Stop McNukes

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

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.

Citizens Awareness Network, 413-334-5781, can@; Nuclear Information
and Resource Center, 202-328-0002, [email protected], Michael
Steinberg is an investigative journalist and author of
Millstone and Me:
Sex, Lies and Radiation in Southeastern Connecticut