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Leonard Hyman & William Tilles

Leonard Hyman & William Tilles

Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and…

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Utility Sues Nuclear Energy Institute For Extortion

We aren’t lawyers, but extortion sounds like a serious charge. NextEra Energy, parent of Florida Power and Light and owner of several nuclear power stations around the country recently launched a lawsuit against the Nuclear Energy Institute (NEI), the nuclear industry’s trade group.

NextEra, which is also a major player in the renewable energy business, withdrew from NEI after that group backed the Trump Energy Department's ill-fated proposed rulemaking. This measure was designed to prop up less-than-economically-viable nuclear and coal-fired power generating stations disguised as a reliability booster for the nation's power network. However, the proposed rule did not even pass muster with the President's own Federal Energy Regulatory Commission. Nevertheless NextEra was not happy about the NEI’s stance, accusing the organization of trying to instill a false panic about reliability.

Disputes within trade organizations are not unusual, although the organization usually manages to keep them in house. Outright member withdrawals though occur less frequently. There are real downsides to withdrawing from a trade group like NEI.

NextEra as a major nuclear plant operator depends on a data base maintained by the NEI on existing and prospective nuclear workers. Like many nuclear facilities operators, NextEra hires outsider contractors and consultants to aid in refueling its nuclear power stations. And it cannot do so without a thorough personnel evaluation--which NEI's data base conveniently provides. Related: Maduro Proposes OPEC Cryptocurrency

According to the lawsuit, NEI denied NextEra access to its nuclear personnel data base without an $860,000 payment. NextEra claimed this was like being forced to pay for membership yet again. That’s where the charge of extortion comes in.

Let’s assume the name calling is the work of over-excited corporate litigators. It's in both parties interest to allow NextEra access to the data they need to hire qualified workers. But there's another, bigger issue here.

What does this say about nuclear policy issues and splits within the industry? Do we have two warring industry groups: regulated nuclear power generators, who are plugging along just fine, economically versus nuclear power generators experiencing difficult conditions in competitive power markets. The latter group look desperate for any lifeline. This is often the fate of high cost producers in a commodities market. (Not to be unsympathetic, but these firms willingly chose to enter competitive wholesale electricity markets. Nobody forced them.) Related: Oil Prices Fall On Rising Crude Inventories

Under its previous leadership the NEI carefully parsed its arguments and lauded the improvements in nuclear operations for example. Attempting always to look and sound like a voice of industry reason (not always an easy task for an organization in an often controversial industry). And even attempting to paper over intramural differences so to speak.

Jumping into the polar vortex/reliability fracas and taking the easy political "bait" may have affected the credibility of the organization. But it also ends up discrediting the nuclear power endeavor by presenting such a weak or bogus rationale for keeping aging nuclear plants running. The nuclear industry still provides one fifth of our nation's electricity. It needs to get its act together.

By Leonard Hyman and William Tilles for Oilprice.com

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