Re: Mook's quote about nuclear being a "low grade heat". Is it true?

From: daestrom (daestrom_at_NO_SPAM_HEREtwcny.rr.com)
Date: 07/11/04 

Date: Sun, 11 Jul 2004 20:08:33 GMT

"Scott A Crosby" <scrosby@cs.rice.edu> wrote in message
news:oydacy6g032.fsf@bert.cs.rice.edu...
> On 10 Jul 2004 23:32:51 -0700, william.mook@mokindustries.com (william
mook) writes:
>
> > > I posted some numbers for fuel and O&M costs in another message.
> > > Unfortunately, my ISP's news-server doesn't show it, but I did see
> > > this message on google. So here are some numbers again...
> > >
> > > One plant (not a top performer) has an annual fuel cost of ~$22M -
> > > $23M. Their O&M costs are about $150M.
> >
> > The costs charged for nuclear fuels bear little relation to their
> > total cost of production, even so, I agree the fuel costs are a small
> > part of the total - capital costs are the largest.
>
> Wouldn't fuel-supply expenses be capitalized by the fuel supplier, and
> amortized over the fuel they produce and sell to nuclear reactor
> operators?
>

Of course they are. But William Mook continues to insist on some fanatasy
about government subsidies supporting them. And now he's even suggesting
that GE is operating their GNF division at a loss and covering it with
income from other divisions. Yet he provides no reasoning for such an
action.

> > > With a capacity factor of 96% and net output of 850MWe. This
> > > works out to a yearly cost for fuel and operation of $173M and an
> > > annual output of 7.19e+9 kWh. About 2.4 cents per kWh
> >
> > If all you were doing is paying the government set rates for nuclear
> > fuels, then nuclear would be golden. But you're not. You're paying
> > for all the costs of the nuclear fuels plus all the costs of
> > construction and maintenance, and all the costs of cleanup of both
> > the power plant the spent fuels, and the portion of the fuel
> > production infrastructure that supplied the fuels to your plant.
>
> Which daestrom documents is funded, either through decomissioning
> obligations, a per-MW*h fee for waste disposal, etc. If you want to
> convince me, you'll either have to explain how daestrom was off on all
> of his numbers by a factor of two, or what catagory he forgot to
> include. You can make convincing arguments, but this isn't one of
> them. Show me a table with each cost, with daestrom's numbers and your
> numbers and explain why yours are higher.
>
> > Adding all this in gets you something greater than $5.00 per watt
> > and something that's not competitive on a kWh basis.
>
> Besides, if nuclear power is inherently this expensive, then why
> would, say, France be using it to supply their country? If nuclear
> power is as much of a black hole for money as you claim, where is the
> missing mass.
>

He (Mr Mook) doesn't like to discuss France's success. He'd rather ignore
nuclear programs abroad, or focus only on the failures like those in the
former East Germany.

> > > A top performer that I know of had a capacity factor 96% last year, an
> > > O&M budget of $98M and annual fuel costs of $28M. This works out to
> > > 1.3 cents per kWh generated.
> >
> > But this is not the only cost and its not the largest cost. So, its
> > not a good predictor of real costs. Which is why folks who have
> > invested in nuclear power don't have the capital to invest more, or
> > the inclination to invest more.
> >
>
> There's also public sentiment. After the round of decade(s)-long
> construction delays causing capital costs to spiral, I'd expect
> caution.
>
> >
> > > The 'check' written to GNF is pretty
> > > straight accounting.
> >
> > Yet all the costs are not covered by that check.
> >

What costs do you think GNF does *not* include when setting their pricing?
Do you think they are silly enough to not include the capital costs of their
facilities? Or of purchasing their raw materials? Why do you think they
are such poor businessmen that they don't cover all their costs with their
sales revenue? Oh, wait, you're probably going to drag up some fantasy
about govt. subsidies again.... Got any proof?

> > > The O&M costs at a nuc are something on the
> > > order of 70% labor costs. With a staff between 500 and 750 (depending
> > > on the plant), you can 'ball park' the O&M as (700 people X
> > > $100000/yr)/0.70 => $100M.
> >
> > Why not look at DOE EIA figures, or the figures reported by NRC, or
> > even the 10ks reported by the publicly traded companies who own
> > nuclear plants?
>
>
> http://www.eia.doe.gov/cneaf/nuclear/page/analysis/nuclearpower.html
>
> From which I see >90% average utilization for nuclear power (I recall
> you saying it was 80% a few days ago).
>
> Going by the O&M&FUEL expenses reported, at $.018/kW*h and at 90%
> utilization for a 1GWe plant comes to $140M/year. Eyeballing the graph
> and guessing about $.004/kW*h for fuel, O&M would be $110/year.
>
> 10% off for such an offhand estimate ain't bad daestrom. Congrats.
>
> And as the average is the average, how might these numbers improve if
> a half dozen of the worst-performers were ignored?
>
> > Here are some filings from nuclear plant operators though - check it
> > out;
> >
> >
http://gsbwww.uchicago.edu/fac/richard.leftwich/teaching/Trash/More%20Trash/keyspan98_files/filing_raw.htm
>
> I don't see this even discussing nuclear power.
>
> >
> >
http://gsbwww.uchicago.edu/fac/richard.leftwich/teaching/Trash/More%20Trash/baycorp98_files/filing_raw.htm
>
> Interesting that a 3% stake, 34MWe owned by Montaup was bought for 3
> million. $.10/W for resold capacity. Later it discusses a contract
> selling the power for 5.24c/kW*h, so the value of that electricity
> should be about $12M/year, so that stake in Seabrook should have been
> worth at least $30-50M, not $3M.
>
> Something is strange. Daestrom, would you have an opinion on this?

Because the plant's capacity factor and O&M at the time of sale did not
support this? There have been many owners that had just one nuc plant. And
they have had a poor operating record because they only have one plant (they
basically didn't know the best way to 'operate' a nuc). Not the simple
'base-load' operating, I mean the staffing and when to spend money to not
just 'fix' a problem, but fix the cause as well so it doesn't recur.

And their prognosticators believed that capacity factor could *not* be
improved and that it might get even worse? So, with such dire predictions
about it's future, they sell out their share. If you could get some of them
'off-the record', I bet they'd admit they wish they hadn't sold now. Of
course, some sales are based on more intangibles such as political
motivation or deregulation that forces a sale for example.

>
> > They make huge distinctions between their nuclear and non-nuclear
> > components, and point out that the losses they suffer are due in large
> > measure to the massive losses they suffer from the operation of their
> > nuclear assets.
> >
> > This suggests that no one is making money in nuclear energy at the
> > This suggests that no one is making money in nuclear energy at the
> > moment. Which suggests and explanation as to why no new nuclear
> > plants are being built.
>
> There appears to be a general oversupply of generation.
>
> As pointed out in the 10K:
>
> In addition, non-utility wholesale generators of electricity, such
> as independent power producers ("IPPs"), Qualifying Facilities
> ("QFs") and EWGs, as well as power marketers and brokers, actively
> sell electricity in this market.
>
> And in the EIA url I gave above:
>
> First among these in the short term is that many if not most
> regions of the Nation presently have surplus baseload generating
> capacity. This short term base load surplus must be worked off
> before any new nuclear construction can be seriously considered.
>
> If there's an oversupply of baseload, you'd expect costs to be low,
> especially now that cogeneration has become popular and is increasing
> the supply.
>
> > http://www.citact.org/nucrep.html
>
> Which has no predictive value about under liabilities. *Every* single
> one of the reactors predicted to be retired early in 1999-2003 in the
> 'best case for nuclear power scenario' is still operating. Makes one
> question the other claims.
>

In the mid 90's, there were two schools of thought. Some predicted the end
of nuclear power, while a few predicted the opposite.

The first group were often looking at single-plant owners that had poor
track records. Those owners suffered from a different sort of approach to
operations. Often, costs were being controlled at the price of equipment
reliability (i.e. poor maintenance). There are a great many things that can
take a plant off-line that are *not* required for plant/public safety. The
owners would only fund maintenance for items that were required by NRC and
other regulatory requirements.

I know it seems silly, but they figured that if the plant had a poor
operating year, then the only way to 'balance' the books was to reduce costs
and cut back on non-safety-related maintenance. Middle managers were
rewarded for not spending money on maintanence and upper management did not
like to see any budget increases. They didn't see a connection between poor
maintenance of non-safety equipment and poor performance. Many's the time I
heard, "That's not safety-related, so we don't have the money in the budget
to fix it." So the capacity factor suffered and the economic outlook for
such plants under deregulation was grim. In fairness, they were
*predicting* future economics based on past performance. Not an
unreasonable approach, but it ignores possible operational improvements.
(i.e. as one quote, 'The net present value is nearly zero and sometimes even
negative')

Others looked at the future of nuclear in a different way. They said, "The
only way this plant can make money is if it stays on line. And the only way
for it to do that is if we fix all the *non-safety related* stuff that keeps
taking the plant off line." Plant capacity factors *can* be improved while
also controlling O&M costs. And they noticed that a lot of plants were
being auctioned off at 'fire sale' prices (partly due to poor performance,
partly due to deregulation in some areas). The trick for them was to
convince bankers they knew what they were talking about. But after a few
plants, they had established a track record that they could show
investors/bankers.

It doesn't take a lot of accounting to figure out that if you can buy a
1000MWe plant (with possibly 35 years of operational life after license
extension) for $500M, spend another $100M on repairs, consolidate some
services with other plants you own, that you can make some money *if* you
can keep the plant on-line. This is precisely what some owners such as
Echelon, Entergy, Constellation and Dominion have been doing. (look up
their 10k and other public disclosures)

Fixing things like condensate/feed-water systems, turbine controls and some
other systems that are not essential for plant safety, but essential for
operating; they have been able to raise the capacity factor of their units
into the mid and high 90's. By taking a different approach to a lot of
maintenance and doing it while on-line (many plants used to defer *all*
routine maintenance to refueling outage periods); refueling outage times
have shrunk considerably. When I first got out of the service (USN) in the
mid 80's, a typical refueling outage took on the order of +120 days. Some
took even longer, like 6 months. But changes in doing some maintenance on
line has reduced refueling outages to < 30 days as routine. And the plants
have much fewer unplanned shutdowns. Several plants in the NE would have
reached three consecutive years without an unplanned reactor trip by now,
*if* it were not for the 8/14/2003 blackout event.

With these owners, whenever a new problem comes up, the first question is,
"Does this issue, in any way impact on the health and safety of the public
or our workers?" If so, then they address the problem immediately. But the
*second* question asked is, "Is this issue a 'challenge to generation'?
(i.e. does this in any way affect our ability to keep the plant operating
properly at full power, now or in the foreseeable future)" If so, then they
address the problem almost as urgently. They run them like a business, not
a regulated monopoly.

Mr Mook seems to be behind the times about all this and chooses some of the
economic disasters (such as Shoreham) and selective foreign performance (the
former East German plants, but not France or Asian countries with successes)
to base his knowledge about nuclear costs. (that, and some fantasies about
the owners getting some secret gov't funding for keeping nuclear plants, and
using accounting subterfuge to hide costs) He also ignores changes that
have taken place since the most expensive plants were built in the 80's that
would change the economic landscape for a new plant.

daestrom

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