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FAIR COMPETITION CHALLENGE; Nuclear versus renewables

The Center for Energy Efficiency and Renewable Technologies (CEERT) issued an Earth Day challenge to California's largest utilities to surrender subsidies for nuclear reactors and submit to competition, as the most cost-effective approach to meeting America's commitment on reduction of air pollution associated with the global climate change threat. Recovery of future operating, capital and decommissioning costs is guaranteed for nuclear but not renewables.

California's largest utilities were issued an Earth Day challenge to surrender subsidies for nuclear reactors and submit to competition. This gauntlet was thrown down by the Center for Energy Efficiency and Renewable Technologies (CEERT) on April 22. The Sacramento based organisation contended that fair competition was the most cost-effective approach to meeting America's commitment on reduction of air pollution associated with the global climate change threat.

CEERT represents America's leading environmental groups as well as wind companies such as Kenetech and Zond Systems. Its challenge countered arguments from Dan Fessler, president of the California Public Utilities Commission (CPUC) that the state's nuclear power plants are needed to maintain California's compliance with the Rio climate change treaty which mandates reducing global warming gases to pre-1990 levels.

Californians pay some of the highest electric rates in the US, due, in large part, to the private utilities' investments in three expensive nuclear plants: San Onofre in Orange County, Diablo Canyon in San Luis Obispo, and Palo Verde in Arizona. The CPUC has blessed proposals by Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric to insulate these nuclear plants from competition by guaranteeing payment of the ongoing operating costs and future capital additions, as well as sunk capital investments in these expensive sources of power.

The hidden truth

The sunk capital costs alone are estimated at more than $4 billion for the three plant and the guaranteed recovery of future operating and capital costs will cost customers an additional half billion dollars or so annually for the next five to seven years. The costs to decommission the plants is not known, but will also be paid by customers.

CEERT points out that while this guarantee had been made on nuclear, renewables have been left in limbo by the CPUC. "Despite being the first choice of California citizens, many renewable energy facilities are closing and companies that have led the world in developing these clean power sources teeter on the verge of bankruptcy," adds the organisation. Instead it proposes that starting from January 1 next year, California's investor-owned utilities give up nuclear operating subsidies granted through CPUC decisions and join renewable power producers in an open and fair competition to supply "clean" electricity to California's electric customers. The state's existing nuclear and renewable plants should bid directly against each other for the right to serve state consumers. If the nuclear utilities are unwilling to join in this non-fossil competition, payments afforded existing renewable power producers should be set at the same level as the payments recently afforded Edison shareholders for the San Onofre nuclear reactor. "The utilities, and the CPUC, have a choice. Either they can begin a fair and open competition for "non-fossil" power, or they can grant non-discriminatory treatment of renewable producers during the transition to competitive markets," says CEERT.

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