downsize nuke indus. & hp jobs

[stephens@lamar.ColoState.EDU (John Stephens)]

> I am a supporter of nuclear power, and I am afraid of another nuclear plant
> accident that could mean the end of the industry.
> I don't believe it can survive an important accident in the aftermath of TMI,
> Chernobyl, and its own marginal financial condition.

With regards to the financial conditions, a couple of economists have done
some excellent research as to what ails the commercial nuke power industry.
The abstracts are below, I seem to recall pulling these off the nuke home
web page.

Title: A Dynamic Programming Model of U.S. Nuclear Power Plant Operations
Author: Geoffrey Rothwell, Department of Economics, Stanford University
rothwell@leland.stanford.edu John Rust, Department of Economics, University of Wisconsin
jrust@thor.econ.wisc.edu
Abstract1: This paper presents a dynamic programming (DP) model of an
electric utility's optimal policy for operating a nuclear power plant (NPP).
The utility chooses the level of capacity utilization of the NPP as a
function of signals about the NPP's current operating state. In each period
the utility must determine whether or not to operate the reactor, or shut
it down for preventive maintenance or refueling, or to permanently close
the plant. Maintenance performed during periodic refueling outages partially
``regenerates'' the NPP, reducing the risk of unplanned forced outages in
succeeding periods. Using monthly data on U.S. NPPs in the post-TMI era we
estimate parameters of the utility's profit function, the failure processes
that lead to unplanned forced outages, and the parameters governing the
duration of refueling outages. These parameters imply an endogenous distribution
of operating spells and capacity utilization levels that depend on the NPP's age,
signals the operator receives about the NPP's current operating state, and the
duration since last refueling. The estimates of the DP model reveal that utilities
appear responsive to NRC regulation insofar as they impute a very high cost to
unplanned and forced outages. Utilities are also highly averse to causing unnecessary
wear and tear on their NPP's caused by stop/start operation of their NPP's including
planned and unplanned outages. Overall, the DP model yields very accurate predictions
of nuclear power generation including the impact of the relatively rare event of NPP
decommissionings.

Title: Optimal Response to Shift in Regulatory Regime: the Case of
the U.S. Nuclear Power Industry
Author: John Rust, Department of Economics, University of Wisconsin jrust@thor.econ.wisc.edu
Geoffrey Rothwell, Department of Economics, Stanford University rothwell@leland.stanford.edu
Contact: jrust@thor.econ.wisc.edu
Abstract2: This paper studies the impact of the March 1979 Three Mile
Island (TMI) accident on the regulation of nuclear power plants (NPPs)
and its consequences for the operating behavior and profitability of the
U.S. nuclear power industry. We treat the TMI accident as a ``natural
experiment'' that caused a sudden, unexpected, and permanent increase
in the intensity of safety regulation by the U.S. Nuclear Regulatory
Commission (NRC) and a shift toward increased disallowances of
operating costs by state and local public utility commissions (PUCs).
We analyze the nuclear power industry's reaction to this shift in
regulatory regime using detailed monthly data on NPP operations
collected by the NRC. We find that the industry has been very responsive
to NRC regulation insofar as they impute a significantly higher cost to
``imprudent'' operation of a reactor in the post-TMI period than in the
pre-TMI period. We find that while NPPs appear safer in the post-TMI
period (in terms of having a lower rate of forced outages), they are
also substantially less profitable: over 90\% of the expected discounted
profits from continued operation of existing NPPs have been eliminated
in the post-TMI period. Interestingly, we find that the hypothesis of
expected discounted profit maximization provides a much better
approximation to NPP operating behavior in the post-TMI period than
in the pre-TMI period.

However, the nuclear power industry will survive. It's just not that
complicated, people in the U.S. will come to hard terms with how
much they'll pay to power their car and heat their homes in the next
several decades.  Several other countries have had to, watching the
price of a gallon of petro soar $5-10. Possibly, we will come to terms
with the fact that environmentally correct is not necessarily
politically correct, and not succumb to anachronistic U.S. foreign
policy of imperialism. In this thought, possibly so-called environmentalists will
realize that nuclear power is much more environmentally correct than
burning precious fossil fuels into our biosphere.  It is more a question
of what are we going to do about it in the meanwhile.  There's half
a dozen things off the top of my head that could be done to help
promote the nuke power industry.  It seems there are quite a few
people of the HP profession who have recently realized that they
hold a stake in the outcome, when really they were a stake-holder
all along.

John Stephens
another still unemployed HP graduate...