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Stop McNukes
Monopolization of U.S. nuclear plants
The deregulation of the U.S. electrical industry was supposed to end monopoly control of that commodity. Unfortunately the nuclear component of the industry has tainted this process.
Across the nation ratepayers are getting stuck with paying for billions of dollars in “stranded costs” for inefficient aged nukes. These are the portions of bad investments in this failed technology that utilities would otherwise never recover. Estimates of the total take on this ripoff have been put at $120 billion, rivalling the $132 billion Savings and Loan bailout.
While this alone is totally outrageous, another trend developing—with perhaps even more serious consequences—is the buying up of mostly old nukes with shoddy operating records by several large corporations. Unless this trend is checked by concerted citizen action, the nation’s 103 remaining commercial nuclear power plants may soon end up in the hands of these few grasping operators.
Some have dubbed this franchising and monopolization trend “McNukes.” But the giant conglomerates who are doing the wheeling and dealing may be biting off more than they can chew.
Enter Amergen
The bidding war on U.S. nukes began in the summer of 1998 when Amergen offered $100 million for the Three Mile Island 1 plant. Amergen is a multinational 50-50 partnership between Philadelphia Electric Company (PECO) and British Energy (BE). Its stated goal is to own 100 (virtually all) U.S. nukes. PECO top executive Corbin McNeill has stated that “We intend to be the premier nuclear operation in the nation.” With 1.5 million customers, PECO operates 4 nuclear reactors at its Limerick and Peach Bottom power stations. Peach Bottom is known for being shut down by the NRC after control room operators were caught sleeping and using drugs on the job. British Energy operates 15 nukes in the UK. Formerly the government agency that ran British nukes, it was privatized in 1996. BE is the UK’s largest electrical generator, supplying over 20 percent of the nation’s power. PECO and BE formed Amergen as a holding company in 1997. They also formed Canegen, which wants to buy up Canadian nukes.
Though privatized, BE maintains a cozy relationship with the British government, from which it borrows money at below market interest rates. Thus it can obtain relatively cheap loans to use in its bidding wars for U.S. nukes.
Jaws dropped around the world on hearing that Amergen had bid for TMI 1. After all, its evil twin, Three Mile Island 2, in 1979 had suffered the worst accident thus far at a U.S. commercial nuclear power plant. The partial meltdown and release of large amounts of radiation forced the permanent shutdown of TMI 2 and a six and a half year shutdown of TMI 1.
Amergen’s $100 million bid included $76.6 million for 5 years worth of nuclear fuel for TMI 1. Thus it offered only a little more than $23 million for the plant, which had a book value of $600 million.
TMI 1 proved to be only Amergen’s opening salvo in its bidding war for U.S. nukes. In April 1999 it offered $20 million for the Clinton plant in Illinois, which cost more than $4 billion to build over a 12 year period. In July Amergen bid $163 million for both Nine Mile Point reactors in upstate New York. Unit 2 alone cost well over $6 billion to construct, also over a dozen years. Unit 1 was 30 years old. The Amergen offer was 10 cents on the dollar of the plants’ book value.
In September Amergen bid only $10 million for the likewise three-decades-old Oyster Creek plant in New Jersey. Late in the year the owners of the 27- year-old Vermont Yankee plant accepted Amergen’s $23 million offer.
Thus in the space of a year and a half Amergen had potentially acquired 6 nuclear plants with 4,800 Megawatts of generating capacity for not much more than $300 million. Amergen also let it be known it was interested in Northeast Utilities notorious Millstone nukes in Connecticut. NU top dog Michael Morris admitted in 1999 that he hoped to get $200 million for the plants, which cost over $4 billion to build and had a book value of $1.8 billion.
As Morris lamented, “A lot of people think nuclear’s best days are behind it...it has everything to do with public opinion.” And in reality a lot more to do with economics. Even NU, the largest utility in New England, knew its nukes couldn’t be competitive in an unregulated market where consumers could shop for the best deal.
Like the companies who were only too glad to unload their nukes on Amergen, NU realized that only a few mega-corporations operating on a national scale could conceivably squeeze profits out of these nukes. In another sign of this new reality, NU and New York’s Consolidated Edison are merging—on the condition that NU get rid of its nukes.
Nothing But Trouble
All of the above plants have already caused too much trouble. Millstone has released more radiation than any other U.S. nukes except Three Mile Island. All three plants were shut down for over two years in recent times, and last year NU plead guilty to 25 federal felony counts and paid $10 million because of company shenanigans there, including gross mismanagement and systematic harassment of whistleblowers.
Oyster Creek has been shut down more often than not in its 30-year history, but still has released high amounts of radioactive iodine. Nine Mile Point 1 had a 2 and a half year shutdown in the mid 1980s, was fined $440,000 by the NRC for shoddy operations, and cleaned up 150 barrels of highly radioactive waste only 8 years after they spilled in a sub-basement. Unit 2 was put on the NRC’s list of troubled plants in its first year of operation and in 1991 had to declare a Site Area Emergency after it lost total power to crucial indicators in its control room.
Besides experiencing massive construction cost overruns, the Clinton plant had a serious accident in 1988 when three workers were sprayed with radioactive hot water. More recently it had to close down for over two years because of safety problems and mismanagement. Vermont Yankee, like Millstone, operated with damaged fuel rods in the 1970s, resulting in high releases of radiation, including the dumping of 83,000 gallons of contaminated water into the Connecticut River.
In September 1999 PECO announced its intended merger with Unicom, parent company of Commonwealth Edison in Illinois. ComEd, whose 12 nuclear plants (2 now permanently shut down) dominated the NRC’s troubled plant list in the 1990s, is the nation’s largest nuclear utility, with 3.4 million customers. This meant that in less than 2 years Amergen had potential ownership of 20 nukes, a fifth of the U.S. inventory.
But all’s fair in war, and Amergen had competition from Entergy in New Orleans. Entergy, with 2.5 million customers, operates five nukes in the South. In late 1998 Entergy bid $80 million for the Pilgrim nuclear plant on Cape Cod. This offer included $67 million for its nuclear fuel. Pilgrim’s construction cost was $238 million, and its book value at the time of Entergy’s bid was $700 million. Pilgrim’s owner, Boston Edison, accepted this offer, the feds approved it, and Entergy took over Pilgrim in July 1999.
At the end of 1999 Entergy was negotiating with ConEd for the sale of the Indian Point 2 and 3 nukes, located 30 miles north of New York City on the Hudson River. It also was negotiating purchase of the Fitzpatrick plant, located on the same site as the two Nine Mile Point plants.
Entergy lost out to Amergen in a bidding war over Vermont Yankee. But in December 1999 Rochester Gas and Electric, a minority owner of Nine Mile Point 2, exercised its right to match Amergen’s $163 million offer for both Nine Mile Point plants. It also hired Entergy to run and decommission the plants. Thus Entergy in effect trumped Amergen’s takeover of those plants. Entergy has also been hired to decommission the permanently shut down Maine Yankee and Millstone 1 nukes.
Duke Power, which operates seven nukes in the Carolinas, has made noises about buying up other ones, but has taken no action yet.
The Scams
So why are Amergen and Entergy buying up the nuclear relics other utilities are bailing on? As previously mentioned, they may believe that owning large numbers of nuclear plants can give them economies of scale that will enable them to operate them profitably, unlike smaller utilities. To do this however, they will likely resort to cost cutting measures to maintain a competitive edge. This means layoffs and degradation of safety standards.
British Energy has already been carrying out this strategy in the UK. An August 1999 report by the British government’s nuclear regulators revealed that BE laid off 20 percent of its workforce after privitization. The report said BE planned to get rid of 300 more workers as well. These layoffs in turn created continuing forced overtime for remaining workers. BE also brought in some unqualified contractors who would work cheaper.
The report stated that there was “a widespread attitude that issues which could endanger [electrical] output were top priority, while it was acceptable to delay less immediate safety related work.”
The worst result thus far of these cost cutting practices occurred at BE’s Hunterston B nuclear station in Scotland. A loss of power accident there threatened to turn into a Chernobyl-scale disaster, due in great part to understaffing. One worker reported that “The sirens were sounding all over the plant and there were police, fire and ambulance crews arriving. We didn’t know what was going on.”
In the U.S. Amergen laid off 80 percent of the Clinton plant’s contract workers. The PECO/ Unicom merger will result in elimination of over 1,100 jobs. Both Amergen and Entergy are also trying to pull off another major scam over the billions of dollars in decommissioning funds they inherit with bought up nukes. These funds have been created by compulsory contributions from ratepayers and are intended to pay for the cleanup of the nuclear messes left after the plants shut down. That consumers should be obligated to pay for this is a scandal.
These funds are tax exempt so long as they are held by a state regulated utility. But when they transfer to non-regulated corporations like Amergen and Entergy, under present law they become taxable. So these corporations have been lobbying the IRS and Congress, so far unsuccessfully, to change the law so they won’t have to pay these taxes. They stand to avoid paying $1 billion in taxes should they succeed.
There may be another reason that the two behemoths want to buy up old nukes. The older a nuclear plant, the more spent fuel rods are being stored on the plant site. Presently in the U.S. these are considered high level radioactive waste with no market value and no solution for their permanent disposal in sight.
But the UK has a potential solution. British Nuclear Fuels Limited (BNFL) operates a spent fuel reprocessing facility at Sellafield on the west coast of Wales, where it extracts uranium and plutonium. Should Amergen and Entergy become able to ship spent fuel rods from their U.S. nukes to Sellafield, what is now useless radwaste will be worth billions.
In May 1999 Friends of the Earth UK exposed top secret talks between BNFL and U.S. nuclear utility Yankee Atomic to import large amounts of spent fuel rods to Sellafield. The deal was to send over 2,400 fuel assemblies (each such assembly consists of hundreds of fuel rods) from the shut down New England nukes Yankee Rowe, Maine Yankee, and Connecticut Yankee.
A 1957 fire at the Windscale reactor at Sellafield nuclear site caused huge releases of radiation. This was the worst nuclear accident until Chernobyl in 1986.
Greenpeace UK has found that the area around Sellafield is “as heavily contaminated with radioactivity as the zone around the stricken Chernobyl reactor.” It also called pigeons around Sellafield “flying nuclear waste” and found that lobsters in the Irish Sea off the nuclear site were highly contaminated as well. A 1997 study by the British Department of Health found plutonium (which does not exist in nature) in the teeth of adolescents throughout the UK. The study concluded that the plutonium came from Sellafield’s radioactive releases. Greenpeace reported that “Sellafield is now estimated to discharge as much as 9 million liters of radioactive effluents into the Irish Sea each day.” The east coast of Ireland reportedly has been experiencing high rates of Downs Syndrome and various cancers as a result of this contamination.
Like British Energy, British Nuclear Fuels Limited also operates extensively in the U.S. Currently BNFL has contracts with the Department of Energy to clean up the radioactive wastes at the Oak Ridge, Hanford, Idaho Falls, Rocky Flats, and Savannah River federal nuclear facilities.
The Opposition
Much of the information in this article came from the Northeast-based Citizens Awareness Network (CAN) and the Washington, DC-based Nuclear Information and Resource Center (NIRS). CAN and NIRS have been campaigning hard to educate the public about the rapid and largely unknown monopolization of the U.S. nuclear power industry, as well as organizing resistance to it. In October 1999 CAN and NIRS led over 1,000 demonstrators to PECO’s corporate headquarters in Philadelphia to protest this dangerous and disturbing trend. The two groups are also taking legal action to block the mega-conglomerates from taking over more decrepit U.S. nukes and running them into the ground while scamming billions at the expense of the public’s health and safety. Z
Citizens Awareness Network, 413-334-5781, can@ shaysnet.com; Nuclear Information and Resource Center, 202-328-0002, nirsnet@nirs.org, www.nirs.org Michael Steinberg is an investigative journalist and author of Millstone and Me: Sex, Lies and Radiation in Southeastern Connecticut.