfather and one-time information-technology supervisor at Millstone.

Rising electricity demand, concerns about fossil fuel supplies, lucrative federal incentives and the emergence of global warming as a leading issue have ignited a resurgence in nuclear power. Power companies are proposing to build new multibillion-dollar reactors for the first time since the 1970s.

Federal regulators expect applications for more than 30 new reactors by the end of 2009. The first few are beginning to arrive. And the pattern is clear: Almost all of the nuclear action is happening in the South as expansions to existing nuclear plants.

Come up north, and Steward is a lonely voice.

New nuclear development is not likely in Connecticut, or the rest of New England, any time soon. There are discussions about nuclear power — one Dominion official said he gets a couple of queries a week from policy-makers in New England — but at least for now, they are closeted.

"No one," said Donald Downes, chairman of the state Department of Public Utility Control, "wants to come out and say: 'Guys, build more nukes.'"

The reason? Decades of environmental, safety and cost concerns eroded political support for nuclear power in New England. Contributing to the skittishness is the slow growth in electricity use in the Northeast.

And a deregulated power market creates a huge and untested risk for any company that wants to spend the $3 billion to $4 billion it would take to build a new reactor here.

No company could make money on a new nuclear reactor in the New England market as it's now working, the agency that runs the region's electric grid said in a study last summer.

Yet nuclear power, some energy experts say, can't just be dismissed — even in Connecticut.

Starting in 2009, Connecticut will be part of a group of Northeast states adhering to the nation's first cap on the emission from power plants of global warming gases, which nuclear plants don't emit.

Recent projections by the Connecticut Siting Council predict slow, but steady growth in electricity consumption — only about 1 percent a year, but still enough to create the need for more generation at a time when old plants are becoming obsolete. Renewable sources, such as wind and solar, and conservation measures so far provide just a sliver of the answer.

Fossil fuel prices, which contribute heavily to the cost of electricity, continue to be volatile, with many predictions of more increases as China and India industrialize further.

"Sooner or later the Northeast has to embrace nuclear," said David Crane, president and CEO of NRG Energy, the owner of several fossil fuel plants in Connecticut. NRG has proposed two new reactors in Texas.

Atomic Baggage
Nuclear power comes with plenty of baggage in New England. People remember the shutdowns, safety violations and cost overruns.

At Millstone, which began generating power in 1970, the cost to build a third reactor mushroomed from hundreds of millions of dollars to billions in the 1980s. The experience was not unique to Connecticut. Seabrook Station in New Hampshire bankrupted the company that built it, making a mockery of the old slogan "too cheap to meter."

"It was a very painful and difficult and costly experience, really, for everyone involved in it," said Gerry Garfield, a partner at the law firm Day Pitney in Hartford with extensive experience in the nuclear industry.

Although the nuclear industry says it has never operated more safely, concerns remain about what could go wrong. Three Mile Island and Chernobyl quickly come to the lips of opponents of atomic power, many of them graying activists.

Iodine pills given to people who live near Millstone are a tangible reminder of the risks. Safety and environmental problems plagued the plant in the 1990s; its former owner, Northeast Utilities, pleaded guilty to felony charges.

Although the safety issue continues to color the political debate, the nuclear power industry is making a stronger case for itself as an environmentally responsible substitute for plants that burn fossil fuels. Reactors produce massive amounts of electricity without emitting carbon dioxide, the main greenhouse gas blamed for global warming.

But the plants produce radioactive wastes, which continue to cause environmental, safety and security concerns. The federal government has no agreed upon plan for spent fuel rods, which are now stored onsite at Millstone and other nuclear plants.

And even if the waste issue were to be addressed, environmental groups in Connecticut aren't convinced that nuclear power is the answer to global warming. They prefer a growing focus on cutting electricity use through efficiency — a cleaner and cheaper way to reduce carbon dioxide emissions.

"We don't always have to build new power plants to meet demand," said Daniel Sosland, executive director of Environment Northeast, an environmental advocacy and research organization.

Official policy — in both major political parties — reflects the environmentalists' concerns, the memories of cost overruns and the historical opposition that permeates New England.

Throughout last spring's debate about electricity rates, for example, Gov. M. Jodi Rell and leaders in the General Assembly largely ignored the largest source of electricity in the state — nuclear power.

They focused on wind, solar and other renewable sources of generation; conservation and efficiency measures; and fuel cells.

A spokesman for Rell said there's little need to talk nuclear. The industry, meanwhile, points out that under the best-case scenario, a reactor would take eight years to permit and build — and requires strong political will.

"New England is viewed as a very hostile place," said Lee Olivier, executive vice president of operations at NU and a veteran of the nuclear power industry. "The companies want to build nuclear power where there is favorable acceptance."

Southern Hospitality
They've found acceptance south of the Mason-Dixon line. Dominion, which is Virginia's largest regulated utility, is planning to build its first new reactor at a plant it owns in Louisa County, Va., about 90 miles southwest of Washington, D.C. — in a county of second homes and long-distance commuters.

"You have the normal environmental group who oppose it for 17 reasons," said Jackson T. Wright, chairman of the board of supervisors for Louisa County.

Entergy Corp., which owns nuclear plants in Massachusetts and Vermont, has the support of state officials in Louisiana and the governor in Mississippi as it plans new reactors in those states.

By contrast, the biggest debate in recent years in the General Assembly about nuclear energy has been whether to impose a windfall tax on Millstone because of the high profit that some elected officials say Dominion makes on the power the plant generates.

Millstone, a decade removed from its safety and regulatory troubles, is indeed profitable. Millstone's two reactors generate more than 2,000 megawatts; that's about 30 percent of the state's total capacity, but because the Millstone reactors run more than other plants, the complex supplies nearly half of the electricity generated in Connecticut.

And there is room for more reactors under the original site plan.

Advocates for nuclear power see long-term price advantages for states that support new reactors. Once the plants are operational, they can produce power at a steady price because labor, and not fuel, is the leading cost of running a nuclear plant.

That brings an economic advantage rarely discussed in the debates about safety and cost. Nuclear plants return more wealth to a community because the money spent running them stays in the pockets of the residents who work there.

Despite these advantages, which proponents assert, Daniel Weekley, director of Northeast government affairs for Dominion, said the political climate would need to change for Dominion to become interested in adding a reactor in Connecticut.

But Weekley added, "I get the question more and more from reasonable regulators and legislators."

Power Of The Market
Even if a power company wanted to build a nuclear reactor in Connecticut, it remains an open question whether it could attract financing and whether consumers would see benefits on their bills under the current market system.

Legislation that Connecticut passed in 1998 deregulated electricity generation. The law abolished the regulated system in which utilities built plants and recouped their investment, plus a potential profit, through electric rates that state officials set.

Under the reformed system, plants are built by developers who make their money by selling the power into a wholesale market.

"The question becomes: Does anyone want to take that kind of risk?" said Gordon van Welie, president and CEO of ISO-New England, which produced the study in August showing that the current market wouldn't work for nuclear expansion.

Power companies, an industry trade group said, could take "various innovative" steps to build new reactors in states with deregulated markets. One is pre-selling the power for decades to utilities that deliver electricity to their customers.

"The jury is really out on it right now," said Garfield, the lawyer at Day Pitney. "It is a very large capital investment for an enterprise that does not have its cost recovery assured."

And whether more nuclear reactors would provide savings is unclear. In New England, wholesale prices are set not by the cheapest or average price of power. Rather, the last, most expensive plant needed to keep the lights on — in most cases, a natural gas-fired unit — sets the price.

So even with more nuclear power, Olivier and others warn, Connecticut ratepayers may not enjoy any of the cost savings unless the rules are changed.

Back in Waterford, Dan Steward knows his views are controversial, especially outside the Waterford area, where many residents work at the plant, or in the nuclear submarine industry.

But he said, "At least I'll start the ball rolling."

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