ML19351F438
| ML19351F438 | |
| Person / Time | |
|---|---|
| Site: | Marble Hill |
| Issue date: | 12/30/1980 |
| From: | Dircks W NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | Huddleston W SENATE |
| References | |
| NUDOCS 8101130044 | |
| Download: ML19351F438 (10) | |
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UNITED STATES k
8 NUCLEAR REGULATORY COMMISSION
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n The Honorable Walter D. Huddleston United States Senate Washington, D. C.
20510 E
Dear Senator Huddleston:
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Please excuse my delayed response to your memoranda of September 30, 1980, which transmitted letters from Messrs. Gray, Hauck, and Cassidy. These letters contained the authors' cohunents on Nuclear Waste Disposal Bills, which are pending before Congress, and their opinions on the need for electric power in Indiana and the cost of the Marble Hill Nuclear Generating Station. Need for power and the cost of Marble Hill are issues that were litigated during the construction permit hearings for ths Marble Hill Station.
The uthors of these letters were partici-pants in the construction permit hearings and are cognizant of the final decisions made by the Atomic Safety and Licensing Board with respect to these issues.
I have included some relevant infonnation on the status of harble Hill, nuclear waste disposal, and nuclear's place in energy in order to assist you in responding to these letters.
Status of Marble Hill Tne total estimated construction cost of Marble Hill as of June 1980 was 53,384 million according to Public Service Company of Indiana. Unit 1 is scheduled to be completea about December 1986 and Unit 2 about December 1987.
Each of the two units is rated at 1130 Megawatts electric (MWe), thus the unit cost for the Marble Hill Station is about $1,497/ kilowatt electric (kwe).
This figure is generally consistent with NRC staff's estimate of $1,470/kwe for a two 1200 Mhe nuclear unit station constructed in the midwest in the late 1980's.
Nuclear Waste Disposal Tne NRC licenses the disposal of both high-level and low-level radioactive wastes.
The disposal of all high-level radioactive wastes generated by the nuclear power industry will be handled by the federal government. The Department of Energy (DOE) has the responsibility of designing, operating, and managing the t
l disposal of high-level waste under the regulatory supervision of NRC, which will assure that the public health ano safety is adequately protected.
It has been the policy of the present Administration, as stated in President Carter's message to Congress on Radioactive Waste Management of February 12, 1980, that all of the DOE costs including the cost of locating constructing, and operating perm'anent geologic repositories, will be recovered through fees paid by utilities and other users of the services and will ultimately be borne by those who oenefit from the activities which generate hign-level waste.
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The Honorabla Walter D. Huddleston The low-level waste generated by the nuclear power industry, on the"other hand, is disposed of in licensed consercial facilities.
The commercial facilities charge a fee for the disposal services that would include the costs for insuring that all health and safety requirements specified by NRC license conditions are met as well as any profit for providing such a service. The NRC staff is presently developing a proposed low-level waste regulation (10 CFR 61) that contains requirements for the licensee to provide assurances that sufficient funds will be available to cover life cycle costs including post-closure, construction, operation, and care by the site owner.
It is anticipated that tne proposed low-level waste regulation will be published for public comment in the second quarter of calenaar year 1981.
Nuclear's Place in Energy The following table sumaarizes the forecast of the source of fuel for electricity procuction through the year 2020. The table is based on data taken from the
" Annual Report to Congress, 1979" DLE/EIA-0173 (79)/3. Also shown in the table is the percent uf fuel used to generate electricity as a percent of fuel used for all purposes.
Electricity generation is expected to take a significantly larger portion through time.
It shoula be noteo that most of the generating capacity need for year 2000 is alreacy in place or has been committed.
Electricity Generation by Fuel in Percent 1978 2000 2020 Coal 44 57 49 Oil and Gas 31 3
2 Nuclear 12 27 35 Renewables:
Hydro 13 8
6 Geothermal 4
5 1
3 Other l
Total Electric Generation 100 T65 IUU i
l Fuel Used to Generata l
Electricity, % of Total Fuel Used 30 35 39 Sincerely, l
(Sipe@ EMm1.Dircks
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William J. Dircks Executive Director for Operations
Enclosure:
Septer.ter 30, 1980 Memorandum with Enclosures.
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l SAVE TIiK VAll<EY
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P. o. boy. 813. MAolSoN. INDIANA 47253 August 20, 1980 c W,@
Subject:
PSI's Impending Financial Problems Friends:
A number of indications imply that PSI, in their determination to rush the building of Marble Hill, has ignored some very serious financial eventualities that are inevitably in store.
We are sure that you must be aware that the en. tire e].actric.c. m.g.-
3 utility industry is experiencing hard times.
It has become impossible to increase dividends at any rate approaching that of inflation!
Eecause PSI in the past enjoyed good management, it is currently in somewhat better financial condition than some systems.
Our analysis of today's rapidly changing condi-tions and of PSI's current problems, however, indicates that PSI's finances are in for some rough sledding.
These upcoming traumatic problems will be due to:
- l. The 5%+ real-dollar annual cost increases for electricity.
Past empirical measurements over more than 30 years indicate that consumption (per person and per unit of production) will decrease by an average of about 30% as real-dollar cost of electricity doubles by about 19951 This 30% reduction is a total of all use in all classes of users, estimated from measurements in many dif-ferent parts of the United S".ates.
PSI can be no exception.
- 2. The PURPA Guidelines.
Changes resulting from just the suggested time-of-use rate struct-ures in the Public Utility Regulatory Policy Act will be almost l
certain to stop peak growth for a decade or more.
PSI, again, can be no exception.
- 3. Very Slow Population Growth.
1 Indiana's population, along with that of most of the Midwest and East, is growing at only 1/3 of the av.erage U.S. growth rate.
This slow growth alone is a powerful indication that Indiana's l
electrical energy growth will be much slower than the anticipat-I ed U.S. average of 2 % annually.
PSI, after its third reduction in peak projections since 1977, is still forecasting growth rates nearly double national rates!
The Bureau of Economic Analysis of l
the U.S. Commerce Department continues to place Indiana and all surrounding states in a very slo'w growth category.
- 4. Marble Hill's' Exorbitant Cost.
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1
Inve.stment and Financial Problems, Page 2 August 20, 1980
.'. hen originally planned in 1974 and 1975, Marble Hill's cost was estimated at $1.4 billion.
Selatedly, more than a year after' many indications of escalating nuclear power costs, PSI man-agement finally increased Marble Hill's estimate to $3.4 billion.
This is still more than $1 billion short of the probable true cost.
An almost identical S1.5 billion (1975 estimate) 2300 megawatt Westinghouse facility in New York State was estimated again in 1979 at $4.5 billion!
Further, there are many indications that even $4.5 billion may be f ar too low an estimate, for MIT's expert, I.C. Supp, has estimated 21% annual cost escalation (and that was before Three Mile Island).
Using the industry's optimistic 30-year reactor life, Marble hill's
$4.5 billion caoital cost will recuire $565 million oer year
.or amorti zation.
This amount alone, when compared with last year's total revenue of $628.5 million, should cause all of PSI's manage-ment grave concern.
The power export market has almost vanished, for the national reserve ratio has already risen to 43%.
Even more of a warningi there are indications that the national reserve figure could reach 55% by 1985.
PSI's management has tried to re-duce their appearance of excess capacity, but a thoroughly honest evaluation from Annual Report figures would confirm current reserves in excess of 50%!
- 5. The availability of continued ample supplies of natural gas is rapidly removing PSI's winter load growth.
Indiana Gas Co. alone has recently added more than 8000 new customers.
This is a national trend.
Since natural gas energy is less than h the cost of resis-
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tance and half that of heat pump energy, Public Service of Indiana will soon again return to summer peaking.
The gas industry confi-dently forecasts increasi.ng supplies through the year 2000.
PSI l
can be no ' exception to another national trend.
The net effect of these five impacts will be that Marble Hill's capacity will be unneeded, probably even by the year 20001 Financial prudence would indicate that construction cease while PSI's n##4 cars and directors, the ones who bear the real respons-
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iEIlity for a fiasco, and whose reputations and fiscal integrity ride on this responsibility, reassess their options.
a Offered with concern,
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Fre auck N
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Engineering Consultant
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Harold G.
Cassidy Professor Emeritus Yale University l
Copies to:
STV Mailing List Media l
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s.,,n SAVE THE VIEEY P. o 307. G13. MADISON. INDIANA 4725o August 23, 1980 Senator Walter "Dee" Huddleston Senate Office Bldg.
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yashington, DC 20510 t.h 'l,g
Subject:
Nuclear Waste Disposal
{(jj S2189, HB7418 and Others Friends:
It seems obvious from the wording of these bills that both the House and the Senate may be overlooking some important funda-mentals.
For example:
(1)S2189 uses the wording "(d) nuclear energy can make signifi-cant contributions to national supplies of electricity;"
The f act (see attached) is that nuclear energy contributes but 13% of our electrical energy, and only 1.6% of all energy at the end-use point.
Even by 1990, optimistic figures give nuclear but 3.3% of total energy at the point-of-use.
Does Congress' energy people know these basic truths?
(2)H37418 says 'il ) nuclear energy is a relatively safe and environ-mentally clean means of generating electricity.
There are many, many research projects done by extremely compe-tent people who would dispute this statement in its entirety.
Could Congress be unaware of the ongoing debates?
(3)S2189 says"(c) a diverse base of primary energy sources can be achieved only if each available source competes on an equal foot-ing in decisions on the siting.
etc.".
One of the many research projects disputing the economics of this statement was done by Cornell economist Dr. Duane Chap-man for the Ohio River Easin Energy Study (ORBES) in May 1980.
He indicates that more than 33% of the probable total cost of nuclear power is covered by government subsidies of one sort or another.
Only this heavy subsidy has caused the appearance of nuclear generated electricity being approximately equal to the cost of that generated by coal.
Both, of course, are much cheap-er than oil-generated electricity.
Is Congress unaware of this large nuclear subsidy?
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(4)In view of this heavy 33+% subsidy, shouldn't you be extremely careful in offering additional subsidies for waste disposal?
After 30 years, shouldn't nuclear energy be able to stand on its own economics?
What is wrong in telling the nuclear power industry that the U.S.
Government will handle its waste problems, but that the industry itself must pay the full cost cf waste disoosal?
This cost could be vari ed up or down as future problems and solutions in-crease or decrease actual costs.
No one today can be fully aware
Page 2 of all costs of nuclear energy's "back end" problems.
Today's pricing could be little better than guessing.
Our shortage of natural gas was caused by artificially constrain-ed selling prices.
Supplies were sharply reduced by prices that did not continue to reflect actual costs.
Similar problems with the electricity supply-demand situation are caused by government actions that make one kind of energy-appear to be cheaper than it actually is.
Current government policies (investment tax credits, etc.) are already causing a tremendous surplus of all kinds of generating capacity.
The Edison Electric Institute, the industry mouthpiece, currently admits to 43% reserves (compared to the industry standard of 15%-20%).
Our research indicates that total electrical generating capacity reserves'will rise to more than 50% by 1985!
May we have your considered reaction to what we are saying?
Sincerely, wry &,f L
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WHAT IS NUCLEAR'S PLACE IN ENERGY?
"Much Ado About Long ago, William Shakespeare wrote a play, Nothing".
In this short article I will show you that this title, "Much Ado About Nothing", is an apt description of nuclear's place in energy.
Further, you will also see, in nuclear's great importance to the income of the
- contrast, utilities and to the individuals with vested interests, especially the $100,000+ utility executive!
First, the small chart below shows nuclear's 1.6% insignificant part of all of today's energy.
Even by 1990, 10 years from now, this figure can merely double to 3.3%!
Truly, much ado about nothing.
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- 2 Now, the story of excess capacity:
I. CVER-CAPACITY The national figure for reserve capacity is now 43%. " Standard" It's is only 17% to 20%, less than, half _ actual total reserves!
easy to check this figure because it's taken from a long article "30th ANNUAL ELECTRICAL INDUSTRY FORECAST" in the 9/15/79
- called, This 43%
" Electrical World", the mouthpiece of the industry.
number means that all of the electric utilities in this countrv the sum of could generate 43% more energy than they generated at all of last year's 1-hour peaks!
Ain't that something?
Espec-ially when we hear the steady cries of " brown-outs and black-outs".
"we ain' t seen nothin '
Further, our careful analysis shows that We'll for by 1985 these reserves will rise to more than 55%.
yet",
tell you in a few minutes how the unwarranted building program lines the coffers of PSI and, at the s ame. time, the pockets of By the way, according to their executives and other employees.
their own figures, PSI's reserves are now 53%,10% worse than Now for some information on Marble Hill's rapidly ris-national!
ing price tag:
II. THE COST PICTURE the cost was When Marble Hill was first announced 5 years ago, listed as S1.4 billion, about 80% of PSI's total investment at the Three years ago this grew to $1.8 billion, 90% of PSI's time.
However, more than a year ago, our bond-and shareholder's money.the proper figure should be at least own Harold Cassidy said that and on August 7, This prompted us to dig deeper,
$3. billion.
after analyses of cost figures used by public about a year ago, and in the deep South, we service commissions in the Northeast concluded that S4.5 billion is a much more realistic cost figure.
Thus, Marble Hill alone, if it is ever finished, will triple the Less than 2 months ago, Mr.
investment in the entire PSI system! attack of honesty when he admitted Barker had a rare (but mild) that Marble Hill might cost $3.4 billion, hore than double the but still more than $1 billion dollars short of oriainal amount, Now for PSI's (and Mr. Barker's) money reasons total candidness.
and for building a facility that may never actually be needed, that could, if ever completed, cost ratepayers more than 50% in-creases merely to pay the financing costs of Marble Hill!
Following, is the story of Marble Hill's many federal " subsidies" 6
and of the money enticements for PSI executives and other employees to f antasize additional capacity need:
III. THE MONEY ENTICEMENT About a year ago, - the Ohio River Basin Energy Study (ORBES) spent
$31,000 for a special electric utility study to be done by Cornell Dr. Duane Chapman.
The study, just i
University utility economist,and fiercely resisted by the utilities, is called, completed," Energy Production, Taxation, Subsidies and Comparative Costs".
It includes a year-by-year comparative analysis of the effect of The " theoretical" 5 different federal subsidies on earnings.
R A G E '3 plant is situated, of all possible places, in Southern Indiana!
We must have a friend somewhere!
The study's computer readout says that PSI, if Marble Hill is ever completed, will receive total of $1.85 billion as a total of 5 different subsidies; and this will occur before it can generate a nickel's worth of elec-tricity in just the 5 year period before going on line!
Copies of Dr. Chapman's 43-page report are available "for free" from ORBES (or immediately from STV if you want to pay the SS Xerox cost).
An interesting aside is that the $1.86 billion is.not subtracted from the rate base but is considered " manna" from Washington and treated as retained earnings.
Even more interesting, Dr. Chapman says, is a special feature of the 11h% " Investment Tax Credit".
In his opinion the lh% portion is especially questionable.
In his exact words, "this (1h%)
portion of the Investment Tax credit uses public funds to increase compensation of utility managers who choose to construct a new plant."
His figures ( and ours ) indicate than an amount between S65 million and $80 million will go directly to a PSI fund to pay for "for free" PSI stock for PSI employees on a predetermined matching basis.
The amount accruing to each employee is roughly equivalent to 1-years salary spread over a number of years.
I have a letter from Dr. Chapman saying that his figures indicate that all $100,000+ officers and employees, if they participate, will profit to the tune of $111,000 each!
Who could resist?
Mr. Barker, a kind of average accountant, already has more than 4000 shares valued at more than $100,000 under his belt.
The effect-iveness of this $150,000 salaried person is attested to by che quality of Marble Hill's construction to date!
New for some confirmatory statements by some of the mighty smart people whom we have joined in questioning the need for nuclear energy.
Each of these statements shows more thinking that PSI has ever cgm 1Tnstr' ate'd:
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(1) ROGER SANT (former DOE official)
"I suppose 3% growth is now conventional wisdom, but my guess is that it will still be quite a bit lower than that."
(2)
DR. VINCENT TAYLOR (RAND think tank researcher)
"Nucinar power is now and will be for decades at least, a relative-ly minor source of electricity, a form of energy for which there is currently substantial excess production capacity."
"In the period since the 1973 oil embargo, improvements made in the efficiency of energy us;e have contributed more than 2 -times as much to the present availability of energy as have the combined increases in energy supplies of all types."
4 PAGE 4 (3) ANTHONY PARISI (Business Writer, New York Times)
"Welcome to the efficient society.
Almost unnoticed, Americans have begun to save energy by wasting less."
(4) DR. MARC ROSS & DR. ROBT. WILLIAMS (Princeton University)
" Nuclear Energy Is No Substitute For Oil" (5) STOEAUGH & YERGIN (Harvard Business School Experts)
" Conservation may be the cheapest, safest, and most productive energy alternative readily available in large amounts. It doesn't threaten to undermine the international monetary system, nor does it emit carbon dioxide into the air, or generate problems comparable to those of nuclear waste."
(6) DR. JOHN KEMENY (President of Dartmouth College)
"On licensing we have recommended vastly higher qualificat ons for a utility before it is allowed to operate a nuclear plant."
(7) MEL NELSON (Supervising Engineer,~Minnkota Co-Op)
" Load Management and Time-of-use Pricing enabled us to add the equivalent of more capacity at of net
- capacity cost. "
(8) AMORY LOVINS (Physicist, Friends of the Earth)
" Nuclear and Synthetic Fuels are so expensive that they are just starting to look like future technologies whose time has passed."
(9) FRED HAUCK (I'm uncomfortable in this distinguished company, but - -)
"The 35 mpg car now in production here and abroad, plus the 60 mpg prototypes being tested, will do more to solve our energy problems than all of our nuclear and synfuel plants together.
Our polit-icians' wisdom seems stuck on dead center. ",
(10) ANONYMOUS (Kenya)
"Let us look at the world as something we have not inherited from our parents, but borrowed from our children."
Now we must close ranks, for now is the time for all of you and all of us, STV, Paddlewheel Alliance, CARE, SAVE and all the rest, to close ranks and get on with the job.
And Ebat's the jcb of o
shutting down Marble Hill!
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FRED HAUCK Box 391 Shelbyville, KY 40065
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