A recent article ("Nuclear power plant in Utah: First step is securing water rights," Oct. 30) offered an informative update on the proposed reactors which Blue Castle Holdings hopes to build on the Green River in southern Utah. As the story notes, the state engineer is expected to announce a key decision on whether Blue Castle can withdraw more than 50,000 acre-feet a year from the Green River to cool the reactors.
Late in the story, Blue Castle's CEO, former state Rep. Aaron Tilton, makes a claim that bears scrutiny. Tilton suggested that demand for nuclear power is robust and that 18 utility companies have "expressed interest" in Green River reactor power. "There is definitely more interest than there is power that is going to be available from the project," he said.
No need to fault Tilton for his wishful thinking. Like all entrepreneurs, he's a passionate evangelist for his business, but a review of less-biased sources makes clear that Blue Castle will struggle to find a market for their power. "Interest" from utilities for nuclear power is minimal.
In examining the economics of nuclear power, we at HEAL rely upon estimates from independent Wall Street analysts who study the electricity sector. They project costs of each potential power source in a bid to figure out which is best for utilities and their customers.
And each of them reaches the same conclusion: Nuclear is a bad bet. Earlier this year, for example, a Standard & Poor's analyst told the Washington Post that "natural gas would have to be more than 50 percent more expensive than it is today before building a new nuclear power plant would make clear economic sense." Last year, Moody's announced that it would take a "more negative view" when it rates bonds from utilities that seek to build new nuclear power plants due to "huge capital costs," among other economic factors.
The nuclear power industry has long been plagued by huge cost overruns, a problem that continues to this day. A current example: When Duke Energy in 2007 announced a proposed two-unit nuclear power plant in South Carolina, it estimated it would cost $5 to $6 billion. Today, that estimate is $11 billion. Similarly, in 2007, Progress Energy announced it would seek to build two reactors in Levy County, Fla., for $9.4 billion. That price-tag has risen to $17.2 billion.
What about the Green River reactors? In 2007, Tilton said they would cost $3 billion. Today, Blue Castle's estimate is between $13 and $16 billion. If history is any guide, that number will continue to go up. In an op-ed ("Costs of nuclear energy in Utah," Aug. 2), Professor Bernell Stone of the BYU management school noted that for the 108 nuclear power plants built so far in the U.S., the actual cost exceeded projected cost by an average of four times.
Those skyrocketing numbers are why the U.S. no longer builds nuclear power plants. There are a few reactors in the pipeline now, but those are expansions of current plants, which are cheaper. Or, they are proposed in states where utilities can charge their ratepayers the full cost of building reactors, regardless of whether there are cheaper alternatives.
Thankfully, in Utah, we have strong laws designed to protect our families and businesses from high electricity rates. Utilities such as Rocky Mountain Power are required to invest in power which is "least-cost, least-risk." That explains why Rocky Mountain Power is planning future investments in natural gas and wind, not nuclear, as a company representative told a legislative committee as recently as last month.
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Tilton has been asked before which utilities have shown "interest" in Green River nuclear power. He has only ever named one: the Page Electric Utility, which serves several thousand customers in Arizona. Blue Castle issued a press release back in 2009, trumpeting the "memorandum of understanding" they had signed with Page. However, even that "interest" turned out to be little more than words. The minutes of the utility's meeting quote their attorney saying that "there was no financial obligation" to actually buy Blue Castle's power.
Matt Pacenza is the policy director for HEAL Utah.