Back to the atom: Nuclear plants have been too expensive to build

Jul 1, 2002

Illinois’ largest energy producer, Exelon, generated a buzz in April when the company revealed it is studying the feasibility of building a nuclear reactor in the small downstate community of Clinton.

Such a proposal would have been unheard of in Illinois just five years ago. That’s when Exelon’s corporate predecessor, Commonwealth Edison, was a lightning rod for worries about its poor safety record and inefficient production. 

For years, the costs of building a nuclear plant were prohibitive. And strict regulations deterred companies from adding to the nation’s stock of nuclear reactors.

But now, a convergence of several factors means such ambitious projects might once again be viable. Nuclear power plants have reached new levels of efficiency over the past 10 years. At the same time, the proliferation of computers has spurred an already growing demand for electricity. And concerns about the environmental effects of coal and gas or hydro generators continue to increase. 

Today, half of the energy Illinois uses is generated by nuclear power, compared to 22 percent in the nation as a whole. In fact, with 11 reactors in use, Illinois already has more than any other state in the union.

There’s renewed political support for nuclear power, too. President George W. Bush called for a quicker approval process for new reactors as part of his national energy policy, lending federal support for expansion. 

Much has changed in the past five years. Rolling blackouts and skyrocketing rates in California demonstrated to the nation the far-reaching effects that short- sighted energy policies can have on businesses and residential customers. “All of these [problems] can be addressed by nuclear power,’’ argues Craig Nesbit, Exelon’s director of communications for nuclear operations. 

But expanding the Clinton site to include a new reactor is far from a done deal. The preliminary notice Exelon filed with the federal government allows the company to explore the feasibility of that option, but doesn’t lock it into any commitments. And several groups already are vowing to block nuclear expansion. 

Furthermore, Howard Learner, the executive director of the Environmental Law and Policy Center, argues that investors will be wary of backing such expensive projects. And, he contends, the public will line up against more nuclear reactors. 

“There’s all sorts of talk about new nuclear plants, but it’s all smoke and no fire,” Learner says. “The reality is nobody wants to finance it, because it’s a risky venture and [power companies] don’t want to put shareholders’ money at risk.”

The existing plant at the 14,300-acre Clinton site, which opened in 1987, cost more than $4 billion to build. Because of high construction costs, Clinton produces some of the most expensive power in the Midwest, according to the federal Energy Information Administration.

While the up-front costs are significantly higher for nuclear energy, the cost of generating energy by breaking apart uranium is lower than burning coal or gas. And proponents of atomic energy note that the process releases only steam into the atmosphere, whereas coal and gas plants release sulfur dioxide, carbon monoxide and other greenhouse gases.

Yet, accidents at Three Mile Island in the United States and Chernobyl in the former Soviet Union high-lighted many of the risks of nuclear power, especially if the plants are not well-built or well-run. The fallout from the 1979 partial meltdown at Three Mile Island in Pennsylvania released radioactive gas, spurring the evacuation of children and pregnant women. The response included tough federal regulations that at times quadrupled the cost of constructing new reactors.

Closer to home, Commonwealth Edison took suburban plants off-line in 1998 following questions about their safety and the cost of bringing them into full compliance with federal standards.

In the 1990s, existing nuclear reactors increased their output by 13 percent, but they still lost ground to coal and gas plants during that decade. Now they may face competition from alternative energy sources: solar, wind and biomass. 

Illinois has a broad diversity of energy sources, especially compared to other states in the Midwest, says Jim Monk, president of the Illinois Energy Association. Indiana, where Monk once chaired that state’s utility regulatory agency, relies on coal-fired plants to produce 95 percent of its electricity. In fact, all of Illinois’ neighbors depend on coal for at least 70 percent of their electricity production.

Monk notes that the state of Illinois has promoted all of the sources of energy it uses for electricity, most recently pumping $3.5 billion into southern Illinois’ ailing coal industry. The money was designated primarily to provide loans to developers of generating plants at coal mines, to help pay for scrubbers that will clean the state’s high-sulphur coal and for transmission lines to send coal-generated energy north to the Chicago area.

Still, the cost of that coal-generated energy is on the rise because of heightened pollution controls. At the same time, natural gas prices are extremely volatile, as customers found out two winters ago. 

Meanwhile, Illinois is widely regarded as a pro-nuclear state, but Nesbit says that was not the catalyst for the decision to launch a preliminary study for a new reactor at the Clinton site. He says the choice has more to do with the specifics of the site than with the fact that it’s in Illinois.

That site, which is 60 miles northeast of Springfield, was originally designed to house more generators than the one currently in use, and Clinton’s location, Nesbit says, would make it easy to distribute the added electricity.

Exelon has a hand in running all of the state’s 11 reactors, which are located at six different sites in northern and central Illinois. It also is responsible for three reactors that have been taken out of service — two at Zion in the northern suburbs and one at the Dresden station, which is southwest of Joliet.

The next reactor that will require recertification also is located at the Dresden site. It’s not up for review until 2006.A report released in February by Gov. George Ryan’s energy cabinet encouraged Exelon to extend the life of its nuclear reactors by making improvements to the plants that would allow them to be recertified.In the meantime, the cabinet credits federal deregulation efforts for spurring increased efficiencies in the state’s nuclear plants. Those improvements have increased production in the state by an amount equal to two new reactors, according to the report.

Harry Stoller, director of the energy division of the Illinois Commerce Commission, says a 1997 state deregulation statute also gave Exelon incentives to increase efficiency at its nuclear plants. The new law made it easier, under certain circumstances, to transfer ownership of nuclear power plants from heavily regulated utilities to separate power-generating companies.

That’s exactly what Exelon did. Unicom, the former corporate parent of Commonwealth Edison, and Philadelphia’s PECO Energy merged in 2000. As part of the transition, Exelon separated its power plants from the utilities. Now Exelon Generation is in charge of making power while Commonwealth Edison and PECO deliver it and sell it to customers.

In Illinois, the rates that Commonwealth Edison can charge its residential customers are frozen until at least 2007. But there are no such controls on the prices that producers charge utilities for the electricity, Stoller says.

That means if Exelon Generation produces more energy at lower costs, the parent company can pocket those savings. At the same time, Exelon cannot pass along costs for being inefficient to its customers.

“The result is that they’re going to run [their power plants] better,” Stoller says.

Ryan’s energy cabinet noted that power companies, including Exelon, are looking into new reactor designs that promise to be cheaper and safer than those currently in use. They pointed to a group of the investors in a South African experiment using a radically different reactor design. 

The investors have started working with federal authorities to discuss the possibility of bringing that design to the United States.

The energy cabinet also called on federal authorities to settle on a national nuclear waste repository, which could speed the process ofdismantling and cleaning up the two reactors at Zion.

All of these signs point to a turnaround for an industry that only recently appeared obsolete. Now, new technology and a more hospitable political climate could produce a resurgence of nuclear power in Illinois. 

 

Daniel C. Vock is a Statehouse reporter for the Chicago Daily Law Bulletin

Illinois Issues,July/August 2002