Back in the 1950s, it was said by some that nuclear power was going to be so cheap that they would not have to meter it. After more than fifty years, the competitiveness of nuclear power in the energy market place is fading. Cheap natural gas and declining prices for renewable power are part of the problem. Another part of the problem is the fact that since in 1950s not a single nuclear power plant project has been completed for the cost that was originally estimated. The energy market has been undergoing a lot of changes recently and the sweetheart guaranteed price for thirty years for the output of a nuclear power plant is gone. Now nuclear power has to compete in the short term market and it is taking a beating. Nuclear power plants are being closed in the U.S. because they cannot compete. The nuclear power industry is now begging state and federal governments for help in keeping their plants open.
Recently Rick Perry, the new U.S. Secretary of Energy, called for a study of the U.S. energy supply system with special emphasis on what is called baseload power. This refers to big power plants such as nuclear and coal that can constantly supply a minimum amount of energy to the grid. Some analysts are arguing that nuclear power and coal power need to be subsidized because they provide this baseload power and that letting these plants be driven out of the marketplace would be a threat to the stability of our electrical grid and our steady supply of electricity.
The study found that the loss of nuclear and coal plants would not pose a threat to the stability of the grid but, nonetheless, Perry has called for a new rule with regard to baseload power plants. The new rule was called for in an unpublicized Notice of Proposed Rulemaking (NOPR) from the U.S. DoE sent to the Federal Energy Regulatory Commission (FERC). The new rule provides what is basically a subsidy for nuclear and coal power plants. Critics of the new rule say that it will be a profound change in the competitive energy market that arose in the 1990s.
The proposed rule would provide for “accurately pric(ing) generation resources necessary to maintain reliability and resiliency.” In order to accomplish this, the new rule requires the “recovery of costs of fuel-secure generation units frequently relied upon to make our grid reliable and resilient.” This means that power plants that have a three month supply of fuel onsite would be guaranteed “full recovery of costs” and a “fair rate of return.” Only nuclear, coal and hydro power plants have a three month supply of fuel onsite. The U.S. taxpayers would be the ultimate guarantors for this plan.
If the new rule is implemented by FERC, then FERC approved regional grid organizations and independent grid operators would be required to create new rate tariffs to make sure that the power sources in question would recover their costs and also make a “fair” profit. Proponents say that the new rule is needed in order to support baseload power plants for their reliability and resiliency. Critics say that the new rule would go against the very idea of a competitive wholesale power market and be a bailout for non-competitive nuclear and coal power plants.
Please read Part 2
