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DOE pans SMD
If you understand that headline, you've been spending
altogether too much time thinking about how electricity is bought
and sold in the United States. Unfortunately, with the federal government
itching to change everything, you'd better be thinking about it.
That won't be simple, because there is no such thing
as a monolithic position among the agencies that swim through the
federal alphabet soup.
For instance, last month the DOE (Department of Energy)
offered some words of caution about the SMD (Standard Market Design)
proposed by the FERC (Federal Energy Regulatory Commission).
The SMD is a new set of rules for bulk wholesale electricity
transactions, and it's still in the development phase. The FERC
hopes it will create more competitive wholesale power markets, ultimately
saving money for retail customers. The SMD would seem to point toward
lower wholesale prices on a nationwide average, but that average
hides some regional price increases, some of them significant, according
to the DOE.
The biggest winner would be the Mid-Atlantic region,
with projected price decreases as large as 11 percent and averaging
around 6 percent by 2020, according to the DOE.
The biggest loser? Yup, you guessed it. Wisconsin lies
just about dead center in a mid-continent region projected to see
near-term wholesale price hikes of about 10 percent. Over the long
term, those numbers are projected to moderate to the lower and mid-single
digits, with perhaps even a 1- percent decrease in some areas, but
who cares?
The only part of this worth remembering is that a big
chunk of the Midwest would get a big cost increase which may gradually
plod its way downward to arrive, years or decades from now, at a
level that—if we're lucky—will differ insignificantly
from today's status quo.
And we'll say once more that this is all thanks to
government manipulation of a system that had been working pretty
well for quite a long time, done in the name of something even we
occasionally persist in referring to as "deregulation."
Nuke-free Minnesota?
No one has built a nuclear power plant in the U.S. for a couple
of decades, but more than a hundred nuclear generating units are
still in operation. Legislative wrangling this spring over storage
of power plant wastes strongly suggests Wisconsin's western neighbor
may go from three nuclear units to none in just a few years.
At press time for The Wire, state lawmakers were racking up overtime
in a special session. There, power-plant issues were taking a back
seat to unresolved budget problems, but regardless of the outcome,
it appeared that Minnesota going nuke-free was becoming a question
of when, not whether.
Early this year, Xcel Energy notified state policy makers that
it needed a decision, in 2003, on storage of additional spent nuclear
fuel at its two-unit Prairie Island plant on the Mississippi just
southeast of the Twin Cities. With the 1998 opening of a federal
waste facility running at least 14 years behind schedule, the material
has no other place to go, and Minnesota law limits the amount that
can be stored on-site. Reaching the existing limit would force the
plant to close, in this case seven years before its scheduled 2014
license expiration.
Xcel's Monticello unit, northwest of the Twin Cities, faces a similar
dilemma.
If waste storage were not an issue, Xcel would almost certainly
be seeking a 30-year license extension for both plants. As it is,
the far likelier scenario is their shutdown, within four years if
lawmakers say no to additional storage and within about 10 even
if they say yes.
Either outcome is certain to be popular in some quarters and unpopular
in others, but regardless of anyone's views on nuclear power, the
replacement of about 1,700 megawatts of generation now being used
by residents of the upper Midwest is a challenge that will have
to be met, perhaps as soon as four years from now.
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