How to pay for new nuclear plants in North America

Over the past year I have suggested emitting jurisdictions become involved in cap-and-trade systems. Even though the European Emission Trading Scheme, or ETS, is deeply flawed and in desperate need of stronger support from the member countries that tout it (see article), I recommended becoming involved in cap-and-trade as a way of easing into a world where carbon and pollution emissions cost something. The aim is to encourage a shift from emitting to non-emitting electricity by making the costs of running new coal- and gas-fired power generating plants less competitive compared with the costs of building plants that don’t emit anything, i.e., nuclear plants.

We should still look at cap-and-trade, but let’s not fool ourselves into thinking higher power costs will encourage electricity consumers to use less. They won’t, any more than ridiculous gasoline prices in Europe have encouraged Europeans to drive less.

Rather, we should use the proceeds of carbon sales to pay for non-emitting power plants. But however we proceed, it is unavoidable that some government, somewhere, is going to have to impose a cap on emissions. Caps in regulated areas mean regulated utilities should be able to finance the cost of building a new nuclear plant at least partly by increasing rates.

Emission caps in deregulated systems would be a bit trickier, but perhaps the operators of deregulated systems could apply the costs evenly across all types of generation in order to achieve a system-wide emission intensity of so many grams per kilowatt-hour. That cost would be a permanent component of the market price of power.

This of course would require a sales job. An integral part of this would be framing the cost increase properly. In Ontario, power consumers are still paying for our most recent nuclear plant, Darlington. This appears as the “Debt Retirement Charge” on every consumer’s power bill. This label appears to have been deliberately designed to antagonize tax-hating conservatives and anti-nuclear greens. Change it to “Climate Change Contribution,” and everybody would calm down.

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Randal Leavitt
16 years ago

I think we should evaluate spent fuel at reactor sites as an asset. Our reactors are storing vast amounts of energy wealth, and not getting credit for it. This wealth could be used for expansion, and to pay for more community involvement such as parks and theaters. This would give nuclear power an appeal that other technologies could not afford to match. The nuclear industry needs to fully apply the resources it has to make progress – spent fuel is a big one.

16 years ago

I don’t understand. I just finished watching the panel discussion on The Agenda, where you stated firmly that Ontarians were paying more than the true cost of power, covering profit as well. And yet, in this blog post of yours, you quite clearly lay out the reasons why a cost increase is necessary, along with the reasons why we’re paying “extra” already.

Care to clarify?

Steve Aplin
16 years ago

Thanks for your comment, Anon. A cost increase is necessary to pay for new nuclear plants, which require heavy up-front financing. My current electricity bill reflects the “true price of power” in that I get the kilowatt-hours and everybody along the supply chain — from the generators to the transmitters/distributors — gets their cut and nobody complains. If the government slaps a cost on carbon, a portion of my power bill should pay for new plants in order to help generators offset their fossil emissions by generating offsetting amounts of nuclear energy. That portion would have to be above the current charge for the Darlington overruns.