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Llewellyn King

Llewellyn King

Llewellyn King is the executive producer and host of "White House Chronicle" on PBS. His e-mail address is lking@kingpublishing.com

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US Government Agency Faulted in Nuclear Abandonment

US Government Agency Faulted in Nuclear Abandonment

If you are heading north on the Chesapeake Bay, just above where the Patuxent River enters it, and you will see the Cove Point liquefied natural gas terminal and gas processing plant.

Journey on, about three miles, and you will see a superbly landscaped industrial installation that, unlike the gas terminal, blends into the cliffs of Maryland. This is the Calvert Cliffs Nuclear Power Plant, which has been making electricity quietly, efficiently and abundantly since 1975.

By contrast, the Cove Point terminal and gas plant has been a symbol of the vagaries of the gas market. Much of the time it has stood idle, with fishermen maneuvering their boats among its piers.

The terminal and gas plant were built when the nation was gripped by the energy crises of the 1970s, the Arab oil embargo and the Iranian Revolution. In reality, it has been seldom used and has been in and out of operation.

Until a week ago the Calvert Cliffs 1 and 2 reactors on the site, 55 miles from Washington, were set to get a sibling. Calvert Cliffs 3, a joint venture between Baltimore-based Constellation Energy and Electricite de France (EDF), the mammoth French utility, was to join the two venerable reactors.

But now there will be no Calvert Cliffs 3, according to one of its promoters, Constellation Energy.

The project has been canceled–strangled in its crib, if you like, by the White House Office of Management and Budget (OMB), which insisted on a sky-high fee in return for federal guarantees of the private commercial loans the utilities needed to finance unit 3.

By effectively axing a new reactor, OMB was acting against the Department of Energy, Congress, and possibly the wishes of President Obama.

The nuclear industry and Unistar, the Franco-American company created to build Calvert Cliffs 3, say the fee was wrongly calculated and that OMB is contradicting the intention of Congress and the expressed hopes of Obama.

Two other projects are also facing cancellation over the OMB calculation for its loan guarantees. The utilities say the terms dictated by OMB are onerous, just too expensive.

Yet the industry can find no appellate route to overcome OMB’s stubbornness. The result is that the much-anticipated “nuclear renaissance” is sliding back into the dark ages. Only the Atlanta-based Southern Company has come to terms with the government and secured the loan guarantees it sought to build Vogtle, a two-unit plant.

Strangely, Congress and the Obama administration have declared the revival of nuclear power as national policy and money has been appropriated for loan guarantees. But both are seeing their desires frustrated by OMB and its formula for calculating the chances of success or failure for new nuclear projects.

Angered by OMB intransigence, the two partners in Unistar, Constellation and EDF, have fallen out. EDF wants to go ahead, despite the difficulties and possibly with French government money. It may have to find a new American partner because a foreign company cannot own a U.S. nuclear plant outright.

Adding to the agony of the nuclear reactor builders is the changed picture for natural gas. There is now too much of it coming to market for utilities to ignore the attendant low price. At the inception of the new wave of interest in reactors, gas was selling for $7 to $8 for 1,000 cubic feet (a standard measure in gas pricing). Now it is bobbing around $4 for 1,000 cubic feet, which means that utilities are tempted by the low capital cost of gas turbines.

The joker is wild–and the joker is natural gas, aided by the OMB bureaucracy.

The nuclear renaissance may be delayed again in the United States, but 58 nuclear plants are under construction in 14 countries, including 24 in China alone.

By. Llewellyn King

Llewellyn King is executive producer and host of “White House Chronicle” on PBS. His e-mail is lking@kingpublishing.com




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  • Anonymous on October 30 2010 said:
    If the nuclear renaissance requires taxpayers to guarantee loans then it's a sham.
  • Anonymous on October 31 2010 said:
    It is this government which is a sham and a disgrace. Small modular nuclear fission reactors are designed to be cheap, reliable, and disaster-proof. Not fail-proof -- any device can fail. But disaster-proof, meaning any failure which might occur will not propagate into a disaster.But the US Nuclear Regulatory Commission is sitting on its rigid thumbs, consuming billions of taxpayer funds without returning compensatory value. The entire US government has become a Chicago-style protection racket, requiring payoffs and super quid pro quos.Advanced societies cannot exist without abundant energy. But the current regime appears dedicated to achieving energy starvation.

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