Tuesday, April 21, 2009

Will Missouri Energy Users Bail Out the French Nuclear Experiment?

AmerenUE is the owner of Callaway 1, a corporation bound by the dictates of the Missouri Public Service Commission. They have partnered with Unistar to build a new plant, Callaway 2. Unistar is a joint venture between Constellation Energy and Electricite de France. Electricite de France (EDF) is 85% owned by the French government. EDF is in charge of energy production for France. France is one of the only countries in the world that gets most of it's electricity from nuclear energy. The nuclear division of Constellation Energy itself used to be mostly owned by Warren Buffett, but EDF bought up 49.9% of its shares in December of 2008. So Unistar (as a partnership of Constellation Energy and EDF) is roughly 70% owned by the French government.

In 1976 Kay Drey and other concerned Missourians led a fight to stop Cost of Work in Progress (CWIP) through a ballot initiative. CWIP allows utilities to raise utility rates in order to help fund the production of large power plants. It actually doesn't completely fund the plant, but it funds it enough so that lenders may be interested in giving credit to the utility, knowing that the ratepayers are obliged to pay back these loans. It takes the substantial risk of the project off the backs of the utility company and the lender, and onto the backs of the ratepayer, which is pretty much all people in the area. If there are cost overruns, the ratepayer pays for it. (The average plant build in the 1960s, 1970s and 1980s had cost overruns of three times the original estimate). If the constuction of the nuclear plant is begun but never completed, the ratepayer neither gets a new source of energy nor his or her money back. (Half of the plants approved for construction in the 1960s, 1970s, and 1980s were never built, with $15 billion in lost investment). In other words: the risks are socialized while the profit remains private.

Remember, no nuclear plant has been approved for construction since the 1970s, due to both danger and cost issues.

The 1976 anti-CWIP ballot initiative passed with the support of over 60% of Missouri voters, and that's why only one reactor was built at Callaway, instead of two. Now there is legislation pending in the Missouri Senate and House with the Orwellian name of the "Clean and Renewable Energy Construction Act." This would overturn the 33 year law passed in 1976, as long as the energy produced was "clean". The definition of "clean" in the bill not only includes all nuclear power plants, it also includes coal fire plants, as long as they use "the latest available technology" to reduce pollution.

It is possible that in the contract, AmerenUE has promised to pay Unistar not in cash but in energy. This would give Unistar (otherwise known as the government of France) the excess energy which it would then sell to other states for what Unistar hopes to be a hefty profit. By looking at public information, it seems as if right now AmerenUE is exaggerating future enery use in their service area in order to gain approval for the project by the Missouri Public Service Commission. The PSC is supposed to approve the production of energy to meet, not exceed, the needs of the people of Missouri.

The French nuclear industry is in trouble. The main French nuclear plant construction firm, Areva, is engaged in a nightmarish project in Finland that is years behind schedule and costing several times original estimates. That's why the Areva, the French nuclear firm with close ties to EDF and the French government, is looking to cut its losses by building more plants in America. Meanwhile, opposition to nuclear power is growing in Europe and in France itself. Normandy is becoming increasing irradiated, and the countries that border the North Sea are getting angrier at the French practice of dumping all but the hottest nuclear waste into the English Channel. The French decision to go nuclear never made financial sense, but was done with national security in mind. The French nuclear industry is heavily tied in with the French nuclear weapons program. Also, France wanted to be less dependent on foreign petroleum, and more importantly, less dependent on foreign natural gas. (Putin has much of Europe by the balls because of they need Russian natural gas for their energy needs). France has almost no domestic supplies of uranium, but that's of little concern. France never granted real independence to it's African colonies. Its uranium comes from Chad and Niger. Safety precautions in Niger for miners are nowhere near western standard, and the French government is not particularly concerned about the effect uranium mining has on the Tuareg people who are both miners and live near the mines.

This is a lot of writing but the summary is this: It seems possible that the government of France, in collusion with AmerenUE is attempting to bail out their own nuclear energy industry by extracting wealth from the Missouri ratepayer to built a costly and dangerous new nuclear power plant at Callaway, much of whose energy they know will not be used by Missourians.

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