As nuclear power plants fail, natural gas becomes competitive RSS Feed

As nuclear power plants fail, natural gas becomes competitive

If a business can’t make money, should the government be mandating that customers pay more to keep that business from failing?

That’s what’s happening in New York and Illinois, where customers’ monthly electric bills are slated to increase to keep financially failing nuclear power plants afloat.

The plants in question are all owned by one company — Exelon — which is the country’s largest nuclear power generator. The facilities are running in the red because maintenance and operating costs exceed their income.

Legislators in Illinois voted to raise consumers’ electricity rates, effectively providing a subsidy to the company, the value of whose stock in turn rose by more than a third. The company leveraged that result to gain similar favor with New York officials.

More states are in the crosshairs of the nuclear energy industry seeking government-mandated bailouts: In Ohio, legislation has been introduced to subsidize failing nuclear facilities, while elsewhere in the state a natural gas-fired facility is being constructed without any subsidies. Pennsylvania and Connecticut are also on the target list.

Here in Virginia, Dominion Power manages two plants — Surry and North Anna — that are operating without subsidies, but the company is seeking favor for a plant in Connecticut.

Why is this of any importance? There are several reasons:

Of the 99 nuclear reactors in operation in the United States, supplying about 20 percent of the country’s electricity requirement, several are slated to shut down over the next decade. The trend is expected to continue. The average age of commercial reactors is 36 years, maintenance and operating costs are rising, competing fuels are cheaper, and few new plants are being built.

The latter point is significant. One of the globe’s leading nuclear reactor designers and developers, Westinghouse, recently roiled the nuclear industry when it filed for bankruptcy. The company’s new plants under construction in South Carolina and Georgia are running billions over budget and years behind schedule.

Another reason government-required subsidies are of concern is the absence of any constitutional or other requirement, or need, for the government to insert itself into the marketplace in a manner that involves deciding winners and losers.

It is generally true that competitive environments produce overall lower costs and greater benefits to consumers. When the government steps in — as it has, for example, in the solar power industry, where a number of government-propped-up enterprises have failed — the track record is not so good.

More electric power generators are turning to natural gas, and some are using renewables, which make it possible to lower operating costs, which benefits consumers, both business and residential.

Most important of the competing fuels in the electric power generation field is natural gas, the supply of which has grown exponentially with the spread of hydraulic fracturing of wells in shale deposits like the Marcellus formation, most notably in Pennsylvania and West Virginia, and the Barnett Shale in Texas.

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