By WENDELL J. KELLEY
Why a utility in coal-rich Illinois is going nuclear
Technological inability to remove sulfur is one factor. Another is that eventually fossil fuel will be too valuable as a chemical to burn. And with world going nuclear, Illinois must be able to generate electricity at competitive prices
EDITOR'S NOTE: This magazine has devoted considerable space to energy issues and most recently the role of coal and nuclear fuel in producing electricity (October, pp. 299-305). The problems in this field from the viewpoint of an investor-owned utility executive are discussed in the following condensation of a speech by Mr. Kelley to the annual meeting of the Association of Illinois Electric Cooperatives on September 10 in Springfield.
WE HAVE a common stake in the construction and operation of the nuclear generating stations at Clinton. The Soyland Power Group, consisting of 15 of your cooperatives, will own nearly 8½ per cent of the capacity of this plant. Western Illinois Power Cooperative will own about 5¼ per cent of its capacity. As you probably know, our plans call for construction of two nuclear generating units at 950 megawatts each.
In order to understand the problems and alternatives we are faced with at Clinton, we must understand why a company that is literally sitting upon one of the cheapest and most plentiful sources of energy in the world—Illinois soft coal—would decide to invest hundreds of millions of dollars in nuclear generation. We would like nothing better than to be able to burn this coal to generate electricity. The main reason we cannot count upon it as the sole source of fuel is because the environmental standards imposed by both state and federal regulations cannot be met with present technology.
When coal is burned it gives off ash and oxides of sulfur. We know how to handle the ash. All of our coal-fired units are equipped with electrostatic precipitators that trap up to 99½ per cent of the fly ash so it does not foul up our air. The sulfur content of Illinois coal is high, and we do not yet know how to burn it and meet the environmental standards for sulfur oxides emissions.
366 / Illinois Issues / December 1975
It would take 15 minutes to read the list of agencies—local, state and national—whose rules must be followed before a nuclear plant can be built
Sulfur removal not yet feasible We are also working with a
team — including General Electric,
Foster-Wheeler, Peabody, Exxon
Engineering and Research, and
others — to try to get a pilot project going at the Wood River plant for a new
concept of a pressurized fluidized bed
boiler for burning Illinois coal in such a
way as to meet Illinois environmental
requirements. While neither our company nor
anyone else has the answers at this
time, it is inconceivable, as we look
ahead to the future energy needs of our
territory and our country, that ways and
standards will not be forthcoming to
make full use of the enormous supply of
Illinois coal we are sitting upon. But as
things stand now, we have no choice but
to seek out and develop alternative
sources of energy, especially nuclear. Prices must be competitive Nuclear power can provide such a
base virtually anywhere in the world,
because it is such a concentrated source
of energy that transportation of fuel is a
negligible consideration. The cost of
nuclear power in New England is comparable to its cost in the Middle West,
California, or Florida. The wide
variations in the cost of electricity
produced by fossil-fired generation in
these areas are due to the wide variations in fuel and transportation costs. A reversal in energy picture? Coal as a chemical Coal and nuclear are the only energy
sources available to us in Illinois for
electric generation for at least the rest
of this century. Natural gas and
petroleum are no longer fuels we can
use for base load electric power generation. And, for the reasons I have outlined, we cannot be entirely dependent upon coal, although we do expect it to
be our primary source of energy for the
foreseeable future. That is why our
plans to go nuclear at Clinton are so
very important to our capability to do
our job. Hurdles to overcome The American electric power industry is the most regulated industry in
the country—probably in the world. It
would take me at least 15 minutes to
read the list of agencies—local, state
and national—whose rules and requirements we must meet. In addition
to such agencies as the Illinois
Commerce Commission, the state and
federal environmental protection agencies, the Federal Power Commission,
the Nuclear Regulatory Commission,
and the United States Army Corps of
Engineers, we must meet the requirements of smaller agencies such as
the Trenkle Slough Drainage District,
the DeWitt County zoning board of
appeals, several township highway commissions, and the circuit court of
DeWitt County. This is in addition to
pipeline companies and railroads, and
in addition to all the land-owners involved in acquiring the site. If you want to see for yourself every
step we must go through with all these
and many other agencies, you can go to
the public document room in the Public December 1975 / Illinois Issues / 367
It isn't that we are not trying. In late
1969 and early 1970 we started working on the Cat-Ox sulfur removal device
at our Wood River plant. It was supposed to be in operation in June 1972.
We have invested about $4.5 million in
it, and the United States Environmental
Protection Agency has invested nearly
the same amount. We have to this point
demonstrated that the process is not
feasible. Other utilities have also been
trying to demonstrate other processes
for scrubbing the sulfur oxides out of
stack gases, but none has yet come up
with a satisfactory solution. This will
force us to buy Western low sulfur coal
and haul it more than 1,000 miles for
our Wood River units No. 4 and 5 and
also for our new unit at Havana, which
will come on line in 1978.
The economic, social and cultural life
of Illinois depends upon our ability to
provide electrical power at competitive
prices. As regulated monopolies, people
do not think of utility companies as being in competition with one another.
Actually, we do compete with each
other—regionally and nationally. This
competition exists because the availability and cost of electric power are
such an important ingredient in the
productivity of an area—and in the
gross national product of a country.
Any area or country with abundant
electrical energy has the base for a
productive and prosperous economy.
Similarly, on an international scale,
countries without their own supplies of
fossil fuels now have the potential to
produce electricity competitively with
countries that do have such supplies. As
you might expect, countries such as
Japan, Taiwan, France, India, and
England are building nuclear power
capability. The inherent competitive advantage of countries with fossil fuel
resources—coal, oil and gas—will diminish as nuclear power becomes more
dominant. We may actually see a reversal in the energy picture as the
energy-poor countries adopt aggressive
nuclear power programs out of necessity, while the energy-rich countries—
such as the United States—procrastinate. And that's exactly what we're doing. Even some of the Arab oil countries
are investing their "Retro-dollars" in
nuclear power plants. In doing so, they
are investing now in an alternate energy
source for the time when the chemical
value of oil and gas make them literally
too valuable to burn.
Here in the United States, we must also begin to prepare for the time when
our fossil fuels become too valuable to
burn. Since our oil and gas reserves are
expected to be depleted earlier than the
Arab reserves, coal wilt also become a
chemical in our economy. Remember
that uranium and thorium—the nuclear
fuel resources—have essentially no
other developed uses except as sources
of energy.
I wish I could tell you that we had
clear sailing ahead to meet our construction schedule at Clinton. We have
overcome a great many hurdles, but
there are still formidable hurdles,
possibly genuine road-blocks, that we
must overcome.
'The safety factor upon safety factor applied to a nuclear plant is not applied to any other human endeavor'
Library in Clinton, where a copy of
every document involved in the licensing process is on file and available to the
public. Moreover, public hearings are
required as a part of this licensing
process. All of our decisions are subject to question by virtually anyone who
wishes to question them. Safety and the environment We were caught in a cross-fire of
bureaucratic disagreement in which one
federal agency approved a 96 degree
maximum water discharge temperature
while another federal agency and a state
agency required 90 degrees. We simply
couldn't meet the 90 degree requirement
without a major revision of plant design
that would require an unacceptable
schedule delay and a substantial cost increase. All federal agencies have now
approved the 96 degree discharge
temperature and we recently received a
variance from the state. As a result it
now appears that we will be able to
proceed. But this one issue took 11
months to resolve. NRC's "What if" policy The Nuclear Regulatory Commission staff follows a "what if policy in
which they attempt to identify every
possible problem that could arise in a
nuclear power station and then predict
the extent of the result. They worry that
they are not sufficiently imaginative to
dream up every unlikely possibility so
they hire consultants to help them. In
this way, they create the likelihood of
earthquakes, tornadoes, hurricanes,
floods, etc., that are larger and more
destructive than any that nature has
been able to produce in the history of
the site. They also create new concepts,
such as the "maximum credible accident." They analyze the total reactor piping and components system to determine which pipe break would be the most severe. They then assume that this
pipe breaks at the worst possible location and that the pipe springs apart sufficiently so that the water or steam can
flow out of both sides of the break totally unrestricted. Then they throw in the
assumption that all other systems and
conditions are in the worst possible condition. After all these assumptions have
been made and the results applied in
their severest form, they ask us to prove
that the plant will survive and that there
will be no failure of the nuclear fuel or
containment. The safety factor upon safety factor
applied to a nuclear power plant is not
applied to any other human endeavor.
If a similar level of conservatism were
applied to our modes of transportation,
we would have no automobiles, buses,
trains, airplanes, or even horses for
transportation, all of which have killed
people since their first use. This super-
conservatism is resulting in higher
power costs in our country which in
turn, will put us at a competitive disadvantage with other countries. To make
our nuclear power competitive, I believe
we must apply a more normal risk
evaluation to nuclear power generation. Rates and service Electric customers won't wait Other manufacturing and service
companies can maintain their profitability in many ways not available to us.
If one line of products becomes unprofitable, they can switch to another.
If the price of almonds gets too high,
the candy manufacturer can put fewer
in each piece or switch to peanuts.
When the auto industry found demand
falling off for its profitable big cars,
it switched capacity to smaller cars and
raised the prices to maintain their profitability. Now with their inventory up
and demand off, they have cut costs by
laying off thousands of workers and
stopped production of many lines. That is the basic law of supply and
demand in a free market—and the way
it is supposed to work. But supply and
demand does not determine our costs,
prices, or managerial decisions. Our
costs are those of the market place, but
the prices Illinois Power can charge are
set by law as determined by the
Commerce Commission. Need $1.2 billion The only way Illinois Power can raise
these amounts of money is to earn a sufficient return on existing investments so
that additional capital can be attracted.
Our projections further show that the
only way we can do so is to receive frequent and adequate rate increases. The
only alternative is to stop new construction which will mean as our present capacity is utilized there will be no more
for future growth, future homes, future
places of business, and industrial
growth. 368 / Illinois Issues / December 1975
Most of the steps we must take are
merely tedious and costly, but a number
of potential roadblocks ahead may
make it impossible to proceed. Most of
these roadblocks grow out of concern
for safety and the protection of the environment. These concerns themselves
are legitimate and understandable. We
share them, and I think we know more
about the problems and are doing more
to solve them than our emotional critics
or the entrenched bureaucrats. The entire Clinton project could have been
wiped out by differing bureaucratic
regulations and interpretations regarding the effects of a few degrees of water
temperature on the ecology of a man-made lake that does not yet exist.
We face more complex problems with
respect to the safety evaluation of nuclear plants.
I have spent this much time telling
you about our hopes and fears for Clinton because I happen to believe that the
solution to this problem—and to most
other problems those of us in the electric energy business must solve—depends ultimately upon our customers applying their good sense and judgment to the facts relating to
our ability to provide them with the service they must have.
If all of our customers want service at
the same time, we cannot tell them to
get in line and wait. We must have sufficient capacity to serve everybody
simultaneously all they need. This
means we must have generation and
transmission capacity all the time—
night and day, winter and summer—to
meet peak demands whenever they
occur. We cannot sell what we have
on hand and close up when we are sold
out.
Our construction program over the
next five years will require about $1.2
billion. It is impossible to finance this
expansion on a current basis. It appears
that we may have to go into the open
money market during the next five
years for nearly $900 million. This
figure will be reduced to the extent that
future rate increases enable us to
generate more cash.