[ RadSafe ] Shoreham and Rancho Seco and Nuclear Fleet Performance

Thomas Potter pottert at erols.com
Wed May 18 19:53:20 CEST 2005

My recollection is that the NRC operating license issued for Shoreham
included a condition that limited power to 5%, and that an increase to 100%
was not a certainty.  Failure to get approval of 100% power would have led
to LILCO bankruptcy.  This regulatory uncertainty surely helped to shape the
"buyout" offer and LILCO's response.    

I would characterize the settlement deal as a partial buyout and a partial
palm-off.  LILCO shareholders had to eat $1.4 billion.  As mentioned
previously, U.S. taxpayers also ate another large fraction of the cost in
the form of $3.7 billion in U.S. tax write-offs.  Rate-payers ate the rest.

The statement that LILCO stock "soared" doesn't tell the whole story.  The
stock did rise substantially with the settlement, but only from a very low
base.  A very large fraction of the value of the company was permanently
lost, even after the bounce at the end.  

Thomas E. Potter

-----Original Message-----
From: George J. Vargo [mailto:vargo at physicist.net] 
Sent: Sunday, May 15, 2005 12:38 AM
Subject: [ RadSafe ] Shoreham and Rancho Seco and Nuclear Fleet Performance

A few comments on the recent nuclear power thread, and not in response to
any particular posting.

Shoreham indeed finally received its full power operating license after many
years of struggling with construction delays, serious quality control
problems and a protracted battle over the efficacy of its radiological
emergency preparedness plan.  What sealed the deal on Shoreham's closure was
essentially a buyout wherein the Long Island Power Authority (LIPA; a
creation of the New York State Legislature formed to facilitate Shoreham's
demise and provide alternative sources of power generation and transmission
for Long Island consumers) took ownership of Shoreham for the sole purpose
of decommissioning it.  At the same time, the NY State Public Service
Commission granted the Long Island Lighting Company (LILCO, the private
electric utility that constructed Shoreham) rate increases of 5% per year
for 10 years.  Given such a financial incentive and the chance to rid itself
of the liability of Shoreham, it would have been irresponsible for LILCO's
Board of Directors not to have accepted the package.  LILCO's stock prices
soared, just as electricity rates did on Long Island.


George J. Vargo, Ph.D., CHP
Senior Scientist
MJW Corporation
610-925-5545 (fax)
vargo at physicist.net

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