- - Wednesday, April 25, 2012

ANALYSIS/OPINION:

Just outside the small town of Genoa, Wis., stands America’s smallest nuclear plant. Once considered the cutting-edge model for powering rural communities, the La Crosse Boiling Water Reactor (LACBWR) stands silent.

But in June 1954, excitement reigned in Genoa. Spurred by President Eisenhower’s “Atoms for Peace” speech at the United Nations, the Dairyland Cooperative voted unanimously to bring nuclear energy to rural Wisconsin and Iowa. Nuclear technology symbolized America’s wealth, ingenuity and global leadership in science. Harnessing nuclear power for peaceful purposes was a national goal.

The Atomic Energy Commission (AEC) approved Dairyland’s nuclear plans in 1961 and agreed to help bring LACBWR online as a demonstration project. In a classic public-private partnership, Dairyland would build and manage the plant, while AEC would build and own the reactor. Nine years later, LACBWR was generating 10 percent of Dairyland’s total output of electricity.

In 1973, AEC sold Dairyland the reactor for $1, leaving the co-op as the sole owner. But when the federal government stepped away, Dairyland soon realized the economics didn’t quite work.

By the 1980s, the plant supplied a mere 5 percent of Dairyland’s electricity, and the influx of costly regulations left the small plant unable to pay for itself. It closed in 1987.

Today, 25 years later, Dairyland ratepayers are still paying for this government-induced experiment — about $6 million every year.

The plant closed with 41.8 tons of nuclear waste on site. (Yes, the federal government is legally responsible for disposing of nuclear waste, and nuclear plants pay a set fee for the service. But, to date, the feds have collected no waste.) Dairyland continues to pay for security and maintenance of the packaged waste that remains at the plant. It will have to keep paying until the fuel is removed. Then it can decommission LACBWR — adding even more costs.

No matter what the era, government seems impelled to become overly involved in energy production. Perhaps it’s because energy touches nearly every aspect of life — from how we get to work and how much we pay for food to our ability to field a national defense. Energy uniquely affects not just the nation, but every business and every individual in it. Thus, energy policy offers a way to express a vision for the nation’s image and direction.

The Eisenhower era had a vision for “peaceful atoms” and rural electricity. President Obama’s vision is green.

Throughout his term, Mr. Obama has looked to green-energy projects to create new jobs and help end a nagging recession. But he also views those projects as an opportunity to showcase American ingenuity and lead the world in a vital area of research and technology. He aims to recharge America’s self-image and international prestige via green energy.

But his approach is flawed.

The president uses subsidies to inflate supply and demand of technologies where little naturally exists. Businesses therefore begin to make decisions based more on political than economic considerations. They ignore the basic financial hurdles facing new enterprises. Thus, subsidized businesses are often unable to exist once the subsidy is gone.

This is not because the underlying technology is necessarily inferior but because the market forces that shape successful enterprises were overridden by the subsidies.

This was true with Dairyland, and it’s true today.

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