Energy Giant Turns 90, Knocks Off Another Nuke

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He seems an unlikely giant killer. He’s five foot seven, one sixty-five pounds, has a distinct southern accent and is not an Olympic athlete. And yet, by any count, he has stopped the construction or shut down the operations of more nuclear plants in the United States than any other person, living or dead.

S. David Freeman’s ninetieth birthday party was held in February of last year. For some years, Dave (as he is known to friends and detractors both) has effected a gray cowboy hat, and his address includes the term “green cowboy.” Each guest upon arrival at the Ritz Carlton ballroom in Marina Del Rey was given a party cowboy hat to wear. It has been quite some time since Los Angeles was a ranch, maybe 200 years, so everyone looked a little silly in their cocktail dresses or suits and ties and cowboy hats. Not Dave, who was busy dancing with the prettiest girls and grilling the attending politicos, including a PUC Chairman, on what the hell they were doing about global warming.

The cowboy heritage of the man is hard to determine. He was born the son of an immigrant Jewish umbrella repairman, who came to the US after WWI to escape the ongoing nastiness of eastern Europe. His family settled in Chattanooga, Tennessee because they heard it rained a lot there. Dave was born in 1926 in this small southern town where the Tennessee River serves as a major transportation artery. For years, Combustion Engineering had a major fabrication facility on the banks of the river in down town, where they made nuclear reactor vessels and floated them off on the river to waiting customers.

He went off to the Georgia Institute of Technology where he showed much intellectual promise, but went home to go to law school at the University of Tennessee. Eventually he came to Washington to work as an assistant to Chairman Joe Swidler at what was then called the Federal Power Commission. The FPC had some interesting regulatory responsibilities related to the electric utility industry, but you had to be a real energy geek even to know it existed or did anything that mattered much. Dave labored diligently there, and even found time to write the first of his many books, this one called Energy Future. He moved on, as people do in Washington, to work for the House Commerce Committee on Capitol Hill. And then the times found the man.

It is difficult to remember now how little anyone, including just about the entire US government, knew about energy, or cared. There was the FPC, there was the Atomic Energy Commission (“AEC”, now the Nuclear Regulatory Commission) which both promoted and regulated nuclear plants, and there was a small office in the Department of the Interior that, with a mighty staff of ten, fiddled with some ideas about energy conservation. There was no Department of Energy—why would you need one? Energy was plentiful, oil was $2 a barrel, and nuclear plants then abuilding would provide electricity “too cheap to meter,” in the oft quoted words of Lewis Strauss, head of the AEC. But suddenly in October of 1973 energy, at least oil, mattered a lot. US support for Israel in the Yom Kippur war led to the declaration of OEC’s Arab oil embargo, and now energy was all anyone could think about.

The embargo was an emergency that the country was supremely ill-suited to deal with. Richard Nixon declared that oil prices had to be regulated and so it came to pass. But mostly the president tried to ignore the whole thing, since he had a little tiny problem of his own called Watergate. Gerald Ford did little better.

A small group of cobbled together OMB staff tried to get a few programs started during that period, but the President and the senior political people were so distracted that little got done. And as good conservative Republicans, the administration had an aversion to messing in the market anyway. But this gang of staffers would go up to the hill, and try to negotiate something that they could get the White House to approve. And sitting across the table was one of the key Congressional staff guys, Dave Freeman. He was smart, and he’d written a book about energy. This made him one of the only people in Washington, of either party, who had any idea of what to do. And ideas were then and have always been his strong suit. The administration staff was constantly on the defensive, trying to figure out whether what he and the other congressional folks proposed was a good idea or not and whether it was politically salable. Usually the answer to the first question was yes and the second question was no. It was frustrating for all, and the country wasn’t getting any happier with the stalemate as gas lines lengthened.

The embargo ended in the spring of 1974 but the debate on energy policy raged on. Things changed again when Jimmy Carter beat Gerald Ford and moved into the White House. One of the first people he appointed was Dave Freeman, who joined a team of policy people, and this time their role was to actually do something, many somethings, not just to explain why nothing could be done.

The new policy proposals were not as grounded in fact as one would have liked, given the remarkable void of data on how much energy the country used and how much it produced. But led by Dave Freeman, and his infectious optimism, progress was made. Ultimately the system produced the National Energy Act of 1978, which did useful things like freeing the price controls on natural gas, setting up a number of energy conservation programs, and almost inadvertently deregulating the generation of electricity. Nobody really knew that the legislation would do that, the focus was on promoting a technology called “cogeneration.” But it was promoted by allowing third parties to make and sell “cogenerated” electricity without being regulated as the utilities were. And the genie was out of the bottle--. competition came to the electric business. And that was bad news for costly technologies like nuclear plants.

Dave was rewarded by President Carter by being appointed the Chairman of the Tennessee Valley Authority. The creation of TVA was one of the most successful of the many government actions taken during the depression in the 1930’s. Its mission was to tame the heretofore untamed Tennessee River, and bring flood control and navigation to the river and electric power to the backward region. Everything was done using money provided by the government, but money that the government loaned to the agency, to be paid back from the power revenues. The TVA built dams on the river, and then coal fired power plants, and sold the power to local distribution companies. It eventually became, by the 1960’s, the largest power generator in the country, with 29 dams and 8 coal plants creating almost 28,000 MW in its seven-state area.

Then things started going off course. In the 50’s and 60’s, power consumption grew at an absolutely predictable 7 percent per year, and you could hardly keep up. The industry fell in love with the promise of nuclear power, and TVA fell the hardest. The first unit, Brown’s Ferry, and went into service in 1974. But after that things got more complicated.

By the time Dave was settled on the 12th floor of TVA headquarters in Knoxville, TVA had five nuclear “units” or reactors in service, three at Brown’s Ferry in Alabama and two at Sequoyah near Chattanooga, and five more plants, with twelve reactors, in construction. They were all behind schedule and over budget. Paying for all this construction raised electricity prices and depressed consumption, and the energy conservation programs being put in place were good for customers, but not so good if you were continuing to churn out power plants that would make increasingly expensive power that no one would need.

People began to notice how much money was being spent. In a budget meeting of top TVA officials there was a line item of a billion dollars, just for interest on the debt that had already been spent on building the nuclear plants. The CFO pointed this out, and said in a delicious Tennessee drawl, “Ya’ll know, this is the first time that we’ve spent more than a billion dollars on interest. Think anyone’ll notice?” Everyone shook their heads, and “Aw, heck no” seemed to be the response. But people did notice.

And so, over his three year period as Chairman, Dave slowly and painfully started to pare away the inventory, stopping procurement, cutting construction employment, mothballing sites. Two units at Phipps Bend near Knoxville, gone. Two units at Bellefonte near Huntsville, Alabama, gone; two units at Yellow Creek near Corinth, MS, gone. And four units at Hartsville near Nashville, gone. By the time Dave’s term was up, Ronald Reagan was president and the handwriting on the wall was clear; his time at TVA was over. He left having stopped the construction of twelve nuclear units at five plant sites. And if he hadn’t done that, it is likely that the federal government would have had to bail out the utility and repay all the debt that would have been required to finish the plants.

Dave moved to the Lower Colorado River Authority (LCRA), a “mini-TVA” in Texas. He repeated the TVA script—start energy conversation programs, don’t over build generation, especially expensive generation. But LCRA had never tried to go nuclear, luckily for it. It was too small and didn’t have enough financial credit.

In 1990 Dave was hired to run one of the largest municipal utilities in California, the Sacramento Municipal Utility District, with the unfortunate acronym of SMUD, pronounced as you would expect. It also had a badly running nuclear plant, Rancho Seco. This plant had suffered, according to the NRC, the third worst nuclear accident in the US. This was before Chernobyl and Fukushima. Dave spearheaded the shutdown of this exceptionally poorly run plant, whose lifetime availability of 39% had contributed to a three-year period during which rates increased 92%. Both of these may be utility industry records, not of a good kind.

After leaving SMUD in spectacularly better shape than he found it, Dave ran the New York Public Power Authority, and then the Los Angeles Department of Water and Power. Neither of these had any nuclear plants or plans, and Dave kept it that way.

He retired from the Department of Water and Power at age 80. But he didn’t fade away. Instead the crisis at San Onofre called to him.

The San Onofre Nuclear Generating Station, or “SONGS” for short, is a two-unit nuclear plant located beside the ocean south of San Clemente. It is owned by Southern California Edison (SCE), and San Diego Gas and Electric is a minority owner. It may be the most visible nuke in the country, easily seen on the west of I-5, just north of Camp Pendleton. These units began commercial operation in 1983 and 1984, with a design life of 50 years. But bad things happened, as they often do at nuclear plants, in this case to a piece of equipment called a steam generator. Nuclear plants heat water in the reactor core, where the water becomes both hot and irradiated. This heat has to be transmitted to clean water that can be flashed into steam and run through turbines, condensed, cooled, and then recycled. The steam generator is a very large cylinder with hot, pressurized water coming in at one end and leaving at the other. The box is filled with thousands and thousands of tubes which carry the non-irradiated water, and around which the “nuclear” water swirls, transferring its heat through the tube walls. But this important heat exchanger wore out its tubes long before anticipated, and so the utility ordered two replacements, one for each nuclear unit. These replacements were very expensive, $671 million each to be precise. Since the design of the plant never anticipated the removal and replacement of these giant pieces of equipment, a large hole had to be cut into the domed roof of each containment building so the old heat exchangers could be lifted out and the new ones put in. And then, when that process was complete, the new ones didn’t work as planned either.

Things can’t just be kluged together in a nuclear plant, due to its regulatory status and the dangerous nature of its fuel, so the dilemma that SCE faced was substantial. This seemed like a good opportunity for our hero. The Green Cowboy put on his spurs, linked up with Friends of the Earth, and together they and others mounted a successful campaign to shut down San Onofre permanently. Dave was a key leadership voice in the opposition to restarting the plant, given his remarkable credentials and his long history in the industry. In June of 2013 SCE threw in the towel and shut down the plant permanently.

But Dave still want finished. There is one other nuclear plant in California, the oddly named Diablo Canyon plant owned by Pacific Gas and Electric (PGE). The utility was scheduled to begin its campaign to renew its nuclear license, only shortly after SONGS was laid to rest. This is a process required by the NRC, and includes studies, re-evaluations, and so forth, and is an open invitation to intervenors. Dave and Friends of the Earth intervened, as did many other environmental groups. Dave was quoted as saying the San Onofre and Diablo Canyon are both "disasters waiting to happen: ageing, unreliable reactors sitting near earthquake fault zones on the fragile Pacific Coast, with millions or hundreds of thousands of Californians living nearby". PGE read the tea leaves, and in June of 2016 agreed to cease pursuing a re-licensing, close Diablo Canyon’s two units in 2024 and 2025, and replace its output with renewable power and storage. Dave was 90 years and 4 months old.

The “nuclear renaissance,” announced with fanfare sixteen years ago, has resulted in the troubled and still incomplete construction of a grand total of two new US plants, both being built by Toshiba. Dave hasn’t announced any new campaigns with regard to nukes as of this writing. But if one saw him heading for the Vogtle plant of Georgia Power, or the Summer plant in South Carolina, the only two construction locations, one should think about shorting Toshiba’s stock. And if he could stop these construction projects—both way over budget and way behind schedule-- it just might be the best thing that ever happened to the two utilities paying for all this expensive hardware. And it would certainly be good for their customers who will ultimately pay for this expensive electricity.

Mr. Hemphill is the Chairman and CEO of Sunshine Soldiers, a non-profit focused on education activities happening in energy, especially with regard to the adoption of renewable energy technology by utilities, commercial customers and homeowners, and strategies to benefit from it. Hemphill is also the author for two business travel books, Stories From the Middle Seat: The Four-Million-Mile Journey to Building a Billion Dollar International Business and Dust Tea, Dingoes & Dragons: Adventure in Culture Cuisine & Commerce from a Globe-Trekking Executive.