Oklahoma bill offers nuclear power incentives

More than 25 years after Oklahoma's only nuclear power plant proposal ended in failure, state lawmakers are touting nuclear power as an alternative energy source with legislation that would streamline the state permitting process for a nuclear plant and give utilities new incentives to build one.

The proposed Black Fox Nuclear Power Plant near Inola was the focus of citizen protests and legal battles before it was abandoned in 1982, and nuclear power is again running into opposition in the state. But this time safety is not the central issue in the debate. It's the enormous cost that has most people concerned.

"It's the wrong idea at the wrong time," said Sean Voskuhl, associate state director of the AARP in Oklahoma.

The senior advocacy group estimates that a nuclear power plant would cost between $6 billion and $10 billion and cause consumer rates to rise 20 percent to 40 percent, based on an analysis of similar legislation in other states.

Tom Schroeder of Oklahoma Industrial Energy Consumers, an alliance of large energy consumers like manufacturers, refineries and steel producers, said the bill erodes the ratemaking authority of the Oklahoma Corporation Commission and "provides a blank check for utilities to recover costs from ratepayers."

"The cost of electricity plays a very important role in the ability of these companies to compete in domestic and world markets," Schroeder said. "We want to insure that legislation will not adversely impact the competitiveness of these industries."

Voskuhl said the bill under consideration by Oklahoma lawmakers would make it easier for utilities to raise rates to recover construction costs while a nuclear power plant is being built and allow them to recover costs even if the plant is abandoned before it is finished.

"They want to shift the burden from the stockholders and the companies to the ratepayers. Even if the plant's not built consumers will be stuck with the bill," Voskuhl said.

But proponents of nuclear power said it is a stable, emission-free alternative to traditional fuels like oil and natural gas, whose costs have risen in recent years, for meeting the state's growing demand for electrical power.

"Long-term, we're going to have to pay for energy some way or the other," said Rep. Scott Martin, R-Norman, author of a nuclear power bill now pending in the Oklahoma House.

"We believe that if we can get a plant online, it will provide a more cost-effective, clean form of power," Martin said.

Martin's measure, modeled after similar bills in states like Virginia and Florida, creates a cost-recovery mechanism for utilities that are building a nuclear power plant and a task force to study tax incentives for a nuclear plant.

Nuclear power generates one-fifth of the nation's power, and there are currently 104 nuclear plants in more than 30 states including Arkansas, Kansas, Texas and Missouri.

But no nuclear plants have been built in the past 30 years since an accident at the Three Mile Island Nuclear Generating Station near Harrisburg, Pa., resulted in a partial core meltdown in a nuclear reactor.

A nuclear power plant is unlikely in Oklahoma without assurances that regulatory agencies like the Corporation Commission will support the utilities behind it, said Bud Ground, manager of governmental and environmental affairs for Tulsa-based Public Service Company of Oklahoma, developer of the failed Black Fox plant.

"The assurance of rate recovery. The assurance that if the commission approves it they're not going to come back at a later date and try to disapprove it," Ground said.

Raising consumer rates to help pay construction costs would not give a utility a return on everything it invests in a nuclear power plant but would help pay interest costs on the money it borrows, Ground said.

"It does give you some cash flow during that long construction period," he said. It also prevents consumer rate shock when the plant is completed and goes online."

"We look at the legislation as a starting point," said Brian Alford, spokesman for Oklahoma Gas and Electric Co., Oklahoma's largest utility. "We fully realize that it's going to take continuing effort to get a bill that everyone can be happy with."

OG&E has no plans to build a new fossil fuel plant until at least 2020 and has not proposed a nuclear power plant. Instead, the utility will concentrate on managing the growth in demand with conservation programs and harnessing renewable energy resources like wind power, Alford said.

Industry experts say it would take at least a decade to license and build a nuclear power plant. A total of 26 applications for new reactors have been filed with the Nuclear Regulatory Commission in the past two years but the agency does not expect to issue a license any earlier than 2011.

"If the state wants to look at nuclear and to pursue nuclear, now is the time to begin that process," Alford said.

For now, nuclear power appears to have support on the three-member Corporation Commission, which regulates utilities and the oil and gas industry.

"It's highly efficient," said Commissioner Jeff Cloud. "It runs at high capacity levels. It emits no greenhouse gas."

Nuclear power would allow a utility to diversify its fuel portfolio and would be an incentive for energy-consuming industries because it would produce power at low cost, Cloud said.

"This to me is planning for the future," said Commissioner Dana Murphy. "It's something we have to be open minded to."

Consumer rates will be a key consideration in deciding whether a nuclear power plant is right for Oklahoma, Ground said.

"That's extremely important to us. The commission has to be convinced that it is the right thing for consumers," he said. "We have to have safe, reliable, low-cost power."

But Schroeder said only a thorough economic analysis will determine whether a nuclear plant is warranted.

"We believe that the bill requires substantial revisions," he said.

Voskuhl added: "We hope our concerns are addressed for the ratepayers of Oklahoma. But that remains to be seen."