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Nuclear Industry Lays Foundation for Comeback

June 22, 2005|Ralph Vartabedian | Times Staff Writer

CLINTON, Ill. — Along the streets of this economically depressed farming town, optimism is running high that a proposed nuclear power plant could bring in new jobs, give a boost to local retailers and increase taxes for schools.

The U.S. has not started a reactor project for 29 years, but President Bush is calling for a new era of nuclear power, saying it would reduce air pollution and dependence on foreign energy. If new reactors are built, the first could go into Clinton or two other possible sites nationwide.

"It is the best option for power," says Stan Winterroth, a high school shop teacher in Clinton. "I don't agree with President Bush on anything else, but I think he is right on the issue of nuclear power."

To promote his program, Bush is to visit Calvert Cliffs Nuclear Power Plant in Maryland today. It will be the first time a president has stepped inside a nuclear plant since Jimmy Carter rushed to Three Mile Island in 1979 to calm public fears just after the reactor's partial meltdown, industry officials say.

For The Record
Los Angeles Times Thursday June 23, 2005 Home Edition Main News Part A Page 2 National Desk 0 inches; 28 words Type of Material: Correction
Nuclear power -- An article in Wednesday's Section A identified Andy White as general manager for marketing at GE Energy. White is president of GE Energy's nuclear business.

The Senate, meanwhile, is preparing subsidies and incentives for utilities to build nuclear plants. The nuclear industry has poured hundreds of millions of dollars into new technology in recent years. And the Nuclear Regulatory Commission has hired scores of engineers to accommodate an atomic renaissance.

But the sober reality of nuclear power is that the U.S. will move slowly and cautiously, at best, because Wall Street financiers and the nation's utility industry still have vivid memories of the legal, financial and regulatory debacles that resulted from the building binge of the 1970s.

Even with subsidies and other incentives, few expect any construction to start within five years, and only a handful of plants are expected to begin during the next 10 years.

Most utilities will wait to see whether the new regulatory system works as advertised before they begin a more ambitious construction effort. It could be two decades before additional nuclear power plants have a significant effect on the U.S. energy supply.

"There is much more confidence in the new process, but not enough yet to make a new investment," acknowledges Marilyn Kray, president of the NuStart Energy Development, a consortium of nine utilities preparing an application for a nuclear construction license. "Financiers are saying they are not yet comfortable."

Still, the industry is taking preliminary steps under government sponsorship. Three consortiums of utilities are getting $539 million in taxpayer subsidies through the Energy Department to seek nuclear construction licenses under the new regulatory system. By going through the bureaucratic motions of applying for a license, the utilities hope to gain confidence in licensing rules intended to reduce delays and litigation.

Separately, three utilities have put in early site applications for reactors at existing plants, including ones in Illinois, Virginia and Mississippi. The early site approval system is another change meant to reduce risks that projects will become mired in delays.

Sen. Pete V. Domenici (R-N.M.), the Senate's powerful energy broker and a big force behind new nuclear power, argues in a recent book that it is the only major source of electricity that does not contribute to global warming by burning carbon-based fuels.

Largely unnoticed, existing nuclear plants have significantly increased their generating capacity in recent years, adding the equivalent of six plants of output, and have vastly improved their reliability. At the same time, natural gas prices have soared.

Existing nuclear plants already produce electricity more cheaply than coal or natural gas. A new nuclear plant would need to cost about $1.2 billion to compete effectively with coal, according to James K. Asselstine, a managing director of Lehman Bros. But the first wave of plants would cost an estimated $1.8 billion, assuming there were no legal or regulatory delays.

As a result, utilities and Wall Street want government guarantees and assistance, some of which are contained in a major energy bill now before the Senate. The legislation also includes a renewal of the Price-Anderson Act, which provides legal immunity in the case of a meltdown or other nuclear accident.

Utilities also need resolution of the nuclear waste problem. There are 50,000 tons of high-level nuclear waste spread across the nation, because the government's plan for an underground repository in Nevada is tied up in political and legal knots.

Another factor is electricity demand. In the 1970s, the Energy Department and utilities grossly overestimated electricity demand, expecting it to double every 10 years. The faulty estimates helped lead to massive overbuilding. Today, by contrast, they project that electricity demand will grow by 50% during the next 15 years.

The lower estimates mean there is not enough demand for basic generating capacity to justify new nuclear plants, Kray said.

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