Are US Selling Off US Nuclear Power Plants to foreign interets with No Concern for Health and Safety?
Once you have learned about AmerGen, click here to send an email to Treasury Secretary Lawrence H. Summers http://www.nukebusters.org/html/send_an_email.html
9 Dec 2000 00:40:53 -0500AMERGEN: The British are COMING AGAIN!
Sale of American Nukes to AmerGen Spells Disaster
In 1999, AmerGen, a multinational corporation, offered to buy Three Mile Island for $23 million dollars less than 1/10 of its book value. AmerGen, a joint venture of Philadelphia Electric Co. (PECo) and British Energy, is interested in purchasing as many nuclear reactors as it can gobble up -- at rock bottom prices. It is committed to buy 100 North American nukes. British Energy of Edinburgh is one of Britain's largest generators of electricity.
In Connecticut, the legislature passed a law last year requiring Northeast Utilities to put its power plants up for auction. With bidding complete on their hydro and fossil plants, the Millstone Nuclear Complex is up for grabs next. In a New London Day article in May 99, the two companies interested in purchasing the reactors are AmerGen Energy Co. and Entergy. In fact, Con Edison is buying out Northeast Utilities and part of the agreement is that it will pay less for the transmission lines if it has to acquire NU's bad reactors!
AmerGen is buying the two units of the Nine Mile Point nuclear reactors, which employs 1,350 workers. The Niagara Mohawk Power Corporation of Syracuse owns one unit. A consortium of utilities, which includes Niagara Mohawk, owns the other. AmerGen is buying Oyster Creek for $10 million and the Clinton reactor in Illinois for less than a 10th of its cost. PECo has announced its intention to merge with Unicom of Illinois, which owns another 10 reactors.
Vermont Yankee accepted AmerGen's offer of $23 million including extras such as $60 million in new fuel around $30/KW. Three Mile Island 1 - not including extras - sold for $25 million, or about $29.40/KW. If the deal is not completed by June 2000, AmerGen will only pay $10 million for the nuke. This means the state of Vermont and the ratepayers are subsidizing the take over foe well over 100 million dollars!
The corporation would likely run Vernon station to the ground, firing close to a third of its workforce in cost cutting measures, and gamble that it can decommission the site cheaper than Vermont Yankee's present owners.
IS AMERGEN A GOOD NUCLEAR NEIGHBOR?
In 1996 British Energy made a name for itself by firing 1/3 of its workforce when it took over British Nuclear. BE laid off over 2,500 workers and intends to lay off up to 4,500 to keep its costs down. These firings were seen as "dividend fodder" allowing the corporation to pay its shareholders handsomely. Operating staff at its reactors fell by 1/5 and the workforce decreased by almost 30%.
FULL SCALE ALERT AFTER FIRINGS
The Hunterston B station in Ayrshire, Scotland suffered the greatest loss in workers under BE's cost cutting. A full-scale emergency was declared at the station when fierce winds knocked out the power to cool its reactors. A second loss of power went unobserved by the reduced staff. A full-scale alarm went off in the community to bring in workers to control the reactor problems and keep them from escalating. The station remained shut after workers couldn't restart the back-up generators, vital to keeping the reactors' two cores from overheating.
Frightened staff were called from their homes and battled for five hours to manually reset safety systems before the cores went "critical." The situation sparked fears of a Chernobyl-type reactor meltdown. At first emergency back-up generators switched on automatically. However there wasn't enough staff on duty to manually reset them before the grid went down a second time, leaving staff helpless. BE claims it's safety systems cover all eventualities, but questions remain about BE's cost cutting polices compromising safety.
FIRINGS U.S. STYLE
AmerGen maintains that its cost-cutting measures are directed toward unnecessary fat and inefficiency. The station black out at it's Scottish reactor, raises serious questions about AmerGen's bottom line: profit or safety. These are in conflict in nuclear power operation.
Now AmerGen is transporting it's cost cutting zeal to America. Although AmerGen has not officially bought the Clinton reactor in Illinois as of April 1,1999, the multinational is paying all of Clinton's bills. The reactor has been closed for two years due to health and safety problems and systemic mismanagement. AmerGen stressed that its agreement to pay $20 million for Clinton is interim. For the deal to go forward, Clinton must be in relative full operation by year-end. However AmerGen, while paying the bill, has already laid off 80% of Clinton's contractors with another layoff scheduled in a few weeks.
BARGAIN BASEMENT DEALS IN THE NUCLEAR SHELL GAME
In Pennsylvania, AmerGen is attempting to buy TMI for 23 million dollars ($70 million for the new fuel) under a 1/10 of its book value with the transfer of its decommissioning funds to AmerGen. Entergy is buying the Pilgrim reactor in Massachusetts, for less that 1/5 of its book value and the agreement transfers decommissioning funds to the purchaser. These bargain basement deals enable existing nuclear corporations to rid themselves of their nuclear liabilities, and purchasers to have a financial jump-start into a new generation of nukes on grandfathered sites. The Pilgrim deal allows Entergy, the purchaser, to lay off ½ of its workforce. The Texas Department of Public Utilities has cited Entergy for its bad work practices including firing its skilled workforce, cutting corners on maintenance, and marginalizing safety to make a profit.
Under the agreement, Entergy Nuclear Inc. would buy Pilgrim from Boston Edison for $80 million. Entergy got a bargain, industry analysts say. Of its total bid of $80 million, $67 million was for nuclear fuel. This meant that in effect Entergy paid only $13 million for a plant whose book value is about $700 million. Entergy gets a $466 million trust fund to offset the cost of decommissioning. Pilgrim had a book value of $700 million, cost $238 million to build in 1972. Decommissioning is estimated to cost an $615 million. Entergy will pay the difference between the balance in the decommissioning fund and what it costs to actually shut and dismantle the reactor.
Decommissioning funds are collected from ratepayers and investment income. Because previously utilities were state regulated, they were immune from taxes on decommissioning funds or the interest earned. Original utilities were committed to returning profits in the fund to the ratepayers; AmerGen, however, makes no such commitment. In fact, the multinational intends to keep whatever profits it makes through cutting corners on site cleanup and reward its shareholders even though ratepayers money contributed significantly to the fund. There can be a lot of money in decommissioning-Yankee Rowe the smallest commercial reactor cost $37 million to build and will cost at least $500 million to clean up.
Utilities believe that as decommissioning experience accrues costs will drop as utilities and contractors become more efficient at cleaning up sites. There is no guarantee of this. Current owners of Decommissioning reactors are attempting to limit cleanup, fire skilled workers, and leave the sites as dirty as they can get away with. All to make money.
Decommissioning funds grow slowly, and depend on compounding to amass necessary funds for clean up. Nuclear decommissioning accounts are short of their goal. This decommissioning liability is a significant portion of nuclear utilities' stranded debt. If a utility can't sell its unit and it closes prematurely, as many in New England have, it must negotiate with state regulators to assure adequate decommissioning funds. State regulators have allowed reactors to continue to collect funds from ratepayers until the original license expires.
THE DEAL BREAKERS: TAX BREAKS FOR MULTINATIONALS
The only way that the buying of deteriorating nukes can be profitable for both buyers and sellers is if neither pays any tax on decommissioning funds-the fund that AmerGen intends to make a profit on. The tax status of decommissioning funds is already an issue in the TMI, Nine-Mile and Pilgrim sales.
MELTDOWN IN DEMOCRACY: PRIVATE RULINGS WITHOUT PUBLIC OVERSIGHT
Both AmerGen and Entergy have asked the Internal Revenue Service (IRS) for ''revenue rulings'' concerning the tax treatment of the decommissioning funds when they are transferred to the purchasing companies. Essentially, both the buyers and sellers want the transfer to be tax-free.
The transfer of liability and decommissioning funds to the purchaser is a nuclear shell game to limit liability for the seller and a gamble AmerGen can run and decommission its' reactors cheaper than the former owners. The IRS can break the deal by taxing decommissioning funds. The agency is threatening to do just that. IRS says AmerGen may have to pay taxes on the shutdown funds, created with customer money The deals will likely collapse if AmerGen is forced to pay tax.
Decommissioning funds were set up without anticipation that reactors could be sold to make a profit. This deal is a dangerous precedent in which nuclear corporations with no accountability for health and safety of the community are driven by necessity to cut corners on operation and decommissioning to profit their shareholders. These corporations are eager to gamble that the decommissioning fund will not only cover decommissioning costs, but that that they can cut costs and make profits. This will lead to lower clean-up standards and greater contamination left behind in reactor communities.
The Nuclear Energy Institute, an industry lobbyist, is pushing legislative proposals to change the tax so that money for decommissioning can continue to be collected tax-free, even if the reactor owner is not a state-regulated utility and intends to make a profit on the fund rather than returning the surplus to ratepayers. There is also an initiative under deregulation to allow new utility owners to force the federal and state government to susidize inadequate decommissioning funds of unregulated nuclear utility if the NRC determines that these pr0fiteers lack adequate funding.
POLICY DECISIONS
The issue of whether AmerGen pays taxes on the decommissioning trust funds is a national policy issue and should not be left in the hands of the Internal Revenue Service to determine. The IRS should not subsidize nuclear profiteers. AmerGen and Entergy are attempting to create defacto policy on taxation and the fate of decommissioning trust funds through their private letter revenue rulings. Any decisions must entail the American people and Congress. As states face utility deregulation, this issue will repeatedly surface. It must be an issue for lawmakers and the public to decide. Decommissioning Trust Funds should remain non-taxable only if excess funds return to ratepayers
THE WILL OF THE PEOPLE
In recent polls over 60% of the American people want energy production in the 21st Century to focus on alternatives, not on subsiding the nuclear industry and its bad debts. These aging and embrittled nukes should shut down now. These corporate pyramid schemes undermine the will of the people. These schemes are dangerous in a deregulated energy market and must be stopped before these corporations create an energy monopoly compromising health and safety to line the pockets of their shareholders.
From:
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Once you have learned about AmerGen, click here to send an email to Treasury Secretary Lawrence H. Summers http://www.nukebusters.org/html/send_an_email.html
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