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Nuclear Power Turns "Green" in a Deregulated Market

By Paul Fenn

There is growing concern among environmentalists that a revival of nuclear power may be on the way, financed by the "stranded costs" bailouts of electric deregulation and marketed in Orwellian fashion as the "solution" to global warming.

The nuclear industry's lobbying arm, the Nuclear Energy Institute (NEI), ran an advertisement in the March 1999 Atlantic Monthly touting the environmental benefits of nuclear energy, featuring a cute owl saying "thanks" to the nuclear industry for fighting global warming, and claiming that "nuclear power plants have accounted for 90 percent of U.S. electric utility greenhouse gas reductions since 1973." Several of the claims in the ad repeated language from the NEI's first green nuclear ad campaign in 1998, branded misleading by the United States National Advertising Division, leading environmental activists to push the Federal Trade Commission to prosecute the NEI.

But the United States government appears to be preparing for a revival of the domestic nuclear power industry in the name of reducing fossil fuel consumption.

The shift is alarming to many observers who thought nuclear power was "dead" in America. Before deregulation, nuclear power was regarded as defunct for two reasons. First, public opinion opposes nuclear power development; second, but perhaps more importantly, nuclear power plants are so expensive to build that the price of their electricity is uncompetitive.

This may all be changing, however. Nuclear industry officials say that "stranded costs" bailouts legislated in state deregulation laws have breathed new life into many reactors by reducing their "nuclear debt." As a new breed of nuclear operators emerges, the industry is seeking reclassification of nuclear power as environmentally friendly, is winning reduced federal oversight of reactors, and is initiating a bold new marketing campaign to "green" the public image of nuclear power.

According to nuclear energy officials themselves, the "stranded cost" bailouts enacted by the California legislature ($28 billion) and other states passing electric restructuring laws have strengthened the "competitiveness" of many of the nation's nuclear power plants.

Deregulation in many states was sold to voters on the claim that competitive markets would result in the early decommissioning of uncompetitive nuclear plants. Some environmental advocates, such as the Natural Resources Defense Council (NRDC), still maintain that deregulation will be the death knell of the nuclear industry, and continue to urge other environmental groups to support deregulation. Other anti-nuclear activists, such as Greenpeace advisor Harvey Wasserman, are seeing red. "Electric restructuring with the stranded costs bailout has essentially meant the public refinancing of nuclear power plants on behalf of their private, deregulated owners."

Nuclear industry chiefs are seeing green, however. They say nuclear plants are solid financial risks in a time when regulators and lawmakers are seeking ways to reduce greenhouse gas emissions from coal, natural gas and oil plants.

Meanwhile, the nuclear industry is moving to find ways of reducing the operating costs of nuclear plants — such as cutting managerial staff and pushing for decreased federal regulation of plants — in order to enhance their "price competitiveness." A group of Midwestern utilities, including Northern States Power Co., Wisconsin Electric Power Co., and Wisconsin Public Service, has formed a joint nuclear operating company to operate seven nuclear generating plants at five locations in the Midwest. The nuclear management company would create a senior management team to consolidate operations and control costs at the generating plants, including Northern States Power's Monticello Plant and the two-unit Prairie Island Plant; Wisconsin Electric's two-unit Point Beach Nuclear Plant; the Kewaunee Nuclear Power Plant.

The NEI is moving to reduce federal safety oversight of nuclear reactors in order to reduce the cost of management. ... Claiming that excessive federal oversight costs the industry "in excess of $1 million (sic) per year" — a strangely low figure in the nuclear industry — the NEI is proposing to remove a traditional NRC criterion for actions requiring federal approval, employing a looser rule for management changes that i act Quality Assurance. The Nuclear Regulatory Commission (NRC) recently announced it will accept and regard as "noncontroversial" a NEI proposal to loosen federal oversight of Quality Assurance changes by nuclear plant owners.

And the nuclear industry is working to undermine the establishment of Renewable Portfolio Standards (RPS), in the deregulated industry by replacing them with the "Non Fossil Fuel Obligation" (NFFO), which would include nuclear power among "non-fossil fuel" energy sources required by law.

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Excerpted from "Love is Hate, War is Peace, and Nuclear Power is Green: The Coming Nuclear Revival," by Paul Fenn, copyright 1999 by the American Local Power Project. The essay in full can be found on American Local Power Project's Web site at www.local.org.