A LIFE AND A HALF
	SMOKE AND MIRRORS
	EDITORIAL
	Wisconsin Favorites Watery Wonderland

A LIFE AND A HALF
For 16 years, Wisconsin’s first nuclear power plant
did its job efficiently. Now it waits for others to do the same.

The small nuclear reactor at Genoa on the Mississippi River did not have a troubled history as an electric generation facility. For 16 years between 1971 and 1987, it safely and reliably helped meet Wisconsin consumers’ energy demand.

In the two decades since it ceased producing electricity the story has been somewhat different, mainly because of the federal government’s tardiness carrying out its obligations concerning the plant’s radioactive waste. Resolved to move ahead on its own, Dairyland Power Cooperative this spring took a large step toward dismantling the La Crosse Boiling Water Reactor (LACBWR, pronounced LACK-bar,) in preparation for ultimate decommissioning.

It’s a painstaking process including major steps that can’t be completed without the cooperation of federal bureaucracies—cooperation that in turn depends on how the bureaucracies fare in performing a mission that’s strongly opposed in high places. With LACBWR already shut down for four years longer than it operated, it’s still an open question how many additional years will pass before the twin obstacles of politics and litigation in distant states are cleared away, allowing the site to be put to some new use.

Marooned

One of the nation’s earliest and smallest nuclear generating units, the 50-megawatt La Crosse Boiling Water Reactor was built for the old Atomic Energy Commission (AEC) by Milwaukee’s Allis Chalmers Corporation as part of the post-World War II “Atoms for Peace” demonstration projects. Dairyland, one of the first generation and transmission cooperatives to consider nuclear generation, agreed to build the steam turbine generator side of the plant and to operate the combined plant on behalf of its federal owner for the 10-year demonstration period.

In 1973, two years after the start of LACBWR commercial operations, the AEC sold the facility to Dairyland. Dairyland was assured that if it became economically prudent to shut down the LACBWR, the cooperative would likely realize several million dollars on the sale of the existing spent nuclear fuel for reprocessing. But four years after LACBWR and its spent-fuel inventory were transferred to Dairyland, the government banned all further nuclear fuel reprocessing, stranding spent fuel at LACBWR and other plants across the country.

Beginning in the 1980s and into this decade, the accumulation of spent fuel at power plants and the corresponding shrinkage of suitable storage space became a matter of growing concern. Many plants that were designed and built before the ban on reprocessing lacked adequate on-site spent-fuel storage for long-term operation. Plants exhausting available storage might be forced to shut down many years before their federal operating licenses expired. Many plants, like LACBWR, rebuilt their storage pool racks to be able to store more fuel in the limited space.

Love them or hate them, nuclear plants produce about one-fifth of the nation’s electricity. Given that regulatory review and resolution of the lawsuits customarily surrounding construction of any new electric generation facility can consume years of lead time before anyone sticks a shovel in the ground, a need to replace nuclear plants prematurely could compromise the ability of utilities of all kinds—cooperative, investor-owned, and municipal—to keep the lights on for their customers.

Giving up LACBWR’s generation capacity hasn’t been an issue for 20 years, but moving some 40 tons of spent-fuel assemblies from LACBWR into an off-site storage or disposal facility has remained an essential step in its decommissioning—and undoubtedly the most challenging one.

There are currently two leading prospects for such a facility: the federal Yucca Mountain permanent repository being developed by the Department of Energy (DOE) in Nevada and the Private Fuel Storage (PFS) temporary fuel-storage site in Utah. PFS is a project undertaken by Dairyland and several other nuclear utilities to create an interim, centralized fuel-storage solution until the federal repository is finished. The PFS site is federally licensed for construction and operation but not yet built. Yucca Mountain has been under investigation and design for years but the DOE has not yet filed the license application, and the project continues falling further behind schedule. Both are embroiled in local political opposition and lawsuits seeking to block their development.

Meanwhile, it’s necessary to continue staffing the LACBWR unit to monitor safe storage of the spent fuel and maintain security at the site, which is next door to Dairyland’s Genoa-3 coal-fired power plant.

The Meter’s Running

The risk of losing major chunks of the nation’s generating capacity has been a real concern but not the only one. As part of the federal Nuclear Waste Policy Act, for decades the federal government has required utilities having nuclear generation to pay annual fees, collected through small surcharges on their customers’ monthly power bills, to build the Nuclear Waste Fund (NWF), a federal trust fund to pay for the construction and operation of the national nuclear waste repository. Owners of shut-down plants like Dairyland’s were required to pay an up-front fee to the trust fund based on their quantity of  spent fuel. In return, the federal government entered into contracts with each nuclear utility under which the DOE agreed to take possession and remove the spent fuel for disposal. The contracts stated that the DOE was required to begin taking possession of spent fuel no later than January, 1998.

Multiple billions of ratepayer dollars have been collected nationwide with no solid date in sight for the repository to open. The DOE isn’t even allowed to use all of the money coming into the NWF each year to pay for repository engineering and licensing activities; the Congress has used billions of the excess NWF collections to pay for other programs. The NWF is filling up with IOUs while the repository incurs year after year of additional delay. By 2004, dozens of utilities including Dairyland had filed suit against the federal government to recover costs they incurred for storing and safeguarding spent fuel that would have been avoided if the government had lived up to its side of the contracts.

Chuck Sans Crainte, Dairyland’s vice president for generation, told Wisconsin Energy Cooperative News that the pretrial discovery phase in Dairyland’s case has largely been completed, and a trial date has been set for January, 2008. Even the outcome of that trial will not resolve all of the contract issues. Sans Crainte told us, “The courts have ruled that each trial will determine the contract damages only up to near the beginning of trial. Recovery of contract damages for later costs will be left to be determined in later proceedings. We’re going to continue to incur damages for a period of time that’s hard to predict.”

Federal law and the utility contracts required Yucca Mountain to begin accepting spent fuel by January 1998. DOE’s most optimistic estimated opening date is now 2017, but the best guess by some DOE officials is that 2020 is more likely the earliest date achievable.

Local politics and U.S. Senate geography elevate the role of guesswork in divining the prospects of a waste facility. Nevada is represented by the current Senate majority leader, Utah by the second-ranking minority member of the Committee on Finance. Both have vowed to their states to permanently block development of Yucca Mountain and PFS.  

On Their Own

One important step toward eventual LACBWR decommissioning took place during the first week of June, when the Reactor Pressure Vessel (RPV) was transported from the Genoa plant for burial in a state-owned nuclear waste repository at Barnwell, South Carolina.

The RPV is the long steel cylinder where nuclear fission produced steam to run the turbine that generated electricity. Graded on its remaining radioactivity, it qualifies as low-level waste. Graded on its size, it qualifies as an attention-getter. To avoid risk to the spent fuel in the pool next to the RPV inside the reactor building, Dairyland had to design a way to lift and remove the RPV horizontally through a special hole cut through the reinforced concrete wall of the reactor building.

Filled with concrete then encased in concrete and steel for transportation and disposal, the 10-by-40-foot RPV weighed in at 310 tons, calling for a specially designed 20-axle railroad car for shipment—and attracting the notice of a local anti-nuclear organization and at least one statewide media outlet.

LACBWR Plant Manager Roger Christians told Wisconsin Energy Cooperative News that other than its size, the material contained in the RPV was comparable to “many low-level shipments done routinely.”

“This just happened to be a large shipment and because the word reactor was attached, it got a lot of attention,” he said. But radiation on direct contact was measured at one-fourth the allowable dose, Christians said, adding that radiation dropped to less than one-fifth that amount—one twentieth the presumably safe exposure limit—less than seven feet away.

Exposure would be indistinguishable from natural background radiation “unless you make an effort to get in physical contact with this thing and stay there,” Christians said, pointing out that the security associated with movement of the vessel would have made it exceedingly unlikely that anyone could get anywhere close.

The spent-fuel assemblies present a separate problem, with the best available option being on-site dry-cask storage in a half-dozen immense steel-and-concrete canisters, and the question of timing to be resolved.

Sooner would be better, Chuck Sans Crainte says, with an eye toward a demographic phenomenon attracting increased attention in the utility industry: the impending wave of baby boomer retirements taking highly knowledgeable workers out of the picture.

Some of the employees at LACBWR have been working at the site through most of its history and are approaching retirement, Sans Crainte notes. “We want to get this done and take advantage of their skills, their institutional knowledge of what is a unique plant, while they’re available,” he says.

Dry storage is also desirable because fuel storage costs fall directly on Dairyland consumers. Other dismantling activities can be paid for through Dairyland’s nuclear decommissioning trust fund, but it doesn’t cover fuel storage, Sans Crainte explained. Reducing fuel storage costs will help hold the line against future rate increases.

End in Sight?

The chances of completing the LACBWR decommissioning in the next five years appear remote, yet what can be done under present circumstances seems to be getting done.

According to Roger Christians, everything now being removed from the site is “very low-level waste, especially concrete that’s minimally contaminated or with no detectable contamination.” During the final dismantling phase, a lot of material will be removed “and concrete will be a big part of that,” he said.

Once the site is decontaminated, he said, it could be used for any other industrial purpose.

As to safety concerns about transporting material like the big, highly visible RPV to a disposal site, Christians points out the security surrounding routes and timings, a special speed limit imposed on the entire rail journey to South Carolina, the low radiation levels, and the more immediately hazardous materials—like tank cars filled with chlorine—that roll down the same tracks virtually every day.

“There were a lot of things shipped down this rail line in the past week that were a lot more dangerous than this reactor vessel, and that didn’t have the same protections,” he said.

Smoke and Mirrors
Electric Restructuring’s Failed Promise

It’s still called deregulation, even though states that tried it tended to wind up with more regulation instead of less. It’s still called retail choice, even though the lack of competing suppliers to choose from is one of its hallmarks. And it may forever be pondered how many of its proponents understood what they hoped to bring about.

It’s been 10 years since energy consumers got their first taste of a nationwide promotional effort marketing the concept of electric utility restructuring, delivered as a 30-second TV advertisement during Super Bowl XXXI and in the less expensive venue of cable networks during the months that followed. The subject was an experimental program letting New Hampshire electricity users choose alternative power providers, but the sponsor was in Texas. It was a natural gas and electricity-trading firm called Enron.

What it Was—and Wasn’t

Long since bankrupt and synonymous with corporate fraud and malfeasance, Enron in the mid-1990s was the undisputed 800-pound gorilla of electric restructuring and visions of an Enron takeover stalked the dreams of many utility leaders. A goodly number concluded that fighting for their lives might get them hurt, and they joined (or at least convincingly simulated enthusiasm for) the restructuring movement. Certainly some yearned to escape a humdrum existence in the world of regulated utilities and taste the excitement of swashbuckling competition in unrelated enterprises, but those appetites were soon to be quenched.

Superficially, restructuring was supposed to be deregulation: the process of lifting or mitigating government restrictions on private businesses. During the 1970s, deregulation achieved notable success in transportation-related industries, allowing competitive providers into markets and making services more efficient, available, and affordable for greater numbers of consumers.

The key to accomplishing all this in the electric utility industry was purported to be “retail wheeling,” moving power generated by one utility (or by a non-utility independent power producer) to a retail end-use customer, using the transmission and distribution systems of other utilities.

Unless the customer was paying a conspicuously high price for basic electricity, the prospect of real savings would be slim: The incumbent utility would still be charging for infrastructure costs and delivering the power, and middlemen would enter the picture. So the difference between the competing providers’ kilowatt-hour rates would have to be substantial before the consumer would find the exercise worthwhile.

Momentum Builds

But there were states with retail rates high enough to make the whole thing seem plausible. Regulated utilities in some northeastern states were charging rates almost double those then typical in the Midwest—and nearly triple those in the hydropower-rich Pacific Northwest. Though far from the highest, California’s rates were high enough to make a bold experiment look attractive.

The Federal Energy Regulatory Commission added momentum with its 1996 Order 888, compelling public utilities to allow open access to their transmission systems in order to facilitate competitive wholesale power markets. With electricity at least theoretically able to be bought anywhere at deregulated prices and resold anywhere else, not many barriers to full retail competition were thought to remain.

About two-dozen states adopted restructuring laws during the latter half of the 1990s, allowing retail customers to switch from their existing, regulated utility to another provider who would deliver power over the incumbent utility’s lines.

But the plans were fatally flawed. Realizing that some customers would see their costs increase, legislators in one state after another mandated artificial rate reductions and a variety of contrivances to make everyone feel like they’d hit the jackpot. The inevitability of the bills coming due didn’t seem to register.

A former member of the Wisconsin Public Service Commission who was an enthusiast for free-market deregulation once told Wisconsin Energy Cooperative News the various state restructuring plans were “doomed to succeed.” They would seem to be delivering benefits and catch on, he predicted, only to have the roof fall in later.

One thing they would not do was answer the question whether a genuinely deregulated electricity market would create healthy competition. Limited by existing technology, chances are it couldn’t have. But the question hasn’t been answered because restructuring programs were set up so it was never asked.

Poison Pills

Even among those devoted to free-market economics, there are abundant reasons to doubt that competition at the retail level will benefit electric utility customers in the way it so obviously does when they’re shopping for, say, candy bars, brokerage services, or the occasional airline ticket.

Those transactions can be completed in multiple ways, delivering truckloads of products by any chosen route, exchanging pieces of paper or digital signals, or storing things up until they’re desired by the consumer. Electricity, however, cannot be efficiently stored but must be used as it’s produced. Most importantly, it can be delivered only through wires not duplicated by competing providers. Until the laws of physics can be amended or we are willing to accept the financial, esthetic, and environmental costs of unlimited sets of distribution lines, delivering electricity will be a monopoly enterprise.

These and other limitations prompted lawmakers and regulatory authorities in the restructuring states to tinker with market forces. A cynic might say they rigged the market to make it appear there were no losers.

More than 30 utilities stepped forward to compete in New Hampshire’s pilot program, and the Public Utilities Commission, in a move that does not sound like deregulation, ordered them to pay “pilot participation credits,”—rebates—deducting 10 percent from the bottom line of each customer’s bill.

Enron’s TV ad claimed that for its customers in Peterborough, New Hampshire, “typical savings range[d] from 10 to 20 percent.” True as far as it went, but clearly some “typical” customers were saving only the mandatory rebate, which existed only to demonstrate immediate “savings.”

California’s 1998 restructuring law mandated an immediate 10-percent rate reduction by incumbent utilities, who were to be indemnified against the resulting revenue losses by a $10 billion bond issue that ratepayers will ultimately have to make good.

Illinois legislators mandated a 10-percent rate reduction and froze rates for 10 years at the reduced level.

As standard components of restructuring laws, such contrivances guaranteed the ultimate failure of the programs. Within a few years after most laws were enacted, generation fuel prices began to rise and competing suppliers began dropping out of the market.

Competition Dwindles; Rates Rise

Many competing suppliers owned no generation capacity. They bought power as cheaply as they could on the open wholesale market and resold it to customers who signed up for their service. When rising fuel costs drove up wholesale prices, they couldn’t beat the incumbent utilities’ rates—artificially reduced and frozen by law—and had to quit the market or sell power for less than it had cost them. Competition vanished.

The Wisconsin Federation of Cooperatives foresaw this in a series of papers called Power Politics, distributed to policymakers statewide from 1997–99. Four years before the spectacular collapse of its restructuring experiment brought skyrocketing prices and rolling blackouts to California, Power Politics warned, “For the frugal householder who sets out gamely upon the new electrical wilderness buoyed by the hope of saving a penny or two per kilowatt-hour, calamity looms ahead.” It went on to explain that just as the number of middlemen staking their claim on the householder’s electricity purchases grew, “the number of actual suppliers competing for his business will have shrunk.”

Today, political maneuvers designed to make everyone feel like a winner are bearing bitter fruit as legislated rate caps expire with few competitive suppliers left in the market and utilities eager to make up lost ground.

Last year, customers of Maryland’s Baltimore Gas and Electric found themselves facing a 57-percent rate increase as the clock ran out on a decade-long freeze.

This spring, Illinois legislators were trying to figure out what to do about rate hikes of more than 50 percent for downstate utility Ameren and more than 20 percent for Chicago’s Commonwealth Edison, which predicts $4 million daily losses and bankruptcy if lawmakers renew the freeze they imposed in 1997.

Pennsylvania consumers taking service from alternative providers peaked at about 800,000 in April 2001. Since then the number has dwindled to just over 134,000, and big rate hikes are on tap for next year, with capped rates expiring.

Dodging the Bullet

Wisconsin nearly fell into this trap. A mid-1990s blue ribbon commission mapped out an orderly transition to competitive retail markets, including a detailed timeline for breaking incumbent utilities into separate companies operating generation, transmission, and distribution systems.

Promoting the restructuring agenda in a message to ratepayers, the head of one major utility wrote, “If we expect to keep your business, we will have no choice but to provide you with the greatest possible value for your energy dollar,” surely an unsettling statement to any customer who pondered what the utility implicitly might do if left to its own devices.

They never found out, because the reluctance of Wisconsin’s utilities and utility regulators to build new infrastructure over the preceding two decades both minimized costs and created deficiencies. The deficiencies would reveal themselves when the fast-growing volume of wholesale transactions over the deregulated transmission grid finally collided with a hot summer.

Warning signs appeared in 1995 when a summer heat wave drove up electricity demand, forcing service curtailments and scattered business closings. But that was before FERC Order 888 made the nation’s transmission system busier than it had ever been before.

By 1997, Order 888 was in place. When hot weather arrived in June with two nuclear plants down for maintenance and Wisconsin’s transmission system too clogged to import sufficient power, curtailments and business closings were the routine for several days.

In 1998—still holding the record as the hottest year worldwide in several centuries—Wisconsin endured more curtailments, though not so severe as the preceding summer. Still, it was enough to drive home a lesson about jumping into a restructuring experiment with system reliability already uncertain.

Both that year and the following year, Wisconsin lawmakers approved reliability legislation (not restructuring) amid a general loss of credibility for the few who continued trying to sell the line that a redesigned industry with customers shopping for alternative providers would solve the state’s problems—despite the infrastructure’s demonstrated inability to consistently deliver the goods.

Within a year after that, the California experiment blew up. Wisconsin, and others, were saved.—Dave Hoopman

 

EDITORIAL
by Perry Baird

It was 40 years ago this month that, in the words of an historical marker, Wisconsin was “ushered…into the nuclear age.” At 7:39 p.m. on July 11, 1967, the first self-sustaining chain reaction occurred in the La Crosse Boiling Water Reactor (LACBWR) at Genoa, a facility built for the Atomic Energy Commission (AEC) as a demonstration project.

Commercial electric-power production began at the plant on the Mississippi 3-1/2 years after that initial reaction, courtesy of steam-turbine equipment installed by Dairyland Power Cooperative adjacent to the reactor. The AEC contracted with Dairyland to operate the entire facility, which it did until operations ceased after a successful 20-year run.

From the earliest phases of construction in 1963, this publication followed the nuke project’s progress, occasionally running photos taken inside the reactor as it was being built, often showing wide-eyed visitors agape at the gear that would house the heat-producing fission processes. Those early tours only hinted at the involved procedures—mechanical and political—that would be required during the plant’s lifetime.

Fuel in the Pool

Physical processes were complicated enough. The nuclear reactor used long, thin tubes containing uranium oxide ceramic pellets that fueled the nuclear fission chain reaction, boiling water for steam to drive the turbine generator. After some months in the reactor, the fuel became highly radioactive but less efficient at sustaining the chain reaction. Periodically, the older fuel rods were withdrawn as “spent fuel” and replaced with fresh fuel rods. The spent fuel rod assemblies were then stored in a water-filled storage pool next to the reactor. There they were kept until being removed for reprocessing—separating the remaining useful fuel uranium from a much smaller amount of high-level radioactive waste intended for permanent disposal.

As part of the demonstration program, the AEC retained the responsibility to remove the spent nuclear fuel and fully decommission the rest of the reactor at the end of the 10-year demonstration period. LACBWR’s original decommissioning plan assumed that all of the spent fuel would be removed first; the remaining radioactive materials would be removed later. It hasn’t played out that way.

Lacking governmental action to take away the radioactive fuel assemblies, Dairyland resolved to do what it could by itself to advance the decommissioning and reduce its costs. The co-op joined Private Fuel Storage (PFS) in 1995 to pursue a private, centralized, away-from-reactor interim storage facility in Utah that could store spent fuel until a federal repository opened.

Stymied Storage

Unfortunately, political considerations have blocked PFS and delayed the federal repository’s opening for the time being. So, the spent-fuel assemblies present a problem remaining to be solved. Final decommissioning of the reactor building cannot proceed with fuel in the wet pool inside. And maintaining the pool will require security and the continued maintenance of a number of water and safety systems inside the plant.

Dry storage, in which the fuel assemblies are placed in a half-dozen immense steel and concrete cylinders and stored on a concrete pad at the site, will require its own security but could significantly reduce monitoring and maintenance costs. While the best option would be to remove the fuel and ship it off site, either to the repository or to PFS, that avenue is currently blocked by continuing Department of Energy delays and political opposition to PFS.

As complicated as the fission/power production process was, political maneuverings and decommissioning solutions have been just as intricate—and far more unpredictable.

 

Wisconsinites seem to have a natural affinity for water—our many lakes, rivers, streams, and fishing holes. After all, we’re surrounded with it. We fish in it, swim in it, boat in it, and even skate and snowmobile over it.

For an ultimate water-based venture, head north to Bayfield County. There on the craggy coast, visible from shore, are Lake Superior’s beautiful Apostle Islands—incidentally, the focus of President Kennedy’s last official tour prior to his death.

Though the largest of the isles, Madeline Island, is inhabited year-round, this chain of tiny drops of land has its heyday in the summer months and early autumn.  It is then that the red carpet is out for visitors who migrate to the islands’ shores.

One way to orient yourselves to the history and the many facets of life in the Apostles is to visit the Apostle Islands National Lakeshore headquarters, located near the ferry landing in Bayfield, on the mainland. This center is open daily in summer from 8 a.m. to 4:30 p.m. and only on weekdays during the winter. Then drive to the Little Sand Bay Visitor Center, about 13 miles from Bayfield on the pristine shore. There you will find lakeshore exhibits, including the Hokenson Brothers Fishery exhibit, and a film about the park. (By the way, the Hokenson fishery was one of the first businesses to join Bayfield Electric Cooperative, and Bob Hokenson, son of one of the original brothers for whom the business was named, became a longtime director of the electric co-op. We ran a feature story on the fishery in February 1994.)

The national lakeshore also encompasses several facilities and lighthouses on the islands. These are available by boat only.

To get to the Apostle Islands themselves, you’ll need to hit the water. Unless you have your own boat or kayak, your options are cruises (to see the smaller islands and their lighthouses) or the Madeline Island Ferry. The latter goes frequently, depositing passengers on Madeline Island at its sole village, La Pointe. The ferry allows autos (under 21 feet in length) and bicycles, but you can also get by for a short visit without your own wheels, thanks to bus tours and the compact size of the village itself. Bikes and mopeds may also be rented on the island.

Once on the island, the varieties of activities depend largely on your physical shape and inclinations. The athletic types can swim, kayak, fish, go bicycling around the island, or play a round of golf at the Madeline Island Golf Club. More sedentary choices include a walking tour of the small village, shopping in the numerous small galleries and gift stores, sunning in the sand at Joni’s Beach, or simply eating or sipping a cold beverage while admiring the spectacular lake view at one of the restaurants or at the golf club (open to the public).

Not to be missed is the Madeline Island Museum, operated by the Wisconsin Historical Society and centrally located in La Pointe. It focuses on 300 years of island life, from Ojibwa culture to the fur traders, missionaries, loggers, and fishermen.

July and August herald the tourist season with many special events on Madeline Island, including a festive Independence Day celebration and parade on July 4; a demonstration of life during the 18th-century fur trade from July 20–22; a live demonstration of the Ojibwa traditions and customs on August 3–5; and demonstrations showing how wild rice is gathered and prepared on August 17–19. All of these events are held in or near the Madeline Island Museum.

Whatever your choices for activities, hop on the ferry for a wonderful adventure on your watery wonderland! Bon voyage!—Linda Hilton

For further information about the Apostle Island National Lakeshore, visit www.nps.gov/apis or call 715/779-3397. For information about Madeline Island, including activities, accommodations, services, and tours, visit www.madelineisland.com or call 888/475-3386. And for information about the ferry, including rates and schedules, visit www.madferry.com or call 715/747-2051.