ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, May 9, 1996 TAG: 9605090003
SECTION: EDITORIAL PAGE: A-13 EDITION: METRO
SOURCE: STANFORD L. LEVIN
THE UNITED STATES is on the threshold of a competitive electricity market. Given all we have heard about the cost of nuclear power, it might be hard to believe, but nuclear power will be one of the least expensive sources of electricity in this newly competitive market.
As a result, nuclear generation will not shut down, especially if utilities continue to control production costs and if plant operating licenses are renewed. Indeed, nuclear power will be an important market element. We cannot afford to rule out any economic options for producing electricity.
This isn't to minimize the importance of renewable energy sources like wind and solar power, but an efficient energy market will rely on all sources of electricity. Many utilities already are using some wind power and installing solar panels to learn more about the technologies. At this time, however, wind generation is more than twice as expensive as nuclear-generated electricity from today's low-cost plants, and solar generation is three to 10 times as expensive. In addition, the capacity to generate electricity from these sources is limited, and both are not without environmental concerns.
Today, U.S. nuclear plants have achieved a 77 percent capacity factor, meaning that their actual performance is 77 percent of the theoretical maximum. This is a remarkable accomplishment, when 10 years ago 60 percent seemed unrealistic. Utilities are now targeting capacity factors of 80 percent to 85 percent, and in 1994 and 1995 at least 20 of the 109 U.S. nuclear plants had capacity factors above 90 percent.
Not only are U.S. electric utilities pushing plant performance higher, they are controlling production costs as well. For example, the median production cost (operation and maintenance cost plus the cost of fuel) of nuclear-generated electricity from plants with a capacity factor of at least 70 percent is currently about 1.72 cents per kilowatt-hour, with some companies as low as 1 cent per kilowatt-hour. These costs compare favorably with the production costs from base-load coal plants.
Because competition will produce additional pressure to reduce costs, U.S. nuclear utilities are bench-marking their plant performance against the best plants here and abroad. The U.S. nuclear industry also has created mechanisms to share good economic practices, much as it shares good safety practices. For example, large cost savings have been achieved by shortening the time it takes to refuel nuclear plants and by reducing unplanned shutdowns.
One area for further cost reduction is the regulatory process. The industry is working to shift to performance-based regulation in order to focus regulation where it is needed and to make it more objective and efficient, while maintaining a high level of safety.
Currently, most Nuclear Regulatory Commission regulations are prescriptive and deterministic. They tell a nuclear plant operator precisely what measures to take to meet certain objectives, leaving little room for innovative approaches that are sometimes both better and less costly. Every system and component that is identified as ``safety-related'' or ``important to safety'' is given the same level of attention, whether it plays a big role in safety or a small one. This type of regulation focuses on processes and procedures instead of results and is both more costly and less effective than it should be.
In contrast, a performance-based rule establishes basic requirements and sets overall performance goals, and then allows the nuclear plant operator to decide how best to meet these goals. For well-performing plants, it promises substantial savings. As an example, the Nuclear Regulatory Commission recently revised its containment-leakage testing rule to allow plants with good test performance to extend the test interval to once in 10 years. Savings across the industry are expected to exceed $1 billion over the next 20 years, primarily in reduced outage time, with no compromise in safety.
Despite the continuing nuclear-waste disposal problem, and the potential consequences of the transition to a more competitive marketplace, we can make progress with a pragmatic policy. Economics, not ideology, should guide our planning, and political bipartisanship will be essential if we are to benefit from low-cost electricity. As demand for electricity grows, we cannot ignore the increasing attractiveness of nuclear power as a low-cost, environmentally friendly option.
Stanford L. Levin is a professor of economics at Southern Illinois University at Edwardsville.
- Knight-Ridder/Tribune
LENGTH: Medium: 82 linesby CNB