More Money, More Problems
During a review of Blue Castle’s early site permit application, the NRC will explore the safety of the site, any environmental-protection concerns and emergency planning. Once granted, the permit is valid for 10 to 20 years, may be renewed for another 10 to 20 years and can legally be sold. During this phase, the NRC holds meetings for public comment on the application.
According to the NRC, Blue Castle’s permit-application review will likely take place between now and 2014. Before breaking ground, Blue Castle would also have to obtain a combined construction and operating license, which reviews the selected reactor design, environmental impacts and operation and construction protocols, as well as the prospective operator’s qualifications. Tilton estimates the permits will cost at least $100 million and expects to have both licenses in five years.
But residents Dunham and Carter don’t feel that the short-term benefits are worth it. “We’re too nearsighted,” Dunham exclaims, frustrated. “Twenty years from now, we’re going to be sorry [we built it]. We don’t need to look to this plant just for jobs.”
Bob Quist of Moki Mac River Expeditions relies on the Green River for his livelihood and knows its changeable nature well. In 1981, he claims, the river ran at less than 700 cubic feet per second all summer. If the Blue Castle plant had been around then, it would have consumed one-tenth of the river’s water all summer long.
Relying on information from pro-nuclear trade groups, Matt Pacenza, HEAL’s policy director, says nuclear energy uses three to four times more water than other energy sources. “Utah is the second-driest state in the country,” he says. “Why would we use the power source that uses the most water?”
Moreover, “We’re only having a conversation about this today because of massive government intervention,” Pacenza says. This intervention comes in the form of loan guarantees, which, he explains, essentially make the government a co-signer on the loan: “If the project fails and doesn’t get built, you and I will pay up to 80 percent of the cost of the project.” According to HEAL and other nuclear watchdogs, projects like this are often delayed or canceled altogether. Even with the promise of federal loan guarantees, builders of nuclear reactors frequently find themselves in financial trouble.
Kent Udell, professor in mechanical engineering and director of the Sustainability Research Center at the University of Utah agrees with Pacenza. “If you take away the subsidies, they really don’t compete with the cleaner forms [of energy].” He estimates nuclear costs to be around $7,000 to $12,000 per kilowatt produced. He places solar at $2,500 per kilowatt and geothermal at $1,800 per kilowatt.
Tilton is quick to point out that he doesn’t find loan guarantees “helpful,” since they only come into effect if the company defaults. He says that while Blue Castle policy states “the least government involvement is best,” he can’t control the methods his future partners might choose to finance their portions of the project, including loan guarantees and raised rates.
Despite the project’s projected $13 billion to $16 billion start-up price tag, Tilton confirms that using private equity from him, his partners and investors in addition to income from investments in New York-based hedge funds and subsidiary Willow Creek LLC means Blue Castle won’t need to raise more capital to finance the early site permit application or the combined operating and construction license.
Willow Creek, headquartered in Grand Junction, Co. and acquired by Blue Castle in December 2010, builds and maintains natural-gas and crude-oil pipelines. In a Blue Castle press release announcing the sale, President Russ Fowles said he he “immediately understood the value of being involved with the new nuclear project.” Tilton views Willow Creek as not only as a source of $30 million per year in revenue, but also as a resource for the overall construction project.
Tilton says once both permits have been approved, other utility companies will join Blue Castle in ownership of the plant. The utilities will help pay for the construction costs. Blue Castle will retain 10 to 20 percent equity. While Tilton says he and his team plan on participating in the operational side, the entity that operates the plant will ultimately be named by the shareholders. Because of SEC regulations, Tilton can’t speculate to the media what these shares might be worth, but they have caught someone’s attention. He says that 18 utilities have already expressed interest in 4,500 megawatts—1 1/2 times what the plant expects to produce.
Kent Udell’s wife, Cherise, is president and founder of Utah Moms for Clean Air. Given her group’s focus on the state’s poor air quality, one might think Utah Moms would support a low-carbon option like nuclear power. But Cherise is concerned. “They’re low emissions until they have an accident. … I don’t think that’s an appropriate risk,” she says.