January 5, 2016

Statement of the Citizens Utility Board

Before the Senate Committee on Natural Resources and Energy

Mr. Chairman, members of the committee, good morning, my name is Kurt Runzler, I am the Acting Executive Director of the Citizens Utility Board, or “CUB”.  I’m here this morning to outline the reasons for CUB’s opposition to Senate Bill 288, which would repeal important statutory language protecting electric utility ratepayers from potentially uneconomic resource decisions.

As many of you know, CUB was created by the Wisconsin legislature in 1979 to give utility ratepayers a voice before the Public Service Commission, or “PSC”, the state agency that sets the rates charged by electric utilities and decides whether utility power plants or transmission lines will be constructed.

CUB has participated in cases before the PSC for the last 35 years representing the interests of the hard working citizens of this state.  CUB’s mission is to work to ensure that residential, farm, and small business ratepayers do not pay more than they should for basic electric utility services.

CUB supports proposals by Wisconsin’s utilities that promote the construction, operation, and maintenance of an adequate, safe, and reliable electric power system at the lowest possible cost, consistent with sound business principles. CUB works to protect ratepayers from paying for utility projects, including new generating resources, that are not needed or that are not cost-effective compared to reasonable alternatives.

Importantly, the statutory language that would be repealed by SB 288 does not prohibit the construction of nuclear power plants.  Rather, the current law serves as an essential checklist that the PSC must follow to help protect ratepayers from the potentially extraordinary costs of nuclear power plants.

Generally, existing law requires that before a nuclear plant can be built in Wisconsin the PSC must find that the plant is “economically advantageous” to ratepayers based upon the costs of construction, operation, and decommissioning.   We know that existing nuclear facilities are struggling to continue operating in low-cost electric power markets, and that the nuclear power industry is currently struggling to complete construction of new base-load sized nuclear facilities at a price that is even in the ballpark of being cost-effective compared to readily available alternative base-load resources, such as new combined cycle natural gas plants.

For example, the cost to finance and construct the combined 2,200 megawatt Vogtle 3 and 4 AP 1000  nuclear units, currently under construction in Georgia, is now projected to be a staggering $17 billion dollars.  The project is already $3 billion dollars over budget, and at least three years behind schedule.    Notably, the Vogtle plants are based on the same reactor design that SB 288 would place ahead of natural gas plants on Wisconsin’s energy priority list.

In addition to the extraordinary costs of construction, the cost to decommission a nuclear plant can add hundreds of millions of dollars of cost to a nuclear project.  For example, the projected cost to dismantle the recently shut-down Kewaunee nuclear plant near Green Bay, is an astonishing $1 billion dollars.

Repealing Wisconsin’s nuclear ratepayer protection law would also remove the requirement that the PSC determine that a site will be available for disposal of spent fuel waste before approving the construction of a new nuclear plant.  Removing this ratepayer protection puts Wisconsin citizens at risk for the costs of the potentially permanent on-site management of spent fuel waste at a new nuclear plant. For example, it is estimated to cost $342 million dollars for high level radioactive waste management at the closed Kewaunee nuclear plant through 2073.

In comparison, the PSC is currently considering the approval of a 650 MW combined cycle natural gas power plant at the Beloit Riverside Energy Center at a cost to construct of $700 million dollars.  The minimum cost per megawatt of constructing the Vogtle nuclear units versus the cost of constructing the Riverside natural gas plant shows that nuclear construction costs are currently five times greater than natural gas plant construction costs.   As I noted earlier, the proposed legislation would add the Vogtle plant design to Wisconsin’s energy priority list ahead of new natural gas plants.

Given the current cost to finance and build a nuclear facility compared to a combined cycle gas plant, CUB believes the inclusion of nuclear power before natural gas fired generators on the energy priority list sends the wrong public policy signal to the PSC.

In conclusion, CUB opposes the proposed repeal of Wisconsin’s nuclear ratepayer protection law and modification of Wisconsin’s energy priority law.  Ratepayers require special protection against the extraordinary costs of nuclear power and the existing law provides that protection.

Thank you for the opportunity to present CUB’s comments.