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May 8, 2007

Green Mountain Senate Punishes Utility For Producing Too Much Green Energy

by tarran

I stumbled across this little tempest in a tea-pot going up in Vermont. I have a lot of affection for the state – away from the cities, they are a pretty self-reliant, likeable people. Plus, the manager of this fine store tried to sell me a rifle when I was 12 years old (my parents, being fanatical supporters of victim disarmament, refused his offer).

Vermont politics is pretty distressing, since it is in many ways a very socialist state. I won’t go into all the reasons (especially since I don’t understand them all), but it is a bizarre result of New Yorkers in the cities interacting with locals who are xenophobic about outsiders.

This article highlights one of those bizarre situations. There is a nuclear power plant in Vermont. Like all nuclear power plants, it is the product of the political economy, simultaneously subsidized and taxed by various governmental agencies, its fortunes weakly coupled with the free-market.

Recently the state senate was considering an attempt to make Vermont more “green”. In effect, some state senators feel that their neighbors use too much energy, and want to stop them. Rather than going after the consumers, though, they want to make it more expensive for everyone to purchase electricity. So, they want to tax energy producers.

Of course, telling people who live through the cold winters of Vermont that they should use less heat and light might get those people angry at the senators. The senators, though, decided to use an old political trick, one which can get people to support policies that harm them directly. They fan feelings of jealousy and envy:

Senate President Pro Tem Peter Shumlin, D-Windham, said Entergy had been making windfall profits in recent years because of the high wholesale price of electricity and because of bonus payments to power producers that don’t emit the greenhouse gas carbon dioxide.

Ah yes, windfall profits! Those bastards! How dare they take advantage of a shortage by producing more electricity! Especially when we subsidize them!

Of course, like Darth Vader in cloud city, the senate is reneging on a previous agreement. When the utility protests, the senators shift the blame:

But Sen. Mark MacDonald, D-Orange and a longtime critic of Vermont Yankee, said the nuclear plant and industry had broken many of their own promises over the years.
He pointed to the industry’s early promises that nuclear power would be “too cheap to meter,” as well as the nuclear industry’s failure to establish a permanent disposal site for radioactive waste.
He recalled that when the plant opened in 1972, the Vermont utilities that owned it said they would be good neighbors; Louisiana-based Entergy bought it in 2002. And he spoke of the original plan that the plant would run for 40 years, followed by decommissioning and site cleanup.
Entergy is now seeking to run it for an added 20 years.
“For someone who has broken deal after deal after deal after deal, to come into this chamber and tell us we’re breaking a deal?” MacDonald said, shaking his head.

OK, let’s run through this. The Federal government originally subsidized nuclear power heavily, and numerous plants were built. Everybody thought that nuclear power was going to be cheap and ubiquitous, especially with the government paying the liability insurance. We were all going to have atomic sky-cars. Everyone thought that new technology would solve that pesky waste problem.

Then the federal government agreed to dispose of the waste. Except they couldn’t agree on a place to do it. Also the plants began to have problems, some like three mile island that freaked out the public, and some that only freaked out the industry, like cracks found in the pressure vessels of lightwater reactors world-wide. Remember the government picking up the tab on liability insurance? Guess what it did to the incentive to improve safety? Anyway, as a result building new nuclear power plants became more difficult. Operators faced increasing regulatory costs operating them, and there was consolidation as a few companies specializing in operating nuclear power plants bought plants from companies that could not afford to do so.

Now, suddenly nuclear power is “good” again, since it produces minimal amounts of CO2 (I’m including the emissions from periodic testing of the emergency diesel generators). The feds and the locals are offering subsidies to produce nuclear power. Companies that want to take advantage of the subsidies, who are prevented from building new plants, are naturally trying to expand capacity and also extend the length of the existing plants.

In other words, all of these “broken promises” are the results of the electricity producing industry reacting to changes in government energy policy!

Senator Mark MacDonald’s comments bring to mind something Mencken once wrote:

Every decent man is ashamed of the government he lives under.

I think the good senator is fortunate that he is permitted to mooch off of other people, and is not forced to earn an honest living.

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6 Comments

  1. Are Americans crazy? or are they crazy? Well, Australians are, too – the way we all put up with clearly stupid government policies. The US federal government pays for nuclear waste management. That means the tax-payer pays.
    We’re all being told that nuclear power is “clean”, and “no greenhouse gases”. What about the whole fuel cycle – uranium mining, milling, transport, building of reactors, building of waste repositories, digging for underground disposal, building of great concrete covers for “decommissioned” reactors – plenty of C02 emissions in all that. Bush’s USA and loyal sycophant Australia – we are both being conned ABout this dangerous, dirty, expensive nuclear industry.
    Meanwhile Germany, Denmark etc are making a packet out of selling truly renewable energy technologies!

    Comment by Christina Macpherson — May 9, 2007 @ 7:54 pm
  2. Christina,

    I may be too young to remember the Nuclear Freeze movement so I won’t debate you on that. But how exactly are Germany and Denmark better off? (Good thing you didn’t include France since they use so much nuclear power.)

    Let me examine a few “renewable energy” methods.

    1. Solar – How much CO2 do we put out making those fancy light panels to capture sunlight?
    2. Wind – Talk about wasting energy. Each windmill must be made of something. Plastic, whoops, that isn’t good. Metal must be mined. Wood cuts down trees.
    3. Water – That kills fish when it heats the water.

    So we are back to the idea, what method creates less waste for the least cost and most energy? What method creates the largest amount of energy with the least environmental impact? I would say nuclear, but that is with the information I have read. Perhaps you could explain why it is so much worse than any other option.

    By the way, does this also mean you are angry with Iran and North Korea for building reactors? Just wondering.

    Comment by trumpetbob15 — May 9, 2007 @ 9:28 pm
  3. As an ex-Navy-Nuke, I know a little bit about the nuclear power industry. I honestly think it is incredibly uneconomical.

    The deal-killer is the lack of liability insurance. In the 1950′s and 1960′s insurers demanded such high premiums for covering nuclear power plants that the plants had no prospect for turning a profit.

    Since they could not cover the costs of their insurance, the industry convinced the Federal Government to force the American tax-payer to pay for the liability insurance at gunpoint.

    In a truly free market, if you cannot get liability insurance, you either abandon the project or try to operate despite the risk.

    I think that with modern design tools, understanding of physics, materials and manufacturing processes, it is quite feasible to produce nuclear power plants that do pay for their own liability insurance. In fact some of the designs I saw in the late 1990′s struck me as absolutely elegant. They were quite idiot proof, and I wouldn’t be adverse to having one close by.

    I am not a big fan of “renewable” energy. When you get right down to it. Renewable energy tends to be either the product of solar energy reaching the ground, siphoning gravitational energy from the Earth Moon system, or tapping the heat produced by radioactive decay in the Earth’s interior.

    I don’t think “renewable energy” would flourish in a free market anywhere, currently they are dependent on state violence for their success.

    Comment by tarran — May 9, 2007 @ 9:47 pm
  4. tarran,

    I think that with modern design tools, understanding of physics, materials and manufacturing processes, it is quite feasible to produce nuclear power plants that do pay for their own liability insurance. In fact some of the designs I saw in the late 1990’s struck me as absolutely elegant. They were quite idiot proof, and I wouldn’t be adverse to having one close by.

    The problem is, all the nuclear power plants we have are based on the old 1950s and 1960s technology since the United States has not built one since Three Mile Island. These old nuclear power plants are going to have be replaced eventually for public safety’s sake.

    Also, aren’t the Chinese working on their own idiot proof reactors?

    Comment by Kevin — May 9, 2007 @ 10:29 pm
  5. The story of the political class and its relationship to Vermont Yankee (the state’s nuclear plant) is wonderfully baroque. They see it, on the one hand, a monster and on the other, a cash cow. We have been all over this story at our web site. Go to the “energy” category.

    Comment by Geoffrey Norman — May 18, 2007 @ 10:07 am
  6. How Others See Us…

    A view from outside….

    Trackback by Vermont Tiger — May 18, 2007 @ 10:10 am

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