By letting states put a hold on nuclear power plants, has the Supreme Court pushed our utilities toward coal?
Are Californians, whose nuclear moratorium law the Supreme Court upheld in April, guilty of protecting their own environment at the expense of other states, which will take the pollution from new coal plants while California takes the electricity?
Suprisingly, the answer to both questions is a solid "No."
The principle that states are entitled to worry about the economic side of nuclear power, which formed the basis of the Supreme Court's decision, is hardly a surprise. Since all of us pay the bill for power plants, there has to be someone, acting on our behalf, who is able to play the careful shopper.
What is surprising is how far the principle of careful shopping has already led in the world of electricity--in the places where it has been taken seriously--and how deeply the principle threatens that world's conventional assumptions. Economic scrutiny will shrink not only nuclear energy, but coal as well.
The two giant utilities that brought this issue to court in the first place claimed that state concerns about nuclear waste disposal should not be allowed to stop them from building nuclear power plants. Pacific Gas & Electric and Southern California Edison sued to overturn a 1976 California law that refuses to license new nuclear plants until the federal government provides an answer to the long-term disposal problem.
But even as the companies' lawyers were pursuing their case in the lower federal courts, the companies' managers were being pressed to justify the overall economic soundness of their construction plans, under other state laws that date back most of a century. By the time a federal appeals court had decided that uncertainty about nuclear waste was one more price-tag issue that the state could consider, the two companies had already dropped their last pending certificate application for a large-scale power plant of any kind. (It was coal rather than nuclear, and an out-of-state location put it beyond the reach of California environmental laws. But it could not avoid state questions about cost.)
Today, economic analysis has led both companies to plan their growth around smaller-scale, more quickly built sources of energy, a diverse collection that includes cogeneration, wind and solid waste, as well as maximum use of conservation investments and load management. Scoffed at only a few years ago as impractical and "soft," these alternatives now account for several nuclear power plants' worth of new energy, in the plans of Pacific and Edison alone.
All of the alternatives are indigenous to California itself. The energy is created in the same areas where it is consumed.
To the extent the companies have needed regulatory permission to put things like conservation investments (paying for their customers to insulate, for example) into the same category as coal plants, in order to earn a comparable return, their Public Utilities Commission has gladly gone along--again, because economic analysis shows it to be a better buy from the customers' point of view.
Because of the alternatives under development, the Supreme Court's ruling--despite its broad national impact--is unlikely to matter much to the utilities that actually brought the case. As a PG&E spokesman explained, the day after the ruling was announced, "We don't need any large-scale power plants right now."
California is not the only state to find surprises through economic scrutiny of power plant proposals, and the possible alternatives. New York, Wisconsin, Missouri, Idaho, New Hampshire, Arkansas and Oregon are among the others. The list will grow as state regulators, and their constituents, learn how to use the available economic tools.
As no investor on Wall Street needs to be told, the uncertainty of an investment is a factor in its cost. The Supreme Court recognized that the waste disposal issue creates uncertainty for investments in power plants. Many other issues do too, such as the very long lag time between commitment and completion which all large- scale power plants share, coal as well as nuclear. That uncertainty, too, is a state's business to consider.
Even safety issues create valid economic concerns for the states. Standards for nuclear safety may be beyond the states' reach, as a majority of the Supreme Court suggested. But if a state cannot adjust the safety standards, it becomes ever more important for each state to examine the cost of living with such standards--including the cost of uncertainties that the standards create--and for each state to make its own decision as to whether that cost is worthwhile.
The ideological commotion over nuclear power, as rambunctious in California as anywhere, has diverted public attention from an economic reassessment that has been quietly going on at the same time. Safety, waste disposal, lead times, appropriateness of scale, a comparison with alternatives: all these are economic issues. Treating them as such is a process already under way.
State obligations to consider such economic issues were on the books long before nuclear power came into existence. The Supreme Court has dusted off those obligations, and reminded all sides that economic regulation, on the most traditional pocketbook grounds, is a force powerful enough to accomplish what ideology has not