Keith Riddler, AP
This Nov. 29, 2018 photo shows the Transient Test Reactor at the Idaho National Laboratory in Idaho Falls, in eastern Idaho. The facility has been restarted to test nuclear fuels as the U.S. tries to revamp a fading nuclear power industry with safer fuel designs and a new generation of power plants. (AP Photo/Keith Riddler)

Some 30 members of the Utah Associated Municipal Power Systems, or UAMPS, are deciding whether to invest in 12 small modular nuclear reactors in Idaho. If they do so, they will replay an old saga with a predictable ending. In a few years, the municipal officials will, like vaudeville actors chomping exploded cigars over badly singed collars, be trying frantically to explain to their outraged constituents how it all went so expensively wrong.

First-of-a-kind nuclear financing and ownership is no work for organizations lacking significant nuclear experience. More than half of the reactors ever announced in the U.S. were canceled. Some, like two units recently canceled in South Carolina, left multibillion-dollar holes in the ground to be paid for by electric customers. Many of those that were completed experienced nine- and 10-figure cost overruns.

A decade ago at the peak of what was then called “the nuclear renaissance,” 31 applications for new reactors were pending at the Nuclear Regulatory Commission. Many, like the UAMPS project, asserted that new modular construction techniques would produce major cost reductions.

Twenty-nine of the 31 plants are cancelled or indefinitely deferred in a blizzard of cost overruns, schedule slippages and the emergence of much cheaper alternative sources of power with greater potential to create jobs. At the Vogtle site in Georgia, the two surviving renaissance units have doubled their original cost estimates to $28 billion and are six years behind schedule.

Similar economic horror stories haunt the customer-owned utility sector. The most notorious was the Washington Public Power Supply System effort to build five reactors in combination with the federal Bonneville Power Authority. Four of the five plants were cancelled after cost estimates increased 500 percent. Washington municipal electric customers endured a decade of litigation resulting from the second-largest bond default in U.S. history. Energy Northwest, the entity formerly known as Washington Public Power Supply System, is the proposed operator of the UAMPS small modular nuclear reactors.

Among other customer-owned electric entities bankrupted or seriously impaired by nuclear construction are the Cajun (Louisiana) and Wabash (Indiana) electric cooperatives, several small entities in New England and Santee Cooper, the South Carolina counterpart to UAMPS. Federal officials threatened to sue the directors of the bankrupt Wabash Valley Power Association personally for $478 million. Similar threats were made around Seabrook plant overruns in New England.

Owners of first-of-a-kind facilities like the proposed small modular nuclear reactors also face significant risks in plant operations. The two most innovative designs completed in the U.S. closed after a few inefficient and costly years.

UAMPS claims to offer protection against such risks through a 6.5 cent per kwh cap on the price to be charged for power from the reactor.

A reasonable and firm cap would provide a degree of protection, but the UAMPS cap is neither reasonable nor firm. Recent U.S. power market prices rarely if ever reached anything like 6.5 cents. Even low carbon power solicitations are yielding competitive bids for packages of renewable energy, demand management, energy storage and grid management in the 4-5 cent per kwh range.

Nor is the cap firm. It adjusts annually for inflation. If the project costs exceed 6.5 cents per kwh, there is no clear understanding as to who will pay the difference. The developer can repeatedly come to the utilities saying something like, “If you hold us to that limit, we’ll have to cancel, embarrassing us all. But if you’ll raise the cap by a couple of cents per kwh, you’ll still get your power.” Versions of this dialogue have played out at many sites.

UAMPS also promises to conduct an “Economic Competitiveness Test,” but this test, by a strong nuclear proponent, considers only a natural gas-fueled alternative plant, exactly the procedure that went so expensively wrong in Georgia and South Carolina.

14 comments on this story

The results of an impartially conducted power study or auction can determine realistic costs of alternative sources, so that figure — not the UAMPS-chosen 6.5 cents per kwh — should determine the firm cap that the municipal utilities demand for the project. In addition, the project contracts should lock in unequivocal responsibility for all cost overruns.

It is often written that those who will not learn from history are condemned to repeat it. Recent nuclear construction history is so clear that no Utah municipalities should be condemned to that fate.