Redefining a word eases reactor policy

Narrower definition of `construction' helps Constellation avoid nuclear plant delays

September 29, 2007|By Bloomberg News

On tree-lined bluffs overlooking the Chesapeake Bay, where anti-nuclear activists won a landmark environmental victory 36 years ago, Constellation Energy Group Inc. is engineering atomic power's comeback.

This time, even if there are protests, bulldozers will roll.

That's because the Baltimore company and its allies have found a way around a long-standing regulatory policy they say added a year or more to construction times for nuclear plants. In April, the federal Nuclear Regulatory Commission agreed to industry demands that it reduce its oversight of initial work at reactor sites.

By narrowing its definition of the word "construction" in agency rules, the NRC put off the required public hearings and permits that have waylaid past projects.

The untold story of how the energy lobby and the federal government worked to clear a path for new reactors - backed by an NRC commissioner seeking a job in the industry - reveals one way pro-nuclear forces have stolen a march on environmentalists.

"It was a very smart, strategic move to work in the background before ever submitting a new proposal for a plant," says Steve Warner, 42, founder of the anti-nuclear Chesapeake Safe Energy Coalition, who says he was caught flat-footed.

Utilities and the Bush administration say they want new reactors on line by 2015.

Power companies are rushing to take advantage of federal tax credits and loan guarantees in the 2005 energy act.

The NRC says it expects to receive as many as 21 applications to build 32 new reactors, the first of which was filed Tuesday by NRG Energy Inc. of Princeton, N.J.

Constellation, the largest U.S. shareholder-owned electricity wholesaler, is proposing to build up to seven new reactors through a joint venture with government-owned Electricite de France SA, Europe's largest power producer.

The first would be at its Calvert Cliffs nuclear plant near Lusby in Calvert County, where the company operates two 1970s-era nuclear generators.

Constellation owns the Baltimore Gas and Electric Co. utility, two more nuclear power plants in upstate New York and fossil fuel plants in four states.

Building a reactor will take an estimated $4 billion and seven years, including 42 months of regulatory reviews. To save time and expense, utilities have been working with the NRC through their trade group, the Nuclear Energy Institute in Washington, to streamline the federal licensing process.

"We recognized that we did have these unnecessary barriers that were not allowing people to move forward," says former NRC Commissioner Jeffrey S. Merrifield, who voted for the rule change while seeking a new job under an unusual arrangement designed to avoid conflicts of interest.

In July, Merrifield, a 43-year-old lawyer and former Republican congressional staff member, joined the nuclear plant builder Shaw Group Inc. as a senior vice president.

The construction limits on nuclear power plants date to 1971. At the time, Johns Hopkins University scientists warned that heated cooling water discharged from a reactor into Chesapeake Bay might harm blue crabs.

Conservationists failed in their efforts to block construction at Calvert Cliffs. Yet they won a federal appeals court decision that year that forced the NRC's predecessor, the Atomic Energy Commission, to consider the environmental consequences of a reactor's construction at future sites.

A public hearing and a construction permit were required before the first shovelful of dirt was lifted. The stricter reviews slowed licensing, especially after the partial meltdown at Three Mile Island in 1979.

Holding costs in check is essential in the nuclear power industry's current effort to become more competitive with coal and natural gas. The cost of building an atomic plant is 41 percent more than that for a conventional coal plant. Even with lower fuel costs, the electricity a nuclear plant produces will cost about 13 percent more than power from a coal plant.

Constellation lawyer Carey W. Fleming was complaining about the regulatory obstacles the industry faced during a meeting at the Nuclear Energy Institute's headquarters in April 2006 when a potential solution emerged.

"My question was: What's the definition of `construction?' Can we look at that, and, in fact, redefine that?" says David A. Repka, an energy attorney at Winston & Strawn LLP in Washington.

By redefining "construction" to exclude excavation, road building and the erection of some cooling towers, the NRC could speed building without violating the 1971 court order, according to a brief Nuclear Energy Institute lawyers presented the government in May 2006. Already grappling with a nearly decade-long overhaul of plant licensing, the commission accepted the industry proposal last October and expedited the adoption process.

Andrew J. Kugler, an NRC environmental project manager, protested the rule would exclude from regulation "probably 90 percent of the true environmental impacts of construction."

On April 17, the Nuclear Energy Institute got what it wanted. The NRC approved the new construction rule in less than six months, compared with the 11 years it had needed to produce a new drug-and-alcohol testing procedure for nuclear plant workers.

An NRC analysis supporting the change pointed out that any pre-licensing construction still would be reviewed before a final permit is issued. The rule will go into effect 30 days after it is published in the Federal Register, probably later this year.

On July 13, Constellation took advantage of the new rule, filing a 4,855 page partial-license application that details plans to build a third reactor at Calvert Cliffs.

Constellation Vice President George Vanderheyden, the top executive developing the new reactors, says construction probably won't begin until 2009. Yet, he adds, "We are trying to preserve our option to move as fast as possible."

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