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Edward Kee will unveil a modest proposal this week: The U.S. government should buy up nuclear plants in much the way it bailed out banks and automakers after the 2008 financial crisis.
Kee, a longtime consultant to the nuclear industry in the U.S. and around the world, argues that the announcement from power plant owners as diverse as Exelon Corp. and the Omaha Public Power District that they will be shuttering their nuclear plants shows that there is a market failure that’s killing nuclear plants. If the federal government stepped in, it could buy those and other vulnerable plants at a discount — and then wait for a time when carbon-free energy is more valuable and resell them.
“It’s becoming more and more obvious that we have a problem here,” Kee says in an interview. “The government needs to step in and take some action.”
Just like transmission lines or highways, nuclear plants should be recognized for their public benefits, he says. Instead they now “get no compensation for these public benefits. The owners of nuclear power plants make decisions based on the market value of commodity electricity and capacity.”
Alternatively, the government could enter into contracts to buy the power from nuclear plants, provide tax credits to them or prod states into establishing nuclear energy mandates.
Kee’s proposal follows a pledge from Energy Secretary Ernest Moniz that the administration sees nuclear power as critical to meeting its climate change goals. But the federal government is limited in what it could do, Moniz said earlier this month. The Energy Department recently held a meeting with nuclear operators and federal, state and local officials to discuss how to help cash-strapped plants.
But meetings are small consolation to an industry going through a fundamental crisis. U.S. nuclear-power capacity fell to about 105 gigawatts after five reactors totaling 4.3 gigawatts shut down in the past three years; plants generating another 4.6 gigawatts are set to close before 2020, according to Bloomberg Intelligence analyst Kit Konolige.
In more than a dozen states that deregulated their electricity markets, owners of aging nuclear and coal generators are reeling under growing competition from generators burning gas. Electricity providers in places like Ohio and New York are asking for millions of dollars to keep their units running.
Exelon Corp., the largest U.S. generator of power from nuclear energy, announced this month that it will close two Illinois plants as competition from renewable energy and low-cost natural gas continues to pressure generators. The Clinton Power Station will shut June 1, 2017 and the Quad Cities Generating Station will close June 1, 2018 after the state failed to pass legislation that would stem their financial losses, Exelon said Thursday in a statement. The plants lost a combined $800 million over the past seven years.
Entergy Corp. closed its Vermont Yankee Reactor in 2014 and announced it will shut two other nuclear plants in the northeast.
In October 2008, Congress authorized $700 billion for the Treasury Department to help stabilize the banking system and forestall a Depression. About $250 billion was committed to banks, $70 billion went to AIG and $83 billion went to the U.S. auto industry, according to the Treasury Department. As of the end of 2015, total collections from those companies exceeded what was handed out by $12 billion, it said.
“These plants could be pretty valuable,” Kee said in an interview. “Just don’t ask me about the political feasibility.”
Global America Business Institute will host Kee, founder of the Nuclear Economics Consulting Group, at noon tomorrow. It’s at 1001 Connecticut Ave., Suite 230.
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FAIR COST OF COAL: Wednesday at 9 a.m., The New York University School of Law Institute for Policy Integrity holds a Federal Coal Workshop on “Fair Market Value and Alternatives Analysis.” 1307 L St, NW.
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