Before hiring a plumber, electrician or a nuclear plant builder, it is best to look up their experience and past performance.
If Iowa legislators were to check MidAmerican Energy's résumé on nuclear power plant construction and operation they would find a blank sheet of paper.
MidAmerican gets about 11 percent of its electricity from nuclear power, but that plant - Quad Cities Nuclear Power Station - was built under a fixed price of $90 million per unit in 1972 by General Electric. It has been operated by Commonwealth Edison (now Exelon Energy) since its completion.
Now MidAmerican is seeking legislative approval of a bill that would enable the utility to charge customers and earn a profit on funds spent building a nuclear power plant prior to its completion.
Why would a utility with no experience step into the complex and highly regulated world of nuclear power?
One of the large carrots is federal incentives being dangled by the U.S. Department fo Energy to those companies and utilities taking on the risk of building the next generation of nuclear power plants. The other incentive is the ratepayer backstop being sought by MidAmerican in the state legislature. The bill (H.F. 561) would assure the utility a return (profit) on funds invested in such a project regardless of the huge unknowns for such a facility, or, even if it is never completed.
The only protection for ratepayers would be five yet-to-be-hired bureaucrats at the Iowa Utilities Board who would have the unenviable task of analyzing construction bills for such a first-of-its-kind nuke plant. . . after the money has been spent.
Ratepayers already are on the hook for $15 million to "study" the feasibility of building a nuclear reactor in Iowa. Study expenses so far have included $44,000 for perception surveys of Iowans toward nuclear power.
MidAmerican apparently would prefer not to wait for the study findings, due in late 2013, pushing for approval of the ratepayer backstop at the state legislature for the second straight session.
Before passing any incentives for MidAmerican to pursue nuclear power, legislators should look closely at why only a small number of utilities run most of the nation's nuclear power plants.
Those firms, like Exelon, have decades of experience in building and operating such complex and highly regulated facilities. They are able to share support services for training, security and regulatory oversight among multiple plants.
Since MidAmerican has zero experience in nuclear power plant construction and operation, it would face a steep learning curve and much higher costs than would an Exelon Energy with built-in staff and expertise.
Even smaller modular reactors would come with a host of additional costs and requirements for training, security, regulatory oversight, used fuel storage and decommissioning costs.
If MidAmerican wants to pursue its nuclear ambitions, it should assume the full risk of such a venture. Only then will there be the proper incentives -- and disincentives -- in place to assure appropriate decision-making by executives of the privately held utility.
