Only the US Government Would Call a Tax a Subsidy
Dec24

Only the US Government Would Call a Tax a Subsidy

Podcast Episode 115 – Download the mp3 file Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.  Play the Podcast My first reaction was “Wow! Did I just read that correctly?!” It was one of those “ah-ha moments” when a seemingly mundane statement leapt out of the page and whacked me on the forehead.  This time the catalyst was a twitter reply from Chris Pragman (@ChrisPragman) who describes himself as an “Avid Podcast listener, Engineer, Nuclear Power, Fire Protection, and beer geek with a long commute!” You see, I had posted a tweet earlier in the day about the cost to taxpayers of some “green energy” jobs.  There’s a new wind farm in Oregon called Shepherds Flat that received federal cash grants totaling $490 million under the guise of job creation.  For that grand sum the Shepherds Flat project will create 35 new jobs.  The math is easy; $14 million per “green energy” job. Our tax dollars at work! This tidbit about Shepherds Flat was part of a larger report by the Energy Tribune that among other things compared the relative size of US government subsidies to various energy industries.  The report by Robert Bryce calculated subsidy dollars per unit energy produced and concluded the renewable energy industry receives 6.5 times more federal government subsidies than the nuclear industry, and 12 times more than the oil and gas industry.  That fact really didn’t surprise me considering the billions of dollars in grants, production tax credits, and favorable depreciation rules the government lavishes upon anything branded with the “renewable” label.  Then Chris asked a great question, “What do they consider nuclear subsidies?” When I dug into that question I learned the Congressional Budget Office is tasked with tracking the amount the government spends subsidizing various industries, and they publish their findings periodically.  There it was on page 3: $900 million in “subsidies” for the “favorable tax treatment of nuclear decommissioning funds.”  Hmmm. What could that be? You see, every nuclear plant owner is required by federal law to set aside funds to ensure there’ll be enough money to pay for decommissioning the plant when the time comes.  Typically plant operators add to the fund each year and over time the fund grows until it’s used. The NRC monitors each fund and will require plant owners to make additional payments if they think they’re behind.  These funds are essentially forced savings accounts that add to each nuclear plants annual operating expenses. So what’s the “favorable tax treatment?”  It turns out Title 26...

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Government Experts Say There Are No Environmental Impacts That Would Prevent Indian Point Nuclear Plant From Operating for 20 More Years.

Download the MP3 File Here The environment would remain safe if Indian Point nuclear plant operates for another 20 years. That’s the opinion of a team of scientists and engineers on the staff of the U.S. Nuclear Regulatory Commission. Operating licenses for the two reactors at Indian Point nuclear plant in New York will expire in 2013 and 2015. Entergy, the plant’s owner has applied for a license renewal to allow the plants to operate for an additional 20 years.  A major portion of the application is this detailed study of the environmental impact of allowing the plant to continue operation. This analysis has been underway for almost two years, and included analyzing public comments and issues raised by New York State and groups opposed to the plant. On December 3, 2010 the staff of the U.S. Nuclear Regulatory Commission released the results of their assessment which concluded there are “no environmental impacts that would preclude license renewal for an additional 20 years of operation.” License renewals are routine.  In fact, last week the NRC issued the 60th such license renewal for a US commercial nuclear plant.  That one went to the Cooper Nuclear Station in Nebraska.  Indian Point’s environmental impact analysis is probably the most thorough ever done by the NRC.  It usually takes between 6 and 12 months for the NRC to collect public comments and conduct their environmental review.  In contract, Indian Point’s review took two years to complete.    It is a monstrous document; the report is more than 2,200 pages long compared to an average of 480 pages at other plants.  It’s worth noting that the plant’s owner pays the Federal Government more than $200 for every hour the NRC staff spent on the environmental analysis. So what’s unique about Indian Point that might require such an extensive review of the environmental impact? In short, it has nothing to do with the natural environment, and everything to do with the political environment in which the plant operates.  There is a very high profile and well funded anti-nuclear campaign being waged against Indian Point by organizations like Riverkeeper, the Radiation and Public Health Project, and the Natural Resources Defense Council. These organizations and others like them have taken advantage of the transparency of the license renewal process to intervene at every opportunity in an effort to slow or block the process. On one hand they claim nuclear plants are too expensive, yet they work hard to further raise the costs. For example, they claimed the plant is in violation of the US Endangered Species Act because the endangered shortnose sturgeon eggs and hatchlings are entrained in...

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Small Modular Reactors May Offer Significant Safety & Security Enhancements

Download the Audio File Here Small Modular Reactors (SMRs) are getting a lot of attention in the nuclear industry because they offer great potential for lower initial capital investment, scalability, and they come in sizes more appropriate for locations unable to accommodate larger 1000+ MW units.  However, there are some big potential advantages that have not been widely discussed that could make SMRs a game-changer.  These advantages are the potential for enhanced safety and security. Let me explain. The goal of nuclear plant emergency planning is to protect people from exposure to radiation they might receive during a reactor accident. That radiation exposure would come (mostly) from radioactive gas released into the air from a damaged nuclear plant. There are three physical barriers in all modern nuclear plants that keep radioactive gas inside the reactor: the metal cladding that encases the ceramic uranium fuel pellets, the thick steel reactor vessel and piping and that contains the reactor and coolant, and the concrete and steel containment building that encloses the reactor. For people to be in danger from a reactor accident first the fuel must overheat to create the radioactive gas. Then all three barriers (clad, system piping, and containment building) must be breached to provide a pathway for the radioactive gas to reach the atmosphere. Finally, there has to be a pressure difference to push the gas out of the plant and into the atmosphere. In water cooled reactors like most in use today, the hot water turns to steam and steam pressure builds up inside the containment.  If the containment is breached this pressure pushes the radioactive gas through the hole to the air outside. With this in mind, small modular reactors offer several big advantages that make them safer: They are smaller, so the amount of radioactivity contained in each reactor is less. So much less in fact, that even if the worse case reactor accident occurs, the amount of radioactive material released would not pose a risk to the public. In nuclear lingo we say SMRs have a smaller “source term.”  This source term is so small we can design the plant and emergency systems to virtually eliminate the need for emergency actions beyond the physical site boundaries.  Then, by controlling access to the site boundary, we can eliminate the need for off-site protective actions (like sheltering or evacuations). These smaller reactors contain less nuclear fuel.  This smaller amount of fuel (with passive cooling I’ll mention in a minute) slows down the progression of reactor accidents.  This slower progression gives operators more time to take action to keep the reactor cool.  Where operators in large reactors have...

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The NY Independent System Operator Confirms Andrew Cuomo’s “PowerNY” Energy Plan to Shut Down Indian Point Nuclear Plant Would Cause Electrical Grid Instability and More Frequent Blackouts.

Listen to the Podcast Here New York gubernatorial candidate Andrew Cuomo makes no bones about it.  He plans to shut down Indian Point Nuclear Plant if he is elected.   His opposition to the plant is no secret.  He has been an out spoken critic of the plant for years, even though Federal inspectors and independent safety assessments agree the plant is safe.  As part of his bid for Governor, Cuomo published his long term energy plan, “PowerNY” in which he calls for the two Indian Point nuclear energy facilities to shut down in 2013 and 2015.  PowerNY states, Andrew Cuomo has long been a supporter of closing the Indian Point nuclear power plant in Westchester and has argued that the federal government should not renew the plant’s operating license when it expires in 2013. PowerNY says New York must “find alternate sources of generation and transmission” so they can replace Indian Point.  Last week, however, the New York Independent System Operator (NYISO) released its latest Reliability Assessment of the electrical grid in New York.  They are the independent non-profit organization that controls the flow of electricity throughout the state.  They are responsible for ensuring the electrical grid is safe and reliable.  In this report the NYISO concluded that without Indian Point the system would become unreliable and blackouts more frequent.  Here is what they said: Reliability violations would occur if the Indian Point Plant were to be retired at the latter of the two units’ current license expiration dates using the Base Case load forecast assumptions. In layman’s terms, that means the grid would become unstable and blackouts much more likely if Indian Point is shut down.  In fact, if you read the report in detail it states that blackouts would be almost four times more likely than allowed by ISO rules if Indian Point is taken out of service.  The NYISO also stated Under stress conditions, the voltage performance on the system without Indian Point would be degraded. This means that during peak loads like those that occur on warm summer days voltage on the grid would drop to dangerously low levels.  When this occurs grid operators are sometimes forces to implement rolling blackouts to prevent loss of large portions of the electrical supply system.  This “degraded voltage” condition also causes accelerated wear and tear on industrial motors, household appliances and electronics because as voltage drops the current draw of the machines rises.  This can cause the appliances to short circuit and fail. The report also says that electricity generated outside the regions would be unable to reach southern New York and New York City because of “transmission...

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Boycotting Anti-Nuclear Activist Companies & Celebrities

Podcast – download the MP3 File Here During a recent conversation over the Deepwater Horizon oil spill, a friend asked if anyone in the group was boycotting BP.  This led to a lively discussion about the effectiveness of boycotts and the inevitable question, “Who do you boycott?” Before I answer that question, I want to make it clear that I don’t want to get overly negative.  I am sometimes critical of so called “environmental” groups like Friends of the Earth and Greenpeace who seem to be against everything yet provide no realistic alternatives.  In my view, to boycott one person, place or thing means I will support an alternative. You don’t have to look very hard to find celebrities or companies who are actively working against the peaceful uses of nuclear energy.  There was a time in my life that going to the Ben & Jerry’s Ice Cream shop was a ritual.  The company opened one of their first retail stores in a renovated gas station about a block from my apartment in Saratoga Springs, NY where I lived when I worked at Knolls Atomic Power Laboratory.   As the company grew and the profits rolled in their founders began to become politically active in Vermont.  Unfortunately they jumped on the anti-nuclear bandwagon and began to support groups like Vermont Businesses for Social Responsibility who advocate shutting down the Vermont Yankee nuclear plant.  I made the decision not to buy Ben & Jerry’s ice cream because every scoop I ate was helping to fund activist efforts to shut down Vermont’s only nuclear plant.  It’s too bad Ben & Jerry’s fails to understand that without Vermont Yankee the electricity used to manufacture their ice cream would necessarily come from fossil fuels, and would contribute to air pollution and climate change.  They are probably unaware that Vermont is one of the only states to continue burning oil to generate electricity.  Their anti-nuclear campaign is in effect supporting the continued use of oil and other fossil fuels.  Fortunately for me there are plenty of ice cream alternatives! I’m a big fan of Tom Clancy novels, and one of my favorites is “Hunt for Red October.”  I’ve read the book and enjoyed the movie when it premiered, but unfortunately I’ll never watch it again.  That’s because one of the stars of that movie is Alec Baldwin, an actor who has personally contributed millions of dollars to efforts to shut down the Indian Point nuclear plant in New York and the Oyster Creek nuclear plant in New Jersey. Baldwin and his actress wife Kim Basinger support the anti-nuclear Radiation and Public Health Project, and have lobbied the...

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NY State Gives Fossil Fuels Favored Treatment

Podcast – Download Audio File Here This is a follow up to the podcast titled “Water Wars in New York” on May 27, 2010 in which I discussed how NY State is using their authority to issue Water Quality Certificates to wage war against the Indian Point Nuclear Plant.  In case you missed that show, New York is holding the plant’s 20 year  license renewal hostage by refusing to issue a Certificate of Water Quality unless the plant agrees to install expensive cooling towers.  The plant has argued that the cost of cooling towers, approximately $2 Billion, is excessive and disproportionate to the environmental benefit that would be derived.  In fact, the plant has identified an alternate technology that would provide greater environmental benefits at about one-tenth of the cost of installing cooling towers. Thus far those arguments have fallen on deaf ears. In my further research on this topic I discovered a damning piece of evidence that proves NY State is giving preferential treatment to fossil fuels while at the same time imposing unfair regulations on neighboring nuclear energy facilities, the largest competitors to fossil fuels. There are several other large power plants on the Hudson River that generate electricity by burning coal, oil, and natural gas.  All of those plants, like Indian Point, use the Hudson River for cooling.  One of the plants, the Bowline plant, is in Haverstraw, NY only about five miles across the river and downstream from Indian Point.  Bowline is a two unit gas and oil fired power plant with a combined output of 1,182 MW (slightly larger than each Indian Point nuclear unit). There are many similarities between Bowline and Indian Point: Bowline, like Indian Point, is required to maintain a NY State water permit.  Bowline, also like Indian Point, evaluated several alternative technologies to reduce fish and fish larva mortality. The Bowline analysis reached similar conclusions to the one performed by Indian Point; they concluded that converting to a closed cooling water system using cooling towers would provide the greatest reduction in fish mortality, but at a very high cost.  Instead, the Bowline plant offered to use a combination of technologies that would provide 80% to 95% percent of the benefit that would be derived from the vastly more expensive cooling towers, but at 1/30th of the cost. That’s where the similarities end.  In the case of the Bowline oil and gas plant, the New York State Department of Environmental Conversation accepted the lower cost alternatives to installing cooling towers.  On the topic of cooling towers, in a letter from Denise Sheehan, the DEC Commissioner they stated; The estimated cost of retrofitting...

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