ML20053A523
| ML20053A523 | |
| Person / Time | |
|---|---|
| Site: | 05000000, Black Fox, Yellow Creek |
| Issue date: | 03/18/1982 |
| From: | Rahn H ENERGY, DEPT. OF |
| To: | Talton V AFFILIATION NOT ASSIGNED |
| Shared Package | |
| ML20053A466 | List: |
| References | |
| FOIA-82-204 NUDOCS 8205260178 | |
| Download: ML20053A523 (4) | |
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Department of Energy y
Washington, D.C. 20545 g
MAR 18 1982 Mrs. Vivian H. Talton 1515 North 10th Street 7
Durant, Oklahoma 74701
Dear Mrs. Talton:
Thank you for your thoughtful letter of February 23, 1982, to Secretary Edwards regarding the perceived benefits associated with nuclear power and your concerns with respect to the cancellation of the Black Fox generating station activities.
Information available to us indicates that the situation confronting the management of the Public Service Company of Oklahoma and the State Corpo-ration Comission is not simply a result of regulatory delays or the impact of citi:en interest groups. The utility industry as a whole is having difficulty obtaining capital funds in view of several interacting factors, including general inflation, high interest rates and uncertainty in load-growth projections. An independent consulting company's " Economic Viability Study" of the Black Fox nuclear facility in August 1981 resulted in the following conclusions:
o A legitimate need for power exists and there is adequate demand to support the addition of the proposed facility.
In fact, a need for additional power exceeding that provided by the Oklaunion facility could exist as early as 1988.
combination of high capital and fuel cycle costs results 1
he determination that the nuclear project would be less economical than a coal-fired alternative by approximately i
14 percent on a 10-year levelized cost basis.
(The esti-mated operating and maintenance costs for the nuclear plant total 37.22 mill s per kilowatt-hour and 73.53 mill s for coal; however, the capital costs for the nuclear plant are 137.73 mill s per kilowatt-hour, but 80.85 mill s for coal).
Historical analysis indicated that although Public Serv' ice o
Company of Oklahoma is currently rated AA, several factors measuring financial condition are poor even in a period of minimal construction activity.
o Based on the company's corporate financial performance mocel, customer costs are expected to increase 57 parcent from 1982 to 1990, excluding any consideration of the Black 8205260/Q
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Fox Station nuclear facility. When 1991 revenue require-ments for the Black Fox Station at the low capital costs are included, customer costs are estimated to increase by coNeunaocas 159 percent, assuming inclusion of construction work in ara smax
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progress for ratemaking purposes.
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'o Based on development of the 10-year leve11 zed cost compari-
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son and assessment of the risks associated with continued o^n construction of a nuclear facility, it is recomended that 3/ /82 the Black Fox Station project as currently conceived be "Ta 5"*"
cancelled and converted to a coal-fired facility.
INITIALS /SaQ.
The President favors further development of nuclear power; however, the over-
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all energy policy of this Administration is to allow nuclear power to compete fairly in the marketplace with other forms of energy supply. Apparently, in the case of the Black Fox nuclear facility, the realistic answer from the marketplace is negative.
INITIALWslG.
I trust that you will find the foregoing coments responsive to the issues you
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raised in your letter and that you will find the information enclosed helpful l
in your evaluation of our energy options.
nTG. sm80L Sincerely,
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1 sis"M Ori@C 3 g. BO How 3 o^u Howard H. Rohm, Acting Director Plans and Analysis Division Office of Nuclear Energy 2 Enclosures RTG. sVM80L Energy Insider, August 3,1981
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/ William Dircks, NRC, with copy of incoming glyg-----
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m percent complete and through 1979, scale as a less-than-PSO's situation " simply has not been advanced,[noredtoyed with during 1980, $500 million plant, wa Cy Bob Vandewater Oklahoma on Tuesday since early' 1979 for and disappoin~ted in recently estimated to Willia m Stratton, Public Service Co. of have a completion cost PSO senior vice presi-abandoned plans to lack of a full construe.
1981."
In the meantime, In-of more than $9 billion, dent of finance, said build the controversial tion license from the {flation's effects on the up $7 billion in the past Tuesday that the com-plant near inola, con-Fate was clearly bit-Black Fox project three years.
pany's Black Fox in-Black Fox nuclear NRC.
Fate clor,cd his letter vestment has reached tending that bureau-er over the N RC's "have been stagger-to the NRC by saying mere than $233.3 mi!-
cratic delays made slowness in licensing ing " Fate noted.
that Black Fox "has al-licn.
continuation economi-nuclear plant projects f-He added that ways been a good man,
Cancellation of the con-cally unicasible.
atter a moratorium on f struction delays have The utility company, new nuclear construc-reduced the economic agement decision" and project will cost about that the need for nucle- $102.5 million more.
which as Black Fox tion was declared fol-1 edge that nuclear pow;- ar energy is "indisput. That additional ex-manager his poured lowing the Three Mile er once clearly held more than $230 million Island accident in ovet coal. fired plants able."
pense comes from or-
"to the vanishing But he added that ders for Black Fox into the project since \\ March,1979.
steeply rising costs and component.i that are the plant hit the draw-He wrote in the NRC point."
risks involved with pur-being tilled now and ir-g boards in 1973, that PSO "cannot help Black Fox, originally withdrew its construc-but feel we were ig ' envisioned on a smaller suing the project make see PLANT, Page 2 tien application from GROUP TO DISBAND federal el at Regu.
Sunbelt liiance Celebrates Win latory Commission.
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