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The Nuclear Power Moratorium

March 09, 2010 By Nathan Paine, Fellow
President Obama is pushing a new nuclear strategy for the United States, and now politicians in Minnesota are calling again for lifting the State's moratorium on new nuclear plants.  Of course, nothing in the debate about nuclear power has changed except the politics.  President Obama's movement on nuclear policy is really nothing more than an effort to reach out to Republicans when Democrats started to slide in the polls.  It also comes at a time when Congress is preparing once again to debate comprehensive energy legislation.  And now politicians in Minnesota want to use this political momentum to lift the moratorium. 

To be very clear, the current moratorium is in place because it was decided that there was no adequate solution to the long-term storage of nuclear waste, not because nuclear plants are too expensive to build.  The cost-effectiveness of nuclear energy is not, and never was, reason to ban construction of new nuclear plants.  The Minnesota Public Utilities Commission (MPUC) is charged with, and is in a better position of, judging the cost effectiveness of nuclear power as part of the certificate of need assessment for a large energy facility.  Lifting the ban, should not, and does not, require a determination of whether Minnesota should pursue a nuclear strategy to meet future demand for power.  This is a decision for the MPUC and the utilities, and they are in the best position to make this determination.  The only reason for the moratorium was concern over storage. 

To truly understand the significance of this distinction and reason behind the ban, it is necessary to know the roles of Minnesota and the federal government in the permitting process for nuclear power plants and the history of nuclear waste policy in the United States.  In 1954, the Atomic Energy Act was passed and the federal government regulated the operation of nuclear plants for the first time.  Under the Act, the disposal of high-level radioactive waste became the responsibility of the federal government.  It is important to note that the Act was based on the premise that the waste could be disposed of safely.  However, environmental concerns have prevented the selection of a site and development of disposal facilities. 

One possibility was the reprocessing of the waste.  However, this was banned by the Carter administration in the late 1970s because it results in weapons-grade plutonium.  The Reagan Administration repealed the ban.  However, the Carter decision has prevailed and all the commercial reactors in the United States employ a once-through process.  Current reprocessing technologies are considered unnecessary, too expensive, and too risky and are not a good option for dealing with the waste problem in the short-term.  Therefore, the spent nuclear fuel is removed and stored temporarily on-site. 

The federal government failed to provide a permanent solution to the storage of nuclear waste.  This failure led to passage of the Nuclear Waste Policy Act in 1982.  This Act acknowledged that federal government was responsible for providing a permanent storage solution.  The Act assigned responsibility for temporary storage to the utilities.  The utilities were also required to enter into a Standard Contract obligating the federal government to begin taking waste in 1998 and the utilities to pay into a fund to cover costs of disposal.  Of course, more than twenty years later there is still no permanent solution for disposal. 

Minnesota's Prairie Island nuclear plant was built in 1973 with the understanding that the federal government would provide for permanent disposal of the nuclear waste or would reprocess the waste.  This has not happened. 

Now fast forward to 1994 when the moratorium was put in place.  Northern States Power needed to build additional temporary storage capacity.  The Mdewakanton Prairie Island Indian Community and a coalition of environmental groups opposed the additional storage.  The groups argued, and the Minnesota Court of Appeals agreed, that the 1977 Minnesota Radioactive Waste Management Act required legislative approval for the additional storage.  This effectively left the decision to the Minnesota Legislature. 

The Legislature approved construction of 17 dry casks and subsequently has approved other requests for more on-site storage.  The Legislature also banned the construction of new nuclear plants.  The Minnesota Legislature was put in a very difficult position.  Initially, it had anticipated that waste would be sent to a federal facility located outside Minnesota.  The federal government failed to live up to its obligation, and the Legislature was forced to either close the nuclear plant or approve additional on-site storage capacity.  The moratorium on new nuclear plants was put in place for a couple of reasons.  The Legislature recognized that the federal government is unlikely to come up with a permanent solution in the future.  Storing nuclear waste in Minnesota is politically unpopular and potentially very dangerous to the health of Minnesota residents, but closure of the Prairie Island nuclear plant was not a viable alternative because it would have greatly impacted the State's energy security and reliability.  So, the Legislature chose the logical solution to approve the additional storage request and ban new nuclear facilities. 

This is why reconsideration of the moratorium on new nuclear plants requires dealing squarely with the waste disposal issue.  The ban was never put in place because nuclear plants are not a cost effective generation source.  Nothing fundamental in the world of nuclear waste storage has changed since the Legislature last reconsidered the ban.  Therefore, lifting the moratorium would essentially mean that the Legislature has decided that storing nuclear waste in Minnesota poses acceptable health and safety and risks to Minnesotans when only last year the Legislature reached an opposite conclusion. 

Storage with dry casks has proven to be an acceptable stopgap solution.  There has never been a single incident at any of these storage sites according to the Nuclear Regulatory Commission.  In the meantime, the hope is that scientists develop advanced fuel-cycle technologies that would allow for safe and efficient reprocessing of the waste.  Minnesota could continue to develop dry-cask storage sites until advanced fuel cycle technologies are developed.  However, last year the Legislature took a different view and upheld the ban.  The hope is that the Legislature will make a well-reasoned decision, not just a political one, this time around regardless of the decision it reaches. 

Incidentally, construction of new nuclear plants in Minnesota is unlikely even if the moratorium is lifted because nuclear energy is not cost effective.  Building these plants puts the taxpayers on the hook for guaranteeing loans, insuring nuclear plants, and financing some of the costs of waste disposal, among other things.  The construction costs are extremely variable.  Reasonable estimates put costs between $2,500 and $8,000 million per megawatt installed, making nuclear power more expensive than alternative generation sources.  

However, nuclear power is attractive for at least two reasons.  It would potentially be a cost effective technology if carbon emissions are taxed at a high level (although coal with CCS technology may be more cost effective).  It is also a reliable base load generation source with stable fuel prices, and the state will need to install additional base load generation as the economy and our demand for power grow.  Wind is not a viable emissions-free alternative for base load power because wind has a significantly lower capacity credit than conventional power sources. 

These considerations, however, should not factor into a decision to lift the moratorium.  The desirability of using nuclear power is best assessed by the utilities and the MPUC.  The job of the Legislature is to decide whether the risks from storing nuclear waste in Minnesota are too great to justify using nuclear power in any circumstances.  The Legislature is in the best position to make this determination and did last year. 

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