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Nuclear Power Benefits From Republican Wins, NRG Says

Nuclear Power Gains Clout in Republican House Takeover
NRG Energy's South Texas Nuclear Station applied for a federal loan guarantee to build two more reactors on the site. Photographer: F. Carter Smith/Bloomberg

Electricity producers such as NRG Energy Inc. and Southern Co. will benefit as Republicans who won control of the U.S. House yesterday promote nuclear power as part of clean-energy legislation.

Requirements for the use of renewable power to reduce carbon emissions and encourage U.S. energy independence may win passage if nuclear plants are added to the wind turbines and solar panels favored by environmentalists, said David Crane, chief executive officer of Princeton, New Jersey-based NRG.

“A lot of the things we’re trying to do in Washington to move forward with zero- and low-carbon generation is something that at least the mainstream of the Republican Party wants to support -- nuclear power in particular,” Crane said in an interview. “It’s not just California and Oregon tree-huggers.”

Republicans retook the House of Representatives yesterday with a net gain of at least 60 seats, their biggest increase since 1938. They also scored a net gain of at least six seats in the Senate, though Democrats retained control of that chamber.

NRG, which owns part of a nuclear power plant in Texas, has applied for a federal loan guarantee to build two more reactors at the site. Crane was among utility executives who backed cap-and-trade legislation that passed the House under Democratic control last year, then languished in the Senate. Republicans called it an energy tax in disguise.

President Barack Obama, who supported the cap-and-trade plan, said lawmakers must work together to better secure U.S. energy supplies and curb global warming pollution.

“The smartest thing for us to do is to see if we can get Democrats and Republicans in a room who are serious about energy independence and are serious about keeping our air clean and our water clean and dealing with the issue of greenhouse gases, and seeing are there ways that we can make progress in the short term,” Obama said today in a news conference.

Upton Backs Nuclear

Representative Fred Upton, the Michigan Republican who is in line to head the House Energy and Commerce Committee, supports nuclear power as a way to create jobs in his state, which had a 13 percent unemployment rate in September, according to the Bureau of Labor Statistics.

Upton would replace Representative Henry Waxman, a California Democrat who was co-sponsor of the failed cap-and-trade bill, which would have set limits on carbon emissions and established a market for the trading of pollution allowances.

“Obama and his team have wanted a legislative solution,” said Josh Greene, a partner with the Washington law firm Patton Boggs LLP. “Obama told the nation today that perhaps there are other solutions, other ways to get us there, outside of cap-and-trade.”

In this year’s elections, cap-and-trade was denounced in ads by candidates of both parties. Democratic Governor Joe Manchin of West Virginia, a coal-producing state, literally shot a hole through legislation labeled “cap-and-trade” in one television commercial for his Senate campaign.

“Cap-and-trade, I think, is toast,” American Electric Power Co. CEO Michael Morris, who backed the House measure, said in an interview. “We’re looking for a realistic compromise that will give us all certainty about where we’re going.”

EPA Regulation

The prospect for compromise may be undercut by a fight over plans by the Environmental Protection Agency to impose its own restrictions on carbon emissions. While administration officials say Obama would veto legislation barring EPA Administrator Lisa Jackson from putting the limits in place, the U.S. Chamber of Commerce has urged lawmakers to attach a ban on EPA regulation to spending legislation during the lame-duck closing session of the current Congress.

“Cap-and-trade was just one way of skinning the cat,” Obama said. “It was not the only way. It was a means, not an end, and I’m going to be looking for other means to address this problem.”

House Republicans may lead investigations next year into the EPA’s justification for new rules on pollutants and potential damage to the economy, said Stephen Brown, a lobbyist for oil refiner Tesoro Corp. of San Antonio, which opposes EPA carbon regulation.

“If you make sure that Lisa Jackson has to testify four out of five days a week, I don’t see how that creates an atmosphere for compromise,” Brown said.

Renewable Standard

Legislation setting a national renewable-energy standard has been championed by Senator Jeff Bingaman, a Democrat from New Mexico. His version would require utilities to get as much as 15 percent of their power from low-pollution sources such as solar and wind energy by 2021.

Senator Richard Lugar, a Republican from Indiana who has worked with Democrats on legislative compromises in the past, said he plans to introduce renewable-energy legislation next year that would encourage construction of nuclear and “clean-coal” plants.

Senator Tom Carper, a Delaware Democrat who sits on the Senate Environment and Public Works Committee, said legislation such as Lugar’s may be one way to “thread the needle” for a bipartisan compromise.

“It’s pretty clear we still need to get something done on this front, and maybe the best we can do is a clean-energy standard that gives initial credit to nuclear and clean coal but eventually provides greater emphasis on true renewables,” Carper said.

Environmental Groups

Nuclear power remains a tough sell among some environmental groups. The U.S. has no long-term plan to dispose of spent reactor fuel, and building nuclear plants remains prohibitively expensive without government subsidies, said John Walke, clean-air director for the New York-based Natural Resources Defense Council.

“Washington is a town of negotiation and compromises, and the nuclear and coal sectors have always been very successful feeding at the Washington trough,” Walke said in an interview. “But I don’t think you will have public policy being made on the representation that either nuclear power or coal power is renewable.”

A renaissance in nuclear power may be stalled regardless of action by Congress, said Chris Gadomski, the lead analyst for nuclear power with Bloomberg New Energy Finance.

“I don’t think you can legislate new nuclear, especially in an environment when there is a lot of unconventional natural gas to be tapped and the cost of natural-gas generating facilities are about one 10th of nuclear,” Gadomski said.

Hydraulic Fracturing

House Republicans also will resist efforts to limit hydraulic fracturing, a technique used in drilling for natural gas in which chemically treated water is pumped underground to loosen rock and let gas flow. The EPA is conducting a study of potential environmental impacts of the practice.

Wind, solar and other renewable sources excluding hydroelectric power accounted for 3.8 percent of the total U.S. energy supply in the year ended in July, up from 3.4 percent in the same period a year earlier, according to the Energy Information Administration, the statistical arm of the Energy Department.

The U.S. got 19.5 percent of its power from nuclear reactors in the recent year. Obama has called for increasing federal guarantees for new nuclear plants to $54 billion from $18.5 billion currently.

Reactor Applications

The Nuclear Regulatory Commission has received applications for 26 new reactors, according to the agency. Southern Co. has begun work on what may be the first new reactors to come online in the U.S. since 1996, said Steve Kerekes, a spokesman for the Washington-based Nuclear Energy Institute.

Southern won a $3.4 billion federal loan guarantee to add two nuclear reactors to the Vogtle station near Waynesboro, Georgia. The company expects to receive an operating license late in 2011, Kerekes said.

The Republican takeover of the House also puts Representative Doc Hastings of Washington state, an opponent of new restrictions on offshore oil and gas drilling, in line to take over the Natural Resources Committee. Hastings denounced a measure, passed by the House after the BP Plc oil spill in the Gulf of Mexico, that would remove a $75 million cap on liability for leaks and bar London-based BP from new U.S. leases.

Landrieu Compromise

The issue remains unsettled because the Senate never took up its version of the drilling bill. Under a compromise proposed by Senator Mary Landrieu, a Louisiana Democrat, companies would pay into an insurance pool based on how much offshore oil and gas they produce, with the fund paying for the first $10 billion in spill damages.

While supporters of cap-and-trade legislation once envisioned sweeping legislation akin to Obama’s health-care overhaul, the president said he was reconciled to smaller steps.

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