President's speech on the power grid

It's 2027. The nation has just experienced its worst black out. On January 27th, in the midst of a surge southward of the polar vortex, the entire mid-continent (MISO) grid went down. Before power was restored 720 people died, mostly from hypothermia, and millions of homes were damaged by frozen pipes and makeshift fires. The economic loss is expected to approach 100 billion dollars, dwarfing the estimated 8 billion dollar cost of the August 2003 blackout. On President's day, February 15th, the President addressed the nation from the Oval Office.

Good evening.

My fellow Americans, the backbone of our society is electricity. For nearly 100 years, almost all American's have enjoyed the manifold benefits of reliable, affordable electric power. But now our electric grid is in crisis. Costs have skyrocketed, reliability has disappeared, as we have learned in the recent, disastrous blackout. But at the same time, we must avoid further exacerbating global warming.

These tragic events have shown that we must have sweeping changes in the way we manage and regulate our indispensable power grid. Tomorrow I will be sending to congress two bills, the Ratepayers in Charge Act (RICA), and the Affordable Nuclear Power Act (ANPA). Together we call this the REPOWER policy.

Under the Ratepayer in Charge Act,

A. The polluter pays.

All subsidies and mandates to any form of power generation shall be eliminated and replaced by a CO2 fee which will depend on the amount of green house gas an activity emits and nothing else. Mankind's use of the atmosphere as a dumping ground for CO2 exhausted by fossil fuel is the mother of all market imperfections. A tax on CO2 is efficient. Whatever level of emissions reduction is achieved by a properly administered tax, it will be achieved with a minimum consumption of the planet's precious resources. And we can control the level of that tax to balance market cost against emissions.

Technology specific subsidies and mandates are the opposite of a pollution tax. They introduce market imperfections and inefficiencies. In their most pernicious form, the tax credit, they are a blatant, in-your-face transfer of wealth from the poor to the rich. They are an insult to the nation's quest for fairness. They must go.

B. The people will control their power.

We will convert the grid to a hierarchy of coops. The distribution of electricity is a natural monopoly. The traditional solution, the regulated monopoly, sets up perverse incentives in which the utility benefits from expanding its rate base whether or not the capital expenditure benefits the ratepayer. At the same time, the utility can ignore variable costs which it can push on to a ``customer" who has no other option.

But attempts at simulating a competitive market have been expensive, tragic flops. In part this has been the result of market distorting subsidies and mandates, which RICA will eliminate. But even if this had not occurred, these efforts were doomed to failure. A competitive market in this situation would result in price spikes which will bankrupt low to moderate income ratepayers. Such price spikes are regarded as unacceptable for good reason. But without such spikes, a truly competitive market is not possible, The resulting compromises generate a bewildering welter of easily gamed regulations which in no way approximates a competitive market, and has led to the recent debacle.

Coops represent a third way. Coops are ratepayer owned local utilities. They operate democratically, according to by-laws approved by the members. Each account gets a vote in this system. A coop recognizes that the local distribution of electricity is a natural monopoly. But if that monopoly is owned by the customers of the monopoly, they will have no motive to over-charge themselves; and they will be the losers if that monopoly is inefficient or unreliable.

Currently, half of the area of the United States is served by electric coops. But most coops are in rural areas. Only about 13% of all Americans are coop members. Converting the rest of the country to coops will be a four step process.

1. Form a muni.

Each town or city shall set up a municipal utility. RICA will create a legal framework to ease this process.

2. Build local back up system.

To provide 2 kilowatts per person, will requires about $2000 per head of Open Cycle Gas Turbines. or $130 per head annually, assuming 30 year life and a real discount rate of 5%. RICA will provide low cost loans to qualifying cities and towns. To qualify, gas plants must be dual fueled and keep at least two weeks of liquid fuel on site.

3. Purchase the area's utility in town distribution system, using condemnation if necessary.

Typically the contract between a city and the utility will have something like a a 20 year life. When that contract is up for renewal, the city holds all the cards provided it can generate its own power. This will require issuing bonds. RICA will provide support for such bonds in the form of purchases and limited guarantees.

4. Spin off the muni to a single purpose coop.

The coop is now in control. It or a consortium of coops can contract with any outside provider of power, be it hydro/wind/solar/nuclear. Since it does not need to buy power, it will have the upper hand in these negotiations. An intelligent policy, and ratepayers can be awfully intelligent shoppers, would be to buy outside power as long as the price is less than the variable cost of using its own generators, which will include the CO2 fee.

This will create an extremely resilient grid. If the outside grid craters for what ever reason, throw a couple of breakers, isolate the local grid from the rest of the world, and turn the lights back on.

But what about global warming?

Now I know what you are thinking. This looks like a largely fossil grid. How does this address global warming? Part of the answer is existing hydro which will be able to undercut the variable cost of the local generators in some areas. Part of the answer is wind or solar. In some areas, unsubsidized wind or solar will be able to undercut the variable cost of the local generators including the CO2 fee, when wind or solar is available. But renewables will not be nearly enough, to push the use of the local fossil generators down to backup for unplanned outages and occasional peaking.

Fortunately, a beneficient Nature has provided us with a solution, a source of 24/7, on-demand electricity that, due to its incredible energy density, could be cheaper than fossil fuel while producing nearly no CO2. It does so while taking up very little land, and producing nil pollution. It need not require new transmission lines. It has been called "a near-perfect providential gift". That source is nuclear power.

But currently nuclear power in the United States is both unaffordable and takes far too long to build. That was not always the case, in the 1960's nuclear power plants that could generate electricity at 3 cents/kWh in today's money were built in four years. And the industry was just getting started.

What happened? We made a tragic mistake. We turned nuclear power over to a regulatory system that is based on and depends on two lies. This cabal of regulators and privileged vendors recites these two whoppers over and over again.

1. Any sizable release of radioactive material would be so catastrophic that it simply can't be allowed to happen. Such a release is intolerable.

2. But don't worry. With enough regulation and paperwork, we can make the probability of such a release so low you can assume it won't happen.

We all know the second lie is false. It was proven false at Three Mile Island, again at Chernobyl, and again at Fukushima. The only way to have no releases is to have no nuclear power. The probability of the next release is 1.00. It is only a question of when?

But the first claim is also false. At Three Mile Island, a full meltdown, the worst case radiation exposure to the public was equivalent to moving from Harrisburg to Denver for a month. At Fukushima a very large triple release, the dose rates to the public are such that, if there is any radiation harm, we wont be able to detect it. This was confirmed by the UN after ten years of searching for that harm. At Chernobyl, essentially a worst case explosion, 30 years on the only detectable radiation harm to the public was a jump in childhood thyroid cancer. This could have been easily prevented by not allowing kids to drink contaminated milk. Provided we keep children from drinking bad milk, the radiation harm to the public associated with an really big, Chernobyl-like release is roughly equivalent to a bad plane crash.

In all three major releases to date, almost all the harm to the public was caused by unnecessary evacuation and exile, and the fear that drove those tragic, and in some cases murderous, measures. The reason for this lack of radiation harm is Nature has provided us with a remarkable ability to repair radiation damage. This ability is indisputable. This ability can be overwhelmed if the dose rate is high enough. But given adequate buffer zones, such dose rates will almost never be experienced by the public in a nuclear power plant release. The worst case, public radiation exposure in a nuclear power plant release is almost always less than that experienced routinely by our astronauts, usually far, far less.

The nuclear power establishment denies our repair ability. It does this to extract tens of billions of taxpayer dollars per year in unnecessary and ineffective clean up programs, and endless research on problems that either don't exist or have straightforward solutions. Most importantly. it does this to perpetuate and expand its power. It is supported by a kleptocracy of incumbent vendors, who have at great expense and effort scaled the NRC's towering paperwork barriers. They are determined to preserve and deepen the regulatory moat that protects their inefficiency and shoddy quality. This is the system that has stifled competition, strangled technological progress, and resulted in nuclear power costing five or more times what it should. This is the system that must be replaced, if we are to survive and flourish.

The crucial question, my fellow citizens, is: with what? Let us go back to the 19th century. In 1830, the first steam railroad in the United States began operation. It was 6 miles long. By 1850, 9000 miles of track had been laid. By 1870, the railroad grid stretched all the way across the country. During the same period, steamboats replaced human powered craft on our rivers, and steamships largely replaced sailing ships in ocean transportation. In 1890, the US electrical grid consisted of one 13 mile line in Oregon. 50 years later almost every home in America had access to electricity. Wealth and health exploded.

But these technological miracles also unleashed a whole new set of dangers on the public. In the mid-19th century, fatal boiler explosions were running at better than 100 per year. The worst of these was the steamboat Sultana. She was badly overloaded with Union soldiers returning home after the end of the Civil War. At least 1700 were killed when 3 of her 4 boilers exploded.

How did we regulate the hazards associated with this technological miracle? Not with bureaucrats and restrictions. Not with subsides and mandates. We did it by requiring compensation to injured third parties and requiring insurance to ensure this compensation was paid. The insurers then set up certification services, which set the rules which must be followed to obtain insurance, and then inspected the construction of the facility or ship to insure it was built to those rules. These services then performed regular inspections and surveys to determine if the operation should be allowed to continue to operate. The insurers are constantly asking the question: can we make money insuring this risk? If not, we won't insure it.

At the same time, the underwriting market is very competitive. If one underwriter is willing to insure a risk for a premium that is less than his competitors, he will get the business. This system sets up a balance between cost and safety. Under this system, both high pressure steam and ocean shipping has become both far safer and far cheaper. This system must be extended to nuclear power.

To enjoy the manifold benefits of cheap nuclear power, I hereby ask Congress to repeal the Atomic Energy Act; and replace it with the Affordable Nuclear Power Act (ANPA). Under this Act, the NRC will be replaced by the Nuclear Monitoring Agency (NMA). Each nuclear plant will be required to maintain a grid of radiation sensors through out the surrounding region. The NMA will monitor this grid. In a release, the NMA will use the grid's measurements to estimate each individual's maximal radiation exposure. This shall be based on assuming each person stands outside his or her residence 24/7. Since the dose rate can be cut by a factor of 10 or more, merely by being inside, this maximal exposure will almost always be many times the actual exposure. The NMA will then estimate each resident's Lost Life Expectancy using a radiation harm model, that recognizes our ability to repair radiation damage, but does so in a very conservative manner. This process is doubly conservative. The maximal dose rate profile will be well above the actual. and the model almost always overstates the harm for a given dose rate profile. The NMA will then pay each resident this compensation at a value per lost-day which the Congress shall set.

This exposure compensation shall be automatic, no fault, not subject to dispute, and exclusive. There would be no requirement to demonstrate any harm, nor any negligence. Only government entities can sue and prosecute the plant. There would also be compensation for lost wages and profits as long as the dose rate at a business is above a level that congress shall set. Details are at the REPOWER website.

Based on the ANPA Compensation Program, Congress will stipulate a procedure for estimating the cost of a reasonable worst case release for each proposed nuclear plant based on the local population distribution, geography, and weather conditions. An example of such a procedure can be found at the REPOWER website.

Congress shall then require iron clad insurance for that amount. Unless a plant can purchase and maintain such insurance, it cannot operate. Under ANPA, it will be the underwriters who set the standards and requirements by which nuclear power plants shall be built and operated, as they do in high pressure steam, ocean shipping, and many other beneficial but potentially hazardous activities.

My fellow Americans, we face the existential threat of global warming. Our electricity grid is in tatters largely because of a misguided attempt to replace on demand power with intermittent sources of electricity. We must have the low CO2, low cost, non-intermittent power that only nuclear can provide. ANPA will make that possible.

REPOWER will be opposed by a powerful complex of special interests. REPOWER will eliminate whole bureaucracies. REPOWER will put a legion of lobbyists out of work. REPOWER will deprive subsidy sucking vendors of monopolistic, progress stifling moats that allow them to overcharge for shoddy products and waste our resources. REPOWER will force the ruling oligarchy to pay their taxes. This syndicate of parasites owns the politicians it needs to ensure that RICA and ANPA are never enacted. But these venal snollygosters have one big fear. You. You can vote the crooks out.

At the REPOWER web site, you can make a solemn pledge to, at the next election, vote against any member of Congress, who opposes RICA or ANPA. The web site will inform you who these people are. Our target is ten million pledges. My fellow Americans, I assure you, if you make these pledges, we will enact RICA and ANPA and restore the American power grid.

Good night. And God bless the United States of America.