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The Prospects of Nuclear Energy in the U.S.

Nuclear Power Plant
Now that the anniversary of the Three Mile Island incident is upon us, let’s take a few minutes to examine the status of our nation’s nuclear energy prospects.

The U.S. has not broken ground on a nuclear power plant since the 1970’s, though the Nuclear Regulatory Commission recently green-lighted the building of two new nuclear complexes — the twin Vogtle reactors near Augusta, Georgia, and a pair of reactors in South Carolina. With a price tag of $30 billion dollars for the two locations, and several other companies laying out hundreds of millions of dollars for the planning of other reactors that may or may not get to the groundbreaking stage, we may be witnessing the onset of a nuclear renaissance in North America.

The U.S. nuclear industry has had three substantial hurdles to get past in recent years: the unimaginably low price of natural gas, the ongoing economic recession, and last year’s Fukushima disaster.

The industry does, however, have two things going for it: the increasing demand for electricity and the worries (founded, or not) of global warming. In the recently published book “The Doomsday Machine,” authors Cohen and McKillop state “Even if global warming science was not explicitly invented by the nuclear lobby, the science could hardly suit the lobby better.” Along those lines, the industry has recently begun an ad campaign aimed at improving its image by stressing the fact that nuclear power is by far the largest zero-carbon energy source in the United States.

In fact, even the Japanese incident is being pointed to as a reason to move forward with building new reactors. The nuclear power plants being built in Georgia and South Carolina will be utilizing the AP1000 model, where the letters stand for “advanced passive,” because the emergency cooling will rely on readily occurring forces like gravity and evaporation, as opposed to the Fukushima model that used pumps and valves that required electricity to operate.

Westinghouse Electric, the maker of the AP1000 line, argues “If an AP1000 had been there, we wouldn’t be having this discussion today; that plant would be back on line.” Even General Electric, which designed the Fukushima reactors, claims the same for its new “passively safe” design.

The jury is still out as to whether or not these two nuclear plants are the beginning of a new trend in meeting America’s energy needs. The headwinds facing nuclear power are still present, and will need to be overcome before our nation’s nuclear power industry can assert the renaissance has begun in earnest.

TXU Continues To Lose Customers

TXU ProblemsAccording to TXU’s latest numbers, their client base has dropped another 6%, but the company says it won’t chase prices. Instead of lowering rates to match the market average and potentially winning new customers, TXU would rather keep squeezing the higher rates from it’s fewer and fewer existing clients.

Now that it’s customer base is 800,000 lighter than a few years ago, you would think that TXU would be doing everything in it’s power to retain their current clients and try to attract new ones. But, alas, it isn’t so.

TXU’s Chief Marketing Officer, Michael Grasso, says “In order to win in the long term, we need to make investments that are smart, fiscally sound investments because consumers want a provider that they can trust and that will be around for a while.” That’s fine and dandy, but huh? TXU’s parent company, EFH, is in debt to the tune of $40 billion and their bonds are currently in deep junk bond territory because of the looming bankruptcy, so what “smart investments” is he talking about?

TXU is on an express elevator — going down.

New Transmission Lines To Bring West Texas Wind To Dallas And Austin

Texas is the largest producer of wind energy in the United States by a wide margin.  In fact, Texas is one of the largest producers of wind energy in the world; producing more than all but a hand full of countries.   The development of the state’s wind portfolio has not come without its challenges and setbacks.  For a while it seemed that development of new wind capacity had gone too far; outpacing the ability of the state’s electricity infrastructure to make use of the electricity being generated by the wind turbines sprouting like dandelion weeds in West Texas.

This spurred a multiyear, multi-billion dollar, project to build giant new transmission lines to carry the abundance of West Texas wind energy to the electricity hungry population centers in the eastern part of the state; including the Dallas/Fort Worth and San Antonio metro areas.   The huge project has recently been completed and is expected to boost the state’s electricity infrastructure and further bolster the already impressive wind energy market in Texas.

The transmission lines were first conceptualized in 2005 when lawmakers ordered the PUC to create regions in the state targeted for renewable energy development.  The PUC designated 5 such zones known as Competitive Renewable Energy Zones (CREZ).

In total the project consisted of around 180 transmission projects with an estimated price tag of around $7 billion.  In the early days of the project the price was estimated at closer to $5 billion with 109 transmission projects.

The completed project is capable of transmitting 18,500 megawatts of electricity across thousands of miles of transmission lines. This increases the states capacity by some 50% and even further widens the gap between Texas and California, the nearest state in terms of wind energy capacity.

Wind is already a large and growing contributor to the electricity mix in Texas.  For example, on January 29th, 2013 wind accounted for fully one-third of the electricity needed across the state.   That displaces a significant amount of more carbon-intensive electricity generation such as natural gas and coal.  Natural gas is still the largest source of Texas electricity.

The integration between wind production assets and the state’s electricity grid is seen as a model for other electricity grids struggling to integrate renewable energy into existing infrastructures.   Texas has the benefit of having a more-or-less completely self-contained electric grid that is separate from most of the North American electricity infrastructure.  This allows Texas a level of control that other states don’t have. Not having to deal with a tangled knot of overlapping state and federal regulations and approvals has allowed the state to be successful in such a massive undertaking as the CREZ transmission project as well as other grid modernization initiatives.

The phenomenal growth in Texas wind capacity can be at least partially credited to the foresight of Texas planners who put these transmission plans into motion years ago.  Producers would have been quite reluctant to build new turbines without being assured of the infrastructure to sell their product to the more populous eastern half of the state.

Texans should expect to see new fees on their electric bills as the cost of the project is recouped.

See Also: Largest Federal Wind Farm To Be Built In Texas

 

Texas Electricity Rates Going Up – Again

In a move that was perhaps inevitable, the Texas Public Utility Commission has voted to double the current wholesale electricity price cap in Texas from the current $4,500 per megawatt hour to $9,000 per megawatt hour. This is the second wholes rate increase this year. Earlier in the year the commission voted to raise the then $3,000 price cap to the current $4,500 cap.

2011 Wholesale Electricity Rate Cap $3,000 per megawatt hour
2012 Wholesale Electricity Rate Cap $4,500 per megawatt hour
2013 Wholesale Electricity Rate Cap $5,000 per megawatt hour
2014 Wholesale Electricity Rate Cap $7,000 per megawatt hour
2015 Wholesale Electricity Rate Cap $9,000 per megawatt hour

Schedule of electricity rate increases

The commission has been searching for ways to increase electricity rates for Texas consumers. This is seen as a must in order to address the state’s electricity capacity concerns. The down-side to the cheap electricity rates in recent years is that electricity producers are not making enough money (so they say) to continue to invest in the Texas market and build new power plants to address pending power shortages.

Because Texas is a power to choose state, regulators don’t directly set electricity rates. Retail electric providers purchase power in the wholesale market from producers of electricity in order to resale it to residential and commercial users. In times of high demand relative to the amount of electricity available the wholesale rate can spike dramatically; often reaching the rate cap established by the PUC. It is during these relatively few times that electricity producers make most of their profit. The largest producers of electricity in the state includes Energy Future Holdings, who is also the parent company of TXU.

Officials hope that by tripling this rate cap more money will find its way into the pockets of producers and encourage them to invest more into building new power plants in Texas. Of course, the extra money going to producers has to come from somewhere. Inevitably it means higher electric rates for consumers.

According to numbers published by the Texas Industrial Energy Consumer group, the new higher rate cap would have cost Texas consumers up to an additional $14 billion had it been in place in 2011.

See Also: Water And Energy: A Double Dilemma In Texas
See Also: Will Texas Switch To A Capacity Market For Electricity?
See Also: Prepaid Electricity

More Legal Issues For The Parent Company Of TXU

TXU’s parent company, Energy Future Holdings, has yet another legal issue to contend with.  EFH is once again being sued over it’s highly pollutive Luminant plant in Longview, Texas.  The coal-fired plant, known as Big Brown, is one of the dirtiest in the nation, and the Environmental Integrity Project (EIP) and the Sierra Club are filing suit against it.

Luminant, TXU and Oncor were purchased together by EFH in 2006, and have lost massive amounts of money every quarter since then.  Luminant has three coal plants in North Texas that rank among the nation’s top ten worst polluting industrial facilities.  Those three plants (Big Brown, Martin Lake and Monticello) alone make up 25% of all the industrial pollution in Texas, and they account for 46% of all pollution related to electricity generation in the state.  That is staggering considering there are over 125 power plants of their size in Texas.

Dr. Neil Caiman, Air Program Director of the Lonestar Chapter of the Sierra Club, had this to say about the lawsuit:

Luminant self-monitors its plants, and according to the company’s own data, the Big Brown plant has violated the requirements of its own air permit thousands of times. What’s troubling is that Luminant’s Big Brown plant has very lenient pollution standards compared to other power plants, and the plant is still pumping out more than three times the legal limit. That impacts the health and wellbeing of Texans. For far too long Luminant has failed to clean up its harmful pollution and chosen not to install pollution controls, even as many other power plant operators were cleaning up their plants. Those days are over and in order to bring Big Brown into compliance, Luminant must decide if it will clean up the power plant or retire it.

Power Outages Happen — Be Ready For The Next One.

Texas Power Grid A power outage can happen at any time with little or no warning. An outage can occur due to weather, equipment failures or other unexplainable reasons, and when the power goes out, all you can do is wait for it to be restored. Plan ahead and prepare your home for an outage so the next time you are left in the dark, you’ll be ready.

Invest in Chargers

A 12-volt charger for your cell phone or an inverter that you can plug into your car then plug a 110 plug into can be a lifeline during a power outage. During an extended outage, you are certain to need to charge your cell phone, your laptop or other electronics. Investing in a solar-powered charger is also a good idea and is a great item to add to your emergency kit.

Lighting Alternatives

When it goes dark, the first thing you will want is light. Make sure you have plenty of emergency lighting to get you through a night (or nights) in the dark. Flashlights (don’t forget the batteries!), rechargeable lanterns, oil lamps and solar-powered lights are all good options to keep on hand and in an emergency kit for when the power goes out.

Be sure to put flashlights in accessible locations in each room of your home. Know where the emergency lights are. When the power goes out and all is dark is definitely not the time to be feeling around, trying to find lights.

Know Where the Breaker Box is Located

When a power outage occurs, it is usually recommended that you throw the main breaker in your home if the outage will be for an extended period of time. This keeps the power from surging suddenly and damaging appliances or electronic items when it comes back on. Keep items such as televisions, DVD players, game systems and computers plugged into surge protector power strips. When you throw the main breaker after the power goes off, be sure to turn off all the power strips also.

If you don’t want to throw the main breaker, simply turn off individual breakers as well as individual power strips, though you might want to keep one light or a radio on in order to know when the power comes back on.

Refrigeration

Fill empty milk jugs three-quarters full of water then place in the freezer. In the event of an extended power outage, you can transfer frozen jugs into a cooler to keep food cool. Limit opening your freezer and fridge to keep the cold in. Generally, food that is in your fridge or freezer will be fine as long as an outage doesn’t last more than four hours. Once most food warms up to 40 degrees or higher for more than two hours it should be discarded.

The top 6 oil-producing states.

By Eric Fox

Sidewalk PowerCrude oil production from the United States averaged approximately 5.48 million barrels per day in January 2011, much less than the country consumes. The bulk of this domestic production comes from just a handful of states where the oil and gas industry has been operating for generations. Here are the six states that produce the greatest amount of crude oil.

1. Texas
It’s no surprise that Texas is the largest domestic producer of oil as this state has had a culture associated with the oil business for more than century. Many historians trace the beginning of the modern oil era to the famous Spindletop well drilled near Beaumont, Texas in 1901. The well blew out and reportedly produced 100,000 barrels of oil per day until it was brought under control nine days later.

In January 2011, crude oil production in Texas averaged 962,338 barrels a day. Like other areas of the United States, this production peaked a generation ago and then entered a long-term decline. Since 2004, however, production leveled out and has been stable since that time. The oil industry is currently focused on increasing Texas oil development from the Eagle Ford Shale, the northern part of the Barnett Shale, and the Permian Basin.

2. Alaska
Alaska is the second-largest oil producer of crude oil with average daily production of 670,553 barrels in February 2011 (includes natural gas liquids). The state was a relatively minor source of domestic production of crude oil until the discovery of oil in the North Slope in the 1970s. Production from the Prudhoe Bay field and other fields began in 1977 and at one point comprised 25% of all U.S. oil production.

Unfortunately for the United States, Alaskan oil production has been in a steep decline since the late 1980s when production peaked at over two million barrels per day. This will probably continue declining as the industry is focused on other areas that are easier to develop.

3. California
Some might find it odd that California is the third largest producer of crude oil in the United States, as this state has a reputation as ground zero for the environmental movement.

Things were much different in the middle of the 19th century, as the oil industry in California began with operators building tunnels or pits to get at the oil, much of which seeped to the surface. The first successful oil wells were drilled in the 1860s and the industry hasn’t stopped since.

In December 2010, California reported average daily production of 536,800 barrels of oil from both onshore and offshore areas. This doesn’t include offshore production from the Outer Continental Shelf that is regulated by the federal government, which typically averages about 35,000 barrels per day.

The state’s largest oil field is the Midway Sunset field which averaged production of 85,100 barrels per day in December 2010.

4. North Dakota
North Dakota has the honor of being the fastest-growing state oil producer over the last few years, as it has seen oil production increase from less than 100,000 barrels per day in 2005 to the 348,367 barrels per day reported in February 2011.

This amazing growth has been powered by the development of the Bakken formation in the Williston Basin and other areas of the state. There are currently 172 rigs drilling in North Dakota with 95% of these rigs targeting the Bakken and Three Forks formation.

Although there is considerable debate on where oil production from the Bakken will peak, one might want to look at the capital plans of the pipeline companies. These operators are planning on increasing takeaway capacity in the area to one million barrels per day by 2015.

5. New Mexico
New Mexico is the fifth-largest domestic oil producer with average daily production of 177,815 barrels per day in 2010. The state is a relative newcomer to the business compared to other top producers, with the first successful commercial oil well drilled in 1924.

6. Oklahoma
Oklahoma comes in sixth in oil production, with average daily production of 147,341 barrels per day in 2010 (through November). The oil industry in Oklahoma also has a long and storied history with the Nellie Johnstone No. 1 well near Bartlesville kicking off the beginning of a boom in 1897. Oklahoma was also where Jean Paul Getty got his start in the oil business in the early 1900s. Getty later went on to run the Getty Oil Company and became one of the first billionaires in the United States.

The bottom line
A handful of states are responsible for much of the domestic oil production in the United States, and these states have a long association with the oil industry, dating back more than a century. For as long as the world continues to heavily rely on oil (and for as long as oil lies beneath U.S. soil) these six states can count on big profits from the oil fields for years to come.