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Nuclear power's future

In a world worried about global warming and escalating coal, oil and gas prices, the nuclear industry has seized an opportunity for rebirth.

Nuclear advocates are working to reshape the atom's image from that of an environmental nightmare and utility bankrupter to an affordable and Earth-friendly energy source - and a hedge against future energy shortages.

Nuclear expansion is the best hope, they argue, to cut carbon dioxide and other emissions that government and many in dustry leaders now believe are creating a perilous climate future.

U.S. power consumption is projected to increase by 50 percent by 2025, and additional reactors would be the cleanest choice.

Uncle Sam is on board - with a 10-year, $550 million grant program called Nuclear Power 2010 that began four years ago to help with the costs of new designs and licensing.

And last week the government stepped up with a new multibillion-dollar portfolio of financial guarantees and incentives.

Major provisions of the landmark energy bill that President Bush signed include:

Federal loan construction guarantees for up to 80 percent of costs.

Compensation for utilities building the first new reactors if completion is delayed because of litigation or foot-dragging by the Nuclear Regulatory Commission.

Production tax credits worth millions to a utility once its new reactor begins operating.

Renewal of the Price-Anderson Act for 20 years to limit utility liability and help insure new reactors by providing a larger secondary insurance pool.

Whether the inducements will convince any utility that building a new reactor is financially prudent is uncertain.

The argument that nuclear power does not pollute ignores the problem of storing radioactive waste for 10,000 years, say opponents. The planned federal depository at Yucca Mountain, Nevada, is mired in litigation and scandal. Storage is now at plants, adding to security costs.

The renewed federal initiative has raised the ire of anti-nuclear and environmental groups.

"This bill does everything but start laying the bricks for them," complained Anna Aurilio of the U.S. Public Interest Research Group. "It's wildly expensive. But I don't think it will jump start new construction."

The Nuclear Energy Institute says it will. "This legislation is like a big tailwind," said Richard Myers, director of business and environmental policies for NEI, a powerful industry group working for a nuclear renaissance.

"The trick will be to get the first four or five or six built so that everybody can gain confidence that we can build them on schedule," he said.

In the 1970s, reactor construction took years because of lawsuits, regulatory snarls and engineering problems solved on the fly. In 1992, the NRC fast- tracked construction permits and operating licenses, and it limited opportunities for anti-nuclear groups to intervene. Utilities have remained unconvinced.

The NRC believes that a revival is imminent and has persuaded Congress to add $20 million to its $702 million budget for a new licensing division. "We have already begun hiring," said Nils Diaz, chairman of the agency's governing board.

The agency can barely do its job today, countered David Lochbaum, nuclear safety engineer with the Union of Concerned Scientists, a watchdog group that does not oppose nuclear but wants the NRC to be reformed before more reactors are built. "Whether it's $20 million or $20 zillion for new troops, until the NRC gets new generals, it'll be money poorly spent," he said.

By 2015, at least two reactors will be built and up to 24 more by 2025, predicted Myers. He envisions up to 100 to replace and add on today's 103 aging reactors.

That scenario makes anti-nuclear groups gasp and utilities wonder how they are going to pay for them. Under deregulation, utilities cannot spread the cost of plant construction over decades as in the past by adding it to rates. Some lobbyists and lawmakers have begun to talk about returning to regulation.

The first new reactors could cost up to $2.5 billion each , Myers said, but that price will fall with additional units because they will use two or three basic designs.

Response from the utilities to the new designs, streamlined licensing and federal largess has been cautious. In response to the Energy Department's Nuclear Power 2010 program, 10 utilities and reactor makers agreed to pay for environmental studies and detailed engineering work for new NRC siting, construction and license applications. This will cost an estimated $1.1 billion, with the Department of Energy picking up half.

That proves that nuclear is not economically viable, said Paul Gunter of the Nuclear Information & Resource Service, an anti- nuclear group. "The federal government is more than a crutch," he said. "It's the lifeline."

Gunter's organization and other groups want major subsidies for solar, wind and other renewables. Renewable energy received only 11 percent of federal research and development dollars between 1948 and 1998, according to nuclear opponent Public Citizen. Nuclear energy received 56 percent.

The energy bill extends the production tax credit for renewable energy for two years at a cost of about $3.2 billion. Total tax incentives for nuclear are estimated at $7.3 billion.

"I don't know of anyone who is talking about actually building one," said Richard Zuercher, spokesman for Dominion Nuclear, a Virginia company which has requested a permit to place a reactor near two units now operating. That will cost about $10 million for environmental and other studies. The permit would be valid for 20 years.

Dominion also formed a consortium with reactor maker General Electric and contractor Bechtel Corp. to prepare an NRC application for a combined construction and operating license. Estimated cost is $450 million, most for the engineering to produce construction-ready blueprints. The Energy Department has agreed to pay half, but the exercise does not commit Dominion or the consortium to build.

Dominion Chief Executive Officer Thomas Capps has noted the industry's fears in widely quoted remarks that the financial risks of nuclear plants are so high that any company agreeing to build would face an immediate downgrade in its bond rating, which could markedly increase its borrowing costs.

NuStart Energy LLC -- a second consortium of nine utilities, including Exelon Corp. of Chicago, Entergy Corp. of New Orleans and Duke Energy of Charlotte, N.C., along with General Electric and Westinghouse -- has also won an Energy Department grant to apply for two reactor construction and operating licenses at a cost of up to $800 million. The agency is expected to pay half.

NuStart's current mission is not construction, emphasizes its president, Marilyn Kray, who is also vice president of project development for Exelon Nuclear.

"Our objectives are to complete the engineering . . . and to demonstrate the NRC's licensing process. It does not include construction."

To reach this Plain Dealer reporter:
jfunk@plaind.com, 216-999-4138

Editorial Notes: The Cleveland Plain Dealer is doing an exemplary job of explaining energy issues to the public, and doing it with a local slant. (If there's one thing we know about a low-energy future, it's that it will be local.) Previous stories in their series "Crude Awakening" are available through the series archive. Many of these articles in the series have been archived on Energy Bulletin. -BA

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