By WENDELL J. KELLEY
President of Illinois Power Co. since 1966, he came directly to the company after his graduation from the University of Illinois with a B.S. degree in electrical engineering (1949). He served as chairman of the Illinois State Chamber of Commerce, 1973-74, and as chairman of Mid-America Interpool Network, 1971-72, and as a member of the board of trustees. National Electric Reliability Council, 1975-76. A fellow of the Institute of Electrical and Electronic Engineers (1971), he received the distinguished alumnus award, Electrical Engineering Department, E.E. Alumni Association, U. of I., 1973.

Why a utility in coal-rich Illinois is going nuclear

Technological inability to remove sulfur is one factor. Another is that eventually fossil fuel will be too valuable as a chemical to burn. And with world going nuclear, Illinois must be able to generate electricity at competitive prices

EDITOR'S NOTE: This magazine has devoted considerable space to energy issues and most recently the role of coal and nuclear fuel in producing electricity (October, pp. 299-305). The problems in this field from the viewpoint of an investor-owned utility executive are discussed in the following condensation of a speech by Mr. Kelley to the annual meeting of the Association of Illinois Electric Cooperatives on September 10 in Springfield.

WE HAVE a common stake in the construction and operation of the nuclear generating stations at Clinton. The Soyland Power Group, consisting of 15 of your cooperatives, will own nearly 8½ per cent of the capacity of this plant. Western Illinois Power Cooperative will own about 5¼ per cent of its capacity. As you probably know, our plans call for construction of two nuclear generating units at 950 megawatts each.

In order to understand the problems and alternatives we are faced with at Clinton, we must understand why a company that is literally sitting upon one of the cheapest and most plentiful sources of energy in the world—Illinois soft coal—would decide to invest hundreds of millions of dollars in nuclear generation. We would like nothing better than to be able to burn this coal to generate electricity. The main reason we cannot count upon it as the sole source of fuel is because the environmental standards imposed by both state and federal regulations cannot be met with present technology.

When coal is burned it gives off ash and oxides of sulfur. We know how to handle the ash. All of our coal-fired units are equipped with electrostatic precipitators that trap up to 99½ per cent of the fly ash so it does not foul up our air. The sulfur content of Illinois coal is high, and we do not yet know how to burn it and meet the environmental standards for sulfur oxides emissions.

366 / Illinois Issues / December 1975


It would take 15 minutes to read the list of agencies—local, state and national—whose rules must be followed before a nuclear plant can be built

Sulfur removal not yet feasible
It isn't that we are not trying. In late 1969 and early 1970 we started working on the Cat-Ox sulfur removal device at our Wood River plant. It was supposed to be in operation in June 1972. We have invested about $4.5 million in it, and the United States Environmental Protection Agency has invested nearly the same amount. We have to this point demonstrated that the process is not feasible. Other utilities have also been trying to demonstrate other processes for scrubbing the sulfur oxides out of stack gases, but none has yet come up with a satisfactory solution. This will force us to buy Western low sulfur coal and haul it more than 1,000 miles for our Wood River units No. 4 and 5 and also for our new unit at Havana, which will come on line in 1978.

We are also working with a team — including General Electric, Foster-Wheeler, Peabody, Exxon Engineering and Research, and others — to try to get a pilot project going at the Wood River plant for a new concept of a pressurized fluidized bed boiler for burning Illinois coal in such a way as to meet Illinois environmental requirements.

While neither our company nor anyone else has the answers at this time, it is inconceivable, as we look ahead to the future energy needs of our territory and our country, that ways and standards will not be forthcoming to make full use of the enormous supply of Illinois coal we are sitting upon. But as things stand now, we have no choice but to seek out and develop alternative sources of energy, especially nuclear.

Prices must be competitive
The economic, social and cultural life of Illinois depends upon our ability to provide electrical power at competitive prices. As regulated monopolies, people do not think of utility companies as being in competition with one another. Actually, we do compete with each other—regionally and nationally. This competition exists because the availability and cost of electric power are such an important ingredient in the productivity of an area—and in the gross national product of a country. Any area or country with abundant electrical energy has the base for a productive and prosperous economy.

Nuclear power can provide such a base virtually anywhere in the world, because it is such a concentrated source of energy that transportation of fuel is a negligible consideration. The cost of nuclear power in New England is comparable to its cost in the Middle West, California, or Florida. The wide variations in the cost of electricity produced by fossil-fired generation in these areas are due to the wide variations in fuel and transportation costs.

A reversal in energy picture?
Similarly, on an international scale, countries without their own supplies of fossil fuels now have the potential to produce electricity competitively with countries that do have such supplies. As you might expect, countries such as Japan, Taiwan, France, India, and England are building nuclear power capability. The inherent competitive advantage of countries with fossil fuel resources—coal, oil and gas—will diminish as nuclear power becomes more dominant. We may actually see a reversal in the energy picture as the energy-poor countries adopt aggressive nuclear power programs out of necessity, while the energy-rich countries— such as the United States—procrastinate. And that's exactly what we're doing. Even some of the Arab oil countries are investing their "Retro-dollars" in nuclear power plants. In doing so, they are investing now in an alternate energy source for the time when the chemical value of oil and gas make them literally too valuable to burn.

Coal as a chemical
Here in the United States, we must also begin to prepare for the time when our fossil fuels become too valuable to burn. Since our oil and gas reserves are expected to be depleted earlier than the Arab reserves, coal wilt also become a chemical in our economy. Remember that uranium and thorium—the nuclear fuel resources—have essentially no other developed uses except as sources of energy.

Coal and nuclear are the only energy sources available to us in Illinois for electric generation for at least the rest of this century. Natural gas and petroleum are no longer fuels we can use for base load electric power generation. And, for the reasons I have outlined, we cannot be entirely dependent upon coal, although we do expect it to be our primary source of energy for the foreseeable future. That is why our plans to go nuclear at Clinton are so very important to our capability to do our job.

Hurdles to overcome
I wish I could tell you that we had clear sailing ahead to meet our construction schedule at Clinton. We have overcome a great many hurdles, but there are still formidable hurdles, possibly genuine road-blocks, that we must overcome.

The American electric power industry is the most regulated industry in the country—probably in the world. It would take me at least 15 minutes to read the list of agencies—local, state and national—whose rules and requirements we must meet. In addition to such agencies as the Illinois Commerce Commission, the state and federal environmental protection agencies, the Federal Power Commission, the Nuclear Regulatory Commission, and the United States Army Corps of Engineers, we must meet the requirements of smaller agencies such as the Trenkle Slough Drainage District, the DeWitt County zoning board of appeals, several township highway commissions, and the circuit court of DeWitt County. This is in addition to pipeline companies and railroads, and in addition to all the land-owners involved in acquiring the site.

If you want to see for yourself every step we must go through with all these and many other agencies, you can go to the public document room in the Public

December 1975 / Illinois Issues / 367


'The safety factor upon safety factor applied to a nuclear plant is not applied to any other human endeavor'

Library in Clinton, where a copy of every document involved in the licensing process is on file and available to the public. Moreover, public hearings are required as a part of this licensing process. All of our decisions are subject to question by virtually anyone who wishes to question them.

Safety and the environment
Most of the steps we must take are merely tedious and costly, but a number of potential roadblocks ahead may make it impossible to proceed. Most of these roadblocks grow out of concern for safety and the protection of the environment. These concerns themselves are legitimate and understandable. We share them, and I think we know more about the problems and are doing more to solve them than our emotional critics or the entrenched bureaucrats. The entire Clinton project could have been wiped out by differing bureaucratic regulations and interpretations regarding the effects of a few degrees of water temperature on the ecology of a man-made lake that does not yet exist.

We were caught in a cross-fire of bureaucratic disagreement in which one federal agency approved a 96 degree maximum water discharge temperature while another federal agency and a state agency required 90 degrees. We simply couldn't meet the 90 degree requirement without a major revision of plant design that would require an unacceptable schedule delay and a substantial cost increase. All federal agencies have now approved the 96 degree discharge temperature and we recently received a variance from the state. As a result it now appears that we will be able to proceed. But this one issue took 11 months to resolve.

NRC's "What if" policy
We face more complex problems with respect to the safety evaluation of nuclear plants.

The Nuclear Regulatory Commission staff follows a "what if policy in which they attempt to identify every possible problem that could arise in a nuclear power station and then predict the extent of the result. They worry that they are not sufficiently imaginative to dream up every unlikely possibility so they hire consultants to help them. In this way, they create the likelihood of earthquakes, tornadoes, hurricanes, floods, etc., that are larger and more destructive than any that nature has been able to produce in the history of the site. They also create new concepts, such as the "maximum credible accident." They analyze the total reactor piping and components system to determine which pipe break would be the most severe. They then assume that this pipe breaks at the worst possible location and that the pipe springs apart sufficiently so that the water or steam can flow out of both sides of the break totally unrestricted. Then they throw in the assumption that all other systems and conditions are in the worst possible condition. After all these assumptions have been made and the results applied in their severest form, they ask us to prove that the plant will survive and that there will be no failure of the nuclear fuel or containment.

The safety factor upon safety factor applied to a nuclear power plant is not applied to any other human endeavor. If a similar level of conservatism were applied to our modes of transportation, we would have no automobiles, buses, trains, airplanes, or even horses for transportation, all of which have killed people since their first use. This super- conservatism is resulting in higher power costs in our country which in turn, will put us at a competitive disadvantage with other countries. To make our nuclear power competitive, I believe we must apply a more normal risk evaluation to nuclear power generation.

Rates and service
I have spent this much time telling you about our hopes and fears for Clinton because I happen to believe that the solution to this problem—and to most other problems those of us in the electric energy business must solve—depends ultimately upon our customers applying their good sense and judgment to the facts relating to our ability to provide them with the service they must have.

Electric customers won't wait
If all of our customers want service at the same time, we cannot tell them to get in line and wait. We must have sufficient capacity to serve everybody simultaneously all they need. This means we must have generation and transmission capacity all the time— night and day, winter and summer—to meet peak demands whenever they occur. We cannot sell what we have on hand and close up when we are sold out.

Other manufacturing and service companies can maintain their profitability in many ways not available to us. If one line of products becomes unprofitable, they can switch to another. If the price of almonds gets too high, the candy manufacturer can put fewer in each piece or switch to peanuts. When the auto industry found demand falling off for its profitable big cars, it switched capacity to smaller cars and raised the prices to maintain their profitability. Now with their inventory up and demand off, they have cut costs by laying off thousands of workers and stopped production of many lines.

That is the basic law of supply and demand in a free market—and the way it is supposed to work. But supply and demand does not determine our costs, prices, or managerial decisions. Our costs are those of the market place, but the prices Illinois Power can charge are set by law as determined by the Commerce Commission.

Need $1.2 billion
Our construction program over the next five years will require about $1.2 billion. It is impossible to finance this expansion on a current basis. It appears that we may have to go into the open money market during the next five years for nearly $900 million. This figure will be reduced to the extent that future rate increases enable us to generate more cash.

The only way Illinois Power can raise these amounts of money is to earn a sufficient return on existing investments so that additional capital can be attracted. Our projections further show that the only way we can do so is to receive frequent and adequate rate increases. The only alternative is to stop new construction which will mean as our present capacity is utilized there will be no more for future growth, future homes, future places of business, and industrial growth. 

368 / Illinois Issues / December 1975


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