From: John De Armond
Subject: Re: Winter Firewood
Date: Fri, 15 Dec 2000 17:07:12 -0500
"George E. Cawthon" wrote:
> Nuclear power has never been a bargain and even less so in later years,
> just ask WPPSS that folded in Washington and tremendously raised the
> rates for all companies that bought into it.
Nuclear, even in the face of 20 years of crushing over- and
ill-regulation (what do you think doomed WPPS, George?) is still
cheaper than coal, is about par with oil (depending on what the
camel jockeys do) and is now about par with natural gas. Since
almost all the cost was front loaded during construction and because
the fuel costs relatively nothing, the cost gets cheaper the longer
the units run. With most large capacity plants now planning some
sort of license extension program, nuclear will get cheaper and
cheaper, particularly as the next round of air quality (sic)
insanity gets forced on the dirt burners. If you don't believe my
opinion, you can always go to EPRI and get the hard numbers. They
do have a web site.
> John: I don't know how you get your 5 cents/kWh. You must have a hell
> of a subsidy and I don't mean just the TVA subsidy. Power in the
> Pacific Northwest has been the lowest in the Nation for years because of
> the hydropower component. Washington Water Power was the lowest for a
> long time until the WPPSS fiasco. Idaho Power has been the lowest or
> second lowest for sometime and it's more than 5 cent/kWh.
TVA's power program is self-sustaining and self-financing. And
since the TVA-haters have gotten some of their way in Congress, TVA
power revenues now pay for most of TVA's non-power activities.
Things like building and maintaining dams and recreation areas.
Things mandated by Congress and in other areas of the country,
funded from federal tax dollars through BLM, Corp of Engineers,
etc. The only semi-subsidy that TVA ever got was the ability to
borrow money directly from the treasury at the same interest rate
the feds pay. That's a tiny benefit in the big scope of things but
one the anti-TVA types trot out regularly.
The way TVA keeps power costs so low is not having stockholders and
having employee salaries tied to the Civil Service pay scale. Not
having stockholders means much more than just not having to make a
profit. It means that they don't play any of the big corporate
games (such as acquisitions, mergers and such) that run up corporate
costs in the private sector. TVA can spend its energy making power
instead of playing stock market games. Power rates are set by the
Board of Directors according to a formula dictated by Congress. The
board members are appointed by the President (damn, it's sure nice
to be able to capitalize that title again!) and confirmed by
congress. Since they serve at the pleasure of the President, it is
in their best interest to keep him happy and doing that typically
means keeping the residents of the service area happy. Low rates do
Another important ingredient of the low power rate mix is TVA's
ability to basically bully fuel suppliers by virtue of their size.
TVA even owns some coal mines, though they are currently
implementing a very bad decision to divest themselves of them. When
you collectively burn a unit train of coal every minute or so, you
can get slightly better prices than can some small utility like Met
Ed (the original owners of TMI) who had only a couple of plants.
A final ingredient is that almost all the local power distributors
in Tennessee are owned and operated by either the municipality or by
power co-ops. Both are non-profits and both are controlled by
elected officials. My power company, Cleveland Utilities, is owned
by the city and is kept on a very close leash cost-wise.
Finally, there is the price cap. After TVA's reckless spending and
spiraling rate increases under Carter and Ford and some of Reagan,
the board promised no rate increases for 10 years. They kept the
promise. It expired 3 or 4 years ago. The board recently committed
to another 5 year cap. Once the price cap becomes the law of the
company, policies can be set to achieve it. In TVA's case, it
involved mostly slashing employees and office space. TVA has barely
half the employees it had 10 years ago. They've consolidated
duplicate divisions and outsourced specialty tasks such as turbine
overhauling, eliminating other whole divisions.
I think TVA's power rates are STILL too high, since their cost of
generating is something like 2.5 cents/kwh. Once the power is out
the door, I don't believe it should require a 100% markup just to
distribute it. But I'm not going to gripe too much. 'Specially
after moving back from Georgia where I paid 11.5 cents/kwh during