This was before an earthquake that measured 9.0 on the Richter scale hit at the convergence of three tectonic plates off the Oshikha Peninsula in Japan's Tōhoku region on March 11. A resulting tsunami, with ten meter waves, damaged six nuclear reactors in Japan's Fukushima Prefecture, creating an ongoing challenge of attempting to prevent a meltdown of the nuclear materials. This incident has captured the attention of the public and may have an impact on the prospects for SF 390 and HF 561. Blog for Iowa hopes legislators will slow down and get all of the facts on costs and risks before proceeding to a vote.

On Friday, according to the New York Times, the Fukushima radioactive plume, containing low levels of radiation, hit the West Coast of the United States. To read more about the ongoing containment efforts, read Joe Cirincione's Friday article in Foreign Policy here.

In a March 15 Fiscal Note, Iowa's Legislative Services Agency (LSA) described the purpose of the SF 390, “Senate File 390 relates to permitting, licensing, constructing, and operating nuclear generation facilities in the State of Iowa. The Bill requires rate-regulated electric utilities to file an application with the Iowa Utilities Board (IUB) for ratemaking principles for the construction of a nuclear generating facility. The Bill states that a utility may recover all prudent costs of permitting, licensing, and construction of a nuclear facility from utility customers whether a facility is completed or not.”

There has been no new nuclear reactor built in the United States in 30 years. The reason has not been lack of capital. During the time since Iowa's Duane Arnold Energy Center was built in the 1970s, investors have gone through periods when they have been flush with cash, as many of them are today. As always, investors seek appropriate places to invest capital to receive an acceptable return on investment.

If capital has been available for investment, most banks and investors have found investment in nuclear reactors too controversial and unacceptably risky. The cost of nuclear reactors is measured in billions of dollars. They take a long time to be sited, designed, approved and built. For example, on Thursday Bill Fehrman, president of MidAmerican Energy, indicated to a Senate commerce subcommittee that if their bills move forward in the legislature, we may see electricity from a new nuclear reactor in the year 2020. Often a nuclear reactor project is started and not finished for a number of reasons, which includes cost over runs, litigation, design and regulatory issues.

The costs of the bill are estimated by LSA as follows, “Senate File 390 is expected to increase expenditures to the Iowa Utilities Board (IUB) by $188,000 for FY 2011 and $625,000 and 5.0 Full Time Equivalents (FTE) for FY 2012 and subsequent fiscal years. The Office of the Consumer Advocate (OCA) will see increased expenditures of $168,000 and 1.0 FTE in FY 2012 and subsequent fiscal years. The additional costs will have no impact on the State General Fund since both the IUB and OCA are funded by the utility industry. Both departments receive appropriations from the Department of Commerce Revolving Fund rather than the General Fund. Both the IUB and OCA will increase assessments to the regulated public utilities by the amount specified. The regulated industry may pass the increased assessment costs on to utility customers.” These costs exclude the actual nuclear reactor.

What we don't know is how much a new nuclear reactor would cost Iowa rate payers. On Thursday, Mr. Fehrman estimated $1 billion for a cluster of small modular reactors, although he did not present a firm number. We should be suspicious when numbers are rounded in billions. Whatever the cost of permitting, licensing and construction, the resulting investment would be divided between MidAmerican Energy's equity investment, loans, participation by rural electric cooperatives and municipalities, grants and loan guarantees from the federal government and investments from Berkshire Hathaway, MidAmerican's parent company. Any grant from the federal government would reduce the direct cost to rate payers. The final, actual amount of investment would be passed along to rate payers over the life cycle of the nuclear reactor. This could be a 40 year period according to MidAmerican's Fehrman, creating inter-generational debt for Iowans.

At one point in the meeting, Senator Rob Hogg (D-19) asked Fehrman what percentage of increase rate payers could see under the legislation. Fehrman indicated a maximum of 10%, doing a quick calculation on his smart phone. However, he was unable to make a firm commitment to that number. Truth is that no one knows how much nuclear power would cost rate payers, or even which rate payers would be affected, until electricity is being generated some ten years from now.

Senator Swati Dandekar (D-18) indicated last week that the legislature should “dot the i's and cross the t's” and that seems like good advice when the legislature is making a decision on sourcing electricity that will impact future generations.

Some say the bill is “greased,” that a decision to move the bill has been made in a back room by legislators influenced by MidAmerican Energy. Others have accused legislators of being influenced to support the bill by the money in politics. While MidAmerican Energy and its officers made campaign contributions to 66 winning Iowa legislators in 2010, one hopes that a vote cannot be bought for less than a thousand dollars which is what most of the donations were, according to Follow the Money.