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MidAmerican energy revisits nuclear, this time in Iowa March 12, 2010

Posted by cleanidahoenergy in Energy policy, nuclear industry, Payette County, Warren Buffet.
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As many people know, Warren Buffet’s MidAmerican Energy proposed building a nuclear power plant in Payette County in 2007 and did some preliminary studies (they were considering a different site than we are in Payette). But the company announced in December 2007 that it wasn’t moving forward, saying the decision was “based on economic considerations and not on issues related to the suitability of the Idaho site.”

Apparently, MidAmerican has found some new sources of funding and is considering building a nuclear plant in Iowa. The state senate there has voted to allow MidAmerican to increase electric consumer rates to fund a three-year, $15 million feasibility study of what would be Iowa’s second nuclear plant, according to World Nuclear News. This will amount to a $4 per year increase in residential customers’ electricity bills, with a $15 increase for commercial customers and $1100 for industrial customers.

I certainly understand the need for this kind of study. In fact, we have spent around $10 million conducting similar studies in Owyhee, Elmore and Payette counties. What’s most noteworthy, however, is that no Idaho utility ratepayer has given us a dime – nor should they.

While our critics call us a “merchant power plant” (presumably merchant farmers, merchant computer chip makers and merchants in general are okay), we are a completely investor-funded operation. We will fund studies, applications and construction of our plant on the private market, without having to ask government bodies for rate increases. In the best tradition of private enterprise, it will be up to us to find a way to make it pencil out financially and recoup our investment in the free market.

Nuclear critics took Buffet’s 2007 withdrawal from Idaho as a sign that a nuclear plant cannot be profitable (although it is hard to imagine them applauding a profitable nuclear plant), but they were wrong then and they are more obviously wrong now. I know from experience that nuclear plants are very profitable, generating as much as $3 million a day in profit. While they have high initial capital costs, uranium is inexpensive and the plants last for decades. Warren Buffet must know this as well.

Developing a nuclear plant requires extensive study and we wish MidAmerican the best in their venture. We have charted a course, however, that will not require any utility payers to subsidize our costs, and that’s a good thing for Idaho.

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Buffet purchase underscores nuclear's profitability September 23, 2008

Posted by cleanidahoenergy in Greenfield nuclear development, nuclear industry, Warren Buffet.
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Less than a year after getting out of the nuclear business, Warren Buffet is back into it in a big way. Buffet’s Mid-American Energy is purchasing Constellation Energy for $4.7 billion and obtaining ownership in UniStar.

In December 2007, Mid-American pulled out of a prospective nuclear power plant site in Payette, Idaho, after conducting preliminary site analysis. The cries of joy from anti-nukes were loud, proclaiming it’s proof that nuclear isn’t profitable (although I have a hard time imagining these people applauding a profitable nuclear plant). We maintained that nuclear is plenty profitable – some plants generate $3 million a day in profit – but has a longer-term horizon that Buffet is comfortable with. We also maintained that nuke plant development requires a team with considerable industry experience, something that Buffet lacked.

Our analysis has proven correct. Buffet knows nuclear is very profitable and he wants in on the start of the renaissance. What better way than purchasing a turnkey company that has a track record of good management and profitability? Some 60% of Constellation’s 8,700 megawatts of generation capacity comes from nukes and the company plans to build more.

Clearly, Buffet wants even more nuclear with purchase of Constellation and UniStar. He knows a winner when he sees one he is also a significant stockholder in NRG, which is building nukes in Texas. It wouldn’t surprise me if Buffet returned to Idaho with a nuclear proposal in the not-too-distant future – possibly after we have begun building our plant.

“Warren Buffet is a wise businessman and currently is investing in a number of businesses,” said Scott Robertson, regional manager of Areva NP Inc. “That he decided to invest in Constellation, a utility with a strong nuclear focus, demonstrates the value of this sector and also is encouraging for the EPR” (Evolutionary Production Reactor, third generation advanced design).

Wall Street Journal reporter Keith Johnson blogged that Buffet’s embrace of nuclear power could mean that either MidAmerican expects costs for fossil fuels to increase, improving nuclears competitive position, or Buffett expects Washington to sow the seeds of the long-awaited nuclear revival. Either way, its good news for us, for investors and for the nation.