Beset by Bad Economics, Nuclear Energy Running Out of Steam

SAN ONOFRE, Calif. —  Surfers have been riding the thundering breakers of this beach since the days of the steam automobile, long before anyone cracked an atom to make electricity.

Joe Higgs adopted this beach as his second home even before bulldozers scraped away 1.5 million cubic yards of sandstone bluff for the first of three nuclear reactors. He and the San Onofre nuclear plant are uneasy neighbors to this day, peering at each other through barbed-wire fencing.

“I’ve learned to live with that. I love surfing, and I love the ocean so much,” he said, looking up at the plant’s three protective domes designed to seal in radioactivity during an accident.

But then he added: “I wish it wasn’t here, to be truthful.”

The way the nuclear industry is declining, his wish may yet come true.

Exploding Costs Jeopardize Industry

Since the Three Mile Island accident in Middletown, Pa., 20 years ago today, American attitudes toward nuclear power have been characterized by paralyzing ambivalence and mood swings. Under public pressure, the industry and government have profoundly reworked safeguards at tremendous effort and cost. Warily, the public has watched 51 commercial reactors hum to life in the years since the accident. But all of them had been planned before Three Mile Island; none has been ordered since.

Virtually no one in the industry can imagine building a plant in the foreseeable future.

It is not runaway chain reactions but exploding costs that have jeopardized this $43-billion-a-year business. With barely a whimper, the nation has let 21 atomic reactors shut down. That’s 17% of its total of 125. They are victims of the intertwined costs of safety changes and heavy staffing; building debt; and mounting expense to replace parts, clean up abandoned sites, and store radioactive waste.

Cranking up pressure, some states are making nuclear power stand on its own as they drop guaranteed electric rates for power monopolies to inject competition into energy production.

The nuclear industry still supplies about one-fifth of the country’s power--second only to coal. But the U.S. Department of Energy predicts it could wither away almost entirely over the next 20 years. By just about any standard of policy or politics, atomic power is looking like a lesson in energy wasted.

“We over-promised and under-delivered. We created fears that are not appropriate, and the industry handled it all in a very defensive, closed way,” said consultant Roger Gale, president of the Washington International Energy Group. “We took a good technology and we blew it.”

It’s a remarkable turnaround for a technology that began with such hope. When the lights flickered on at Moorpark, Calif., Nov. 12, 1957, the country was electrified.

CBS television captured the moment for history. The town of 1,146 people went black when it was cut off from Southern California Edison Co.’s conventional power grid. A few seconds later, thanks to the company’s little atomic reactor in the Santa Susana Mountains, Moorpark and the nation awoke to the age of atoms for peace.

National leaders were eager to redeem the research and destructive power of the atom bomb. They promoted and helped finance the first round of nuclear energy plants and dreamed aloud of electricity so cheap that it would hardly be worth metering, maybe 1,000 reactors by the year 2000.

In the 1970s, public worries about air pollution, the Arab oil embargo and the limits of fossil-fuel supplies boosted the inherent high-tech appeal of nuclear power.

The backbone of the new industry’s work force came from the ranks of the nuclear Navy--a gung-ho breed that later proved inept at dealing with a doubting public.

Decades of environmental and economic bruises have now thoroughly rubbed off the veneer of atomic technology as the wonder boy of energy.

Public support for nuclear energy has slipped from 70% before Three Mile Island to 43% in 1997, according to Roper Starch Worldwide, the polling company. Though some still view the U.S. Nuclear Regulatory Commission as too cozy with the industry, the agency sees itself primarily as a safety enforcer, not a booster.

“Nobody is going to order a new nuclear plant: too much political pressure and environmental pressure, and your capital is at risk for so long,” says Chris Neil, an industry consultant with Resource Data International. “Nobody wants to take that risk.”

Southern California Edison is deciding whether to sell its two big 1,100-megawatt reactors still active at San Onofre south of Los Angeles. California’s 30 million people draw about one-quarter of their electricity from atomic plants, more than any other state. But that could change as California regulators complete the transition to competitive energy-making.

“I don’t think nuclear has changed that much. I think the world around it has changed,” says Harold Ray, the utility’s chief of generation.

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Kara Thorndike, 14, sprawled in shorts on a blanket at San Onofre beach, was busy with homework and oblivious to the atomic plant just a few hundred yards away.

“They have to be safe,” she said. “If they weren’t, I don’t think they’d put it in a public place.”

Even strong critics say the industry has greatly bolstered safety since the partial meltdown of a reactor core at Three Mile Island.

The nation’s worst nuclear accident released little radioactivity into the environment, but it exposed dangers that shook government regulators into ordering expanded training of nuclear operators. Plants were redesigned to give operators better information on the state of reactors. Training control rooms were built identical to the real ones, down to the carpeting. Emergency command centers sprang up and connected to hotlines at the Nuclear Regulatory Commission.

While basically on target, the government’s reaction may sometimes have been overzealous, according to William Travers, the new director of the watchdog agency, who oversaw the Three Mile Island cleanup through much of the 1980s.

Today, he said, the agency is “looking to reduce the unnecessary burden.”

Regulators are stripping back some rules, saying they do not really bear on safety. Using downgraded risk predictions, the agency is allowing more limited testing of some plant materials and setting up a fast track for relicensing old plants to help the industry compete.

In reaction, critics are again fretting over safety. A January report by the General Accounting Office, the investigative arm of Congress, says “safety margins may be compromised” as markets turn competitive.

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Marybeth Howard, who markets computer hardware, was sunning herself at San Onofre beach and basking in thoughts of abundant electricity.

“I’ve got the lights on all the time,” she said. “I’ve got the stereo cranked. I’ve got the microwave and the dishwasher on. Everything! I don’t care how much the bill is. I don’t even really pay attention.”

Her nonchalance sounds quaint is a world where “energy efficient” and “energy conservation” long ago entered common speech.

In the 1970s, the national appetite for power grew about 7% annually, but the growth rate has shrunk to about 2% a year--even with the strong economy. That makes it harder for utilities to pay off nuclear construction debts.

In some cases, big debt paid for little but frustration. The $5.5-billion Shoreham plant on Long Island, crippled by safety fears, never opened.

Only two operating plants so far have asked to renew their 40-year licenses. The licenses of 56 reactors expire in the next 20 years, but industry officials acknowledge that some probably will close long before then.

For one thing, it often takes more than twice as many workers to run a nuclear plant as an equivalent one with fossil fuel.

For another, aging nuclear plants increasingly need big-ticket replacement of generators, turbines and even reactor cores made brittle by decades of neutron bombardment.

San Onofre has been installing new turbines for its two active units at a price tag of about $30 million each. Owners of Yankee Rowe in Massachusetts, the granddaddy of plants, shut it down in 1992 after 32 years instead of buying a new $23-million reactor vessel to cradle its radioactive core.

Meanwhile, in states like Pennsylvania, regulators are expected to bar utilities from recovering much of their nuclear construction debt through consumer rates during the changeover to competitive markets.

Growth Predicted in Developing Nations

Some in the industry are embracing two plant sales in the works as a sign of hope. An international partnership has even arranged to buy the Three Mile Island reactor that did not melt down and later came back on line.

But it is going for just $23 million. It was built for $400 million.

“It appears to me the way to sell a nuclear plant is to pay someone to take it off your hands,” says Kennedy Maize, editor of the Electricity Daily trade newspaper.

The General Accounting Office says up to 26 plants appear vulnerable to shutdown simply because their production costs are higher than the projected price of electricity.

The industry is banking heavily on an expanding market for American nuclear technology in Japan, Taiwan and other Asian countries over the next 20 years. France depends on nuclear plants for 78% of its power.

Environmental distaste, though, has dimmed nuclear prospects in Germany, Sweden and Italy.

Much of the future growth is predicted in developing nations without the centralized grids of power lines to accommodate big nuclear plants. Fear of spreading material and know-how for nuclear weapons is also braking nuclear energy in other lands.

“It’s one of those things that seems to be good for a while, and then something else comes along,” says nuclear physicist Thomas B. Johansson, who oversees international energy development at the United Nations.

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In a final indignity, even the costs of walking away from nuclear power have soared. Taking apart Zion Unit 2 in Zion, Ill., is estimated at $800 million.

Owners of San Onofre 1, which closed in 1992, decided this year to take it out of cold storage and dismantle it quickly, before it gets even more costly. They project decommissioning at $460 million over seven years for the small 450-megawatt reactor.

Around the country, more than 42,000 tons of potentially lethal radioactive waste fuel await federal pickup under a legally binding government promise. Government officials say it is safest to store centrally under federal control. It is now kept mostly in cooling pools not designed for permanent safekeeping.

A permanent national repository is proposed deep underground at Yucca Mountain, Nev. But it won’t be ready until 2010 at the earliest, according to government officials. It is projected to cost $36 billion to build, license, supply with used fuel, run and seal by the year 2116.

Once promised for 1998, the project has stumbled over not-in-my-backyard politics and fears about whether the geology is stable enough to isolate radioactive waste for 10,000 years.

Sen. Frank Murkowski (R-Alaska), chairman of the Senate Energy Committee, says the government should set up a temporary waste site at Yucca to relieve utilities. But that idea has met strong opposition too. “The industry is strangling on its waste,” Murkowski said in an interview.

Many analysts say the nation could weather a slow death of nuclear power fairly well.

They say natural gas, which supplies about 10% of power, can and will do much more. Dozens of gas generators are under construction.

But renewable resources, like solar and wind power, have progressed slowly.

Backers of nuclear power say the nation can’t attain international limits on greenhouse gases without atomic energy.

James Hewlett, an economist with the Energy Department, says coal might be needed to pick up some slack. But Daniel Becker, an energy expert at the Sierra Club, says that’s like “giving up smoking and taking up crack.”

Maybe nuclear power was fundamentally flawed: steeped in danger and, as environmentalists sometimes suggest, the most expensive way ever devised to boil water. Maybe nuclear plants are just too big and centralized to thrive in an era of smaller-is-better.

But others say a potentially enduring technology was simply mishandled: too many companies, designs and bonds to adapt to the new world of private competition.

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A large, low ball of fire radiates the day’s last sunbeams on San Onofre and the Pacific surf. Plant staffer Ray Golden, who has worked at five nuclear plants in 17 years, muses on the unthinkable:

“If the industry goes down the drain, it’s just a very sad testament,” he says. “Maybe it was a technology before its time.”