Electric Schemes, Nuke Dreams

On Thursday, the Maryland Senate endangered the Governor’s settlement with Constellation Energy by voting to amend it. Here’s why the Governor’s deal is worth passing.

When the administration and Constellation, parent company of electric utility BGE, settled their lawsuits against each other, the deal had several components. First, BGE’s residential customers would receive $187 million in one-time rebates, or $170 each. Second, individual Constellation investors would be permitted to own up to 20% of the company each. Third, BGE customers would see limits on electricity distribution charges in the future. Fourth, BGE agreed to add two independent seats to its board. Fifth, the deal cut the liability faced by ratepayers for eventually decommissioning the Calvert Cliffs nuclear plant from $5.2 billion (which Constellation is permitted to collect by the 1999 deregulation law) to $3.7 billion (the current estimated shutdown cost). This will save Marylanders $1.5 billion. There are additional smaller components but these are the most important parts of the deal.

The Governor’s settlement was contingent on passage by the legislature. Constellation’s position was that the deal had to pass without changes. But the Senate thought better. On a 27-18 vote, the Senate added an amendment to regulate the sale of electricity from any new plants built in the state, essentially a limited rollback of deregulation. Senate President Mike Miller and the Governor claim that this vote endangers the deal because it changes its terms. Now it’s hard to blame the Senators who voted for the amendment. Deregulation has been a disaster for Maryland ratepayers and has created shocking wealth for the power companies and their CEOs. But the best reason for sticking with the Governor’s deal is its least-mentioned and most-important provision: the $1.5 billion reduction in the Calvert Cliffs decommissioning liability.

As someone who works for a union that gets carpenters and millwrights hired onto nuke jobs, I can tell you that these jobs are really, really expensive. All trades workers that set foot into a nuke plant must pass background checks and drug tests. And those checks and tests are repeated over and over. All of the workers have completed or are enrolled in four-year apprenticeship programs and numerous journey upgrade and safety courses. (We actually own a gas turbine at our international training center that our instructors practice dismantling and assembling.) Many workers also need to get haz-mat (hazardous materials) certifications. Often, there’s not enough qualified workers in the local area so out-of-state people are flown in. Those guys get per diems and sometimes even signing, retention and head-hunting bonuses. Everybody gets top scale and massive amounts of overtime. Even the laborers are rolling in dough. And part of the decommissioning will include clean-up and storage of radioactive waste. You don’t want to know how much that costs. All of this will go on for years at a decommissioning site.

I can’t tell you how much my guys like this kind of work. These jobs are an apprentice’s fancy, a journeyman’s love and a local union business manager’s dream. The last remnant of America’s working-class aristocracy may be the tens of thousands of “boomers” – traveling super-skilled electricians, pipefitters, boilermakers and millwrights – who fan out across the country to work nuke shutdowns and turnarounds. The boomers can make six-digit annual incomes and set themselves up for fat pension checks and lakeside retirement cabins.

So Constellation says the Calvert Cliffs decommissioning will cost $3.7 billion? Horsepuckey. It will cost four billion, five billion… aw, who cares how many billions as long as my members get the work!! (If you were wondering what “bread-and-butter unionism” is, that statement is a good example.)

But enough about my nuke-worshipping hardhats. My point is that if you are a Constellation/BGE customer, you do not want to be on the hook for all of these costs. Let Constellation’s shareholders and/or its merchant generation division pay some of them. The decommissioning liability reduction is a far more valuable asset to BGE ratepayers than the rebate and it is worth protecting.

So my advice to the General Assembly is to approve the Governor’s deal as-is and come back to re-regulate the power industry next year. That way the ratepayers will get their rebates, the residents will get the protections of regulation and BGE customers won’t have to pay $1.5 billion in extra billings. And what about my boomers? We’re all going to strap on our toolbelts and head down to Calvert Cliffs for some of that overtime!

The author is the Assistant to the General President of the United Brotherhood of Carpenters. He wishes he was as well-paid as the boomers.