Sunday Gazette-Mail from Charleston, West Virginia on July 18, 1976 · Page 68
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July 18, 1976

Sunday Gazette-Mail from Charleston, West Virginia · Page 68

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Charleston, West Virginia
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Sunday, July 18, 1976
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HE -July 18, 1976 SundayGatette-Mail . -Clwrltifcn, Wnt Virjinii Jesus Festival Young people gathered at the State Capitol Saturday for a Jesus Festival and Spirit In (above). In the photo at left, Brian Fatzer of Fairmont listens attentively to some music. (Staff Photos bv Leo Chabot) Economicsof Nuclear Power Overlooked The author of this article on the economic* of nuclear pmrer is n staff writer for Science Mnpasineicho has corereilnuclenr issues extensively. By Robert Gillette For The Associated Press ; While public attention is focused on the safety of nuclear power plants and the hazards of their radioactive wastes, the nuclear industry is being pinched by another, less noticed problem: the economics of nuclear power. A number of federal energy officials and independent energy analysts wonder today whether electricity generated with nuclear power might be priced out of the .market by rapidly rising construction costs and uncertainties surrounding the 'price and long-range supply of uranium fuel. The experts issue conflicting figures about present costs of nuclear power, and their' predictions of what it -- and fossil fuel alternatives -- will cost 10 to 15 years from now diverge even more. In Iowa, the disarray of nuclear economics has led the state public utility agency to oppose further nuclear construction until utility companies can demonstrate that nuclear power has an economic .advantage over coal. "We need all the electricity we can get in Iowa," Maurice Van Nostrand, chairman of the Iowa agency, told a national meeting of public utility commissioners in Washington. "But there are monumental unanswered questions in the economics of nuclear generation. There are literally no answers. Until we get them, our commission will do what it can to prevent any company from investing in a nuclear plant." Since World War II, more than ?50 billion has been invested by government and industry in commercial nuclear power on the assumption that it would provide consumers with cheaper electricity than would fossil fuel. Sixty nuclear power reactors now provide 8.3 per cent of the nation's capacity to generate electricity. The Federal Energy Administration says this is to rise to 30 to 40 per cent of electricity demand by the year 2000, under present plans. Coal now accounts for 44.6 per oent of America's generating capacity; oil, hydroelectric power and natural gas 15.5 per cent each, and wood and other fuels less than one per cent. c * * * · ' AS MOST RESOURCE economists see the situation, the present high cost of oil and the scarcity of domestic natural gas leave coal and nuclear power as the only realistic choices for new electric generating capacity in the United States until the end of the century. The relative economic advantages and disadvantages of coal and the atom - today and 10 to 20 years ahead -- have thus become the focus of an increasingly complex, sometimes acrimonious argument among experts in industry, government and independent research groups. "Nuclear power may have a small margin in its favor now," says Irvin C. Bupp, a Harvard Business School researcher who, with colleagues at the Massachusetts Institute of Technology, has been studying the'economics and politics of nuclear power for the past three years. "The only way you can conclude that nucfear power will be cheaper eight to 10 years from now," he continues, "is to make systematically optimistic assump- tioni about nuclear costs and be systematic A pessimistic about coal." im relatively gloomy outlook represented by Bupp and a study group at MIT's Center for Policy Alternatives has bolstered charges by such environmental ac- tivijts as Barry Commoner that nuclear power is a bad buy for utilities and their customers. Donald Cook, chairman of American Electric Power, the largest utility system in the country, agrees. He has said that "an erroneous conception of the economics of nuclear power" sent U.S. utilities "down the wrong road. The economics that were projected but never materialized -- and never will materialize -looked so good that the companies couldn't resist it." American Electric Power has two nuclear power plants. "We are delighted to h»*e than," Cook ha^said, "but we are._ also delighted not to have three." * * * IN CONTRAST, the Federal Energy Administration and the Energy Research and Development Administration (ERDA), along with many private economic research groups, are committed to nuclear power. Though they are worried about its future because of the economic uncertainties, they believe that rising construction and fuel costs will eventually hit coal power just as hard, leaving nuclear a small advantage in areas of the country that aren't rich in coal. As Roger LeGassie. an assistant administrator for ERDA, puts it:"The nuclear industry is ill, but I don't think it's terminal." Bupp and members of the MIT .study group don't consider themselves antinuclear. They say their conclusions are based in large part on statistics showing that construction costs for dozens of nuclear plants ordered in the late 1960s and early 1970s are averaging more than double the original estimates and "are still climbing at alarming rates." In 1968, it was widely believed that large nuclear plants could be built for $180 per kilowatt of output. But plants ordered then are running $450 a kilowatt today, according to the MIT group, and others scheduled to start up in the early 1980s now carry an estimated price tag of more than $1,000 a kilowatt. Since most modern plants are designed to generate about one million kilowatts (equal to the total generating capacity in Vermont today), this means that new reactors ordered in the early 1970s probably will end lip costing more than $1 billion apiece. Despite cancellations and postponements in the last two years, the ERDA says that utilities are still building or planning 178 nuclear power plants. According to the Bupp group, the cost of nuclear power plants has risen faster than the cost of their main competitor - coal- fired plants -- because of licensing and construction delays. These have been caused by such problems as bad weather, battles over environmental pollution, and safety issues. While nuclear power plants have always cost more than coal plants to build, the over-all price of their electricity has in most parts of the country been equal to or lower than coal plants thanks to low and stable prices for uranium fuel. Now, the MIT group asserts, this is changing: The combination of soaring capital costs and a sudden leap in the price of uranium from $8 a pound in 1973 to nearly $50 a pound today threatens to erase nuclear's competitive edge. Other snags in the nuclear fuel business have compounded the uncertainties of nuclear economics. Federal energy officials say that even if-U.S. uranium deposits turn out to be adequate for the rest of the century - a matter of current debate -industry will have to invest $18 billion or more in hundreds of new mines and some 60 new uranium mills to meet the expected demand. « « · INDUSTRY WANTS to recycle leftover uranium and by-product plutonium from spent nuclear fuel and thereby reduce the demand for uranium mining. But plans to build recycling plants are "almost at a standstill," in the words of an ERDA report last year - blocked by technical, regulatory, financial and political problems that may not be cleared away until the early 1980s, if then. Despite the problems and the uncertain economics, many economists remain optimistic about nuclear power's future. At the most sanguine end of the spectrum are trade organizations like the Atomic Industrial Forum and the Edison Electric Institute, the latter an arm of the utility industry. The AIF recently put out a report of a survey it had made of electric generating costs. The survey showed nuclear generated electricity to be the cheapest at an average of 12.3 cents for 10 kilowatt hours, enough to keep ten 100-watt lightbulbs on for 10 houiA. Coal was 40 per cent more at 17.5 cents per 10 kilowatt hours, the AIF said, with oil almost twice as expensive as coal. Similarly, at a news conference in April, the Edison Electric Institute released a study predicting that between 1978 and 1990, nuclear power would be 10 to 40 per cent cheaper than coal-based electricity, depending on the region of the United States under consideration. In an accompanying press release, the EEI called the economic superiority of nuclear power "an inescapable conclusion" and charged that critics who argue otherwise "have been presenting a distorted picture of nuclear power to the general public." Somewhat at odds with these figures, however, are the results of a biennial survey of electric power costs conducted by Electrical World, a major trade publication. Last Nov. 15, the magazine reported that nuclear power was the second most expensive way to make electricity, at 18 cents for 10 kilowatt hours just a shade behind oil. Coal, this survey indicated, was the least expensive and, at 13.8 cents for 10 kilowatt hours, fully 30 per cent cheaper than nuclear power. Spokesmen for the EEI and the AIF, when asked to reconcile these conflicting numbers, suggested the differences had much to do with the specific utilities surveyed, none of which was identified in any of the three studies. THE MIDDLE GROUND in the debate over nuclear economics is occupied by senior ERDA officials. LeGassie, the agency's assistant administrator for policy analysis, says that calculations of coal and nuclear costs by impartial analysts tend to "merge into a band of uncertainty," with conclusions heavily dependent upon assumptions about such diverse but influential factors as the future cost of transporting coal by rail and the size of the Southwest's rich uranium deposits. LeGassie's own view is that coal and nuclear generation costs are now "about equal." Like the MIT group, he foresees a continuing rise in nuclear construction costs "relative to other plants" for the next decade, though perhaps not as steep a rise as in the past few years. Even so, LeGassie predicts gradual expansion of both coal and nuclear "on a companion basis" through the 1980s. Similarly, Alvin M. Weinberg, director of the Institute for Energy Analysis at Oak Ridge, Tenn., describes the economics of the two technologies as ^confused" and "pretty much at a standdl," though with a margin in favor of nuclear in much of the country today and on into the 1980s. A recent study by the institute indicates that to a large extent the better buy will be determined by future trends in interest and inflation rates, neither of which can be predicted with any certainty. Low interest rates and high inflation work to nuclear power's advantage, the study says, while high interest and low inflation favor coal. The reason, Weinberg explained, lies in the fact that construction costs (including interest on borrowed money) make up a larger proportion of the over-all cost of nuclear generation than is the case with coal. Thus, rising interest rates have a heavier impact on nuclear power while inflation, which drives up fuel costs, hits coal proportionally harder. In his search for answers, Van Nostrand of the Iowa public utility agency says he is chiefly concernee whether uranium will be available 10 or 20 years from now; who will reprocess spent fuel from Iowa's power reactors and at what price; and how the federal government plans to store highly radioactive wastes for centuries. "There are costs involved that we have not yet identified, and I'm afraid that someday some new rate payers are going to have to go back and pick up those costs," Van Nostrand said in an interview. ERDA officials say Van Nostrand's assessment is sincere but "simplistic." They argue that just as many uncertainties cloud the future of coal -- among them the cost of rehabilitating mined land, the cost of transportation and labor, and the cost of "scrubbers" that may eventually have to be installed at coal plants to control sulfur oxide emissions. AMID THE CONFUSION and uncertain- ity over the economics of nuclear power, a number of observers see utility company executives -- upon whom the hard choices ultimately fall -- turning away from decisions made purely or even predominantly on economic grounds. "They're not likely to think, 'Well, there's a cost for coal and a cost for nuclear and that's it,'" says-ERDA's LeGassie. "They've all learned how flaky cost estimates can be. So they're turning to other factors: How long does it take to get a plant on line How dependable is the fuel supply How complicated is the regulation" William Kriegsman, a Washington consultant and a member of the Atomic Energy Commission until 1974, puts it more bluntly: "Utility executives have no rational basis for making decisions now. Their choices tend to be governed by how they feel that morning and what's happened the night before. They might go one way after an oil embargo or another way if 60 per cent of the state has just voted against nuclear power." This, Kriegsman says, "is a horrible way to do business. But utility executives are no wiser than you or I." Family Pet Bulldog Kills Boy, 5 CASTRO VALLEY, Calif. (AP) - A 5-year-old boy was killed by the family's pet bulldog when the animal locked its jaws on the child's neck, authorities said Saturday. The dog sank its teeth into the boy's neck and would not let go until a neighbor stabbed it with a butcher knife, an Alameda County sheriff's deputy said. Michael McNair was dead on arrival Friday at Eden Hospital. The pet bulldog later was ordered destroyed by the boy's father, the deputy said. Because a bulldog's lower jaw is longer than the upper jaw, it is physically impossible for the dog to let go while there is any tension on whatever it is gripping. · * * SHERIFF'S LT. Keith Boyer said the boy was attacked in the McNair home Friday afternoon while his parents, Lee and Sharon McNair, were at work. His 14-year-old sister, Kim, ran from the house screaming for help. A neighbor, Alvin Olviera, 40, tried in vain to drive the dog off by first beating it with his fists and then hitting it with a cement water heater cover, Boyer said. "He had to stab the dog between the shoulders with a big butcher knife to get him to release his grip," Boyer said. Neighbors and John Moore, chief of the Animal Control Shelter, said they did not know why the dog attacked the child. "The youngster came into the house shortly before 1:30 p.m. and was rather exuberantly moving around. All of a sudden the dog grabbed him and took him by the neck," Boyer said. Sometimes, an active day in the sun deserves a quiet evening in the candlelight. Sometimes, BankAmericard can make all the difference. Stop by our lobby today to apply for your BankAmericard or call 348-5646. Charleston National Bank Corner ol Capilol and Virginia Member Fede:i! Reserve Svsiem fodeia' Deposii insurance Corporai.cn

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