DTE’s costly strategy on Fermi 3

Jeff Alson is an environmental engineer who has promoted sustainable transportation policies at the U.S. Environmental Protection Agency in Ann Arbor since 1978. He is also a member of the Alliance to Halt Fermi 3 (www.athf3.org) The views presented are his own and do not necessarily reflect those of the EPA.

One of the best kept secrets in southeastern Michigan is that DTE Energy customers will almost certainly be required to pay over $100 million in expenses for wasted planning for a Fermi 3 nuclear power plant. While Fermi 3 is unneeded, unaffordable, and probably unlikely to be built and therefore to ever generate any electricity, ratepayers will likely have to reimburse DTE for its poor judgment due to what I call the Nuclear Con Game (By “con,” I do not mean to imply illegality; rather, that rules which appear to be impartial unfairly tilt the playing field to favor utilities at the expense of ratepayers).

Nuclear Con Game Rule No. 1 is that, if history is any guide, Michigan Public Service Commission (PSC)-approved utility expenditures are reimbursed whether they actually result in useful electricity or not. The PSC approved DTE expenditures for Fermi 3 planning in 2008 (stunning given that DTE’s two previous nuclear plants were spectacular failures ‒ Fermi 1 partially melted down in 1966 and Fermi 2 cost much more than originally estimated. A December 19 filing by DTE states that these paperwork expenditures will soon exceed $100 million and asks the PSC to include them in the rate base.

Nuclear Con Game Rule No. 2 practically guarantees utility profit on every PSC-approved capital expenditure (perversely, the more a utility spends, even on cost overruns, the more it may profit). So DTE ratepayers must not only cover the $100 million, but possibly millions more in profits, rewarding DTE for its poor decision making.

Nuclear Con Game Rule No. 3 is continuing to give the benefit of the doubt to nuclear utilities like DTE, even though reactors completed in the 1980s and 1990s were routinely over budget, and continuing to place the burden of proof on those of us who point out that the nuclear emperor has no clothes. If insanity is doing the same thing over and over again and expecting a different outcome, it is insane to ever expect a nuclear power plant to be built on budget.

Independent experts agree that we do not need electricity from Fermi 3. Even if electricity supply were an issue, conservation, wind, and solar are cheaper, can be brought online more quickly, yield lower life-cycle carbon emissions, and do not entail the risk of an industry-wide shutdown that would be likely after a major nuclear accident in the U.S.

If built, Fermi 3 would be the largest nuclear reactor in the U.S. and would cost at least $10 billion and almost certainly more given the history of massive nuclear cost overruns. I believe it would be the largest investment on a single project in MIchigan history and would take capital away from infrastructure we truly need. For perspective, building Fermi 3 would cost at least 10 times the one billion dollars that nearly everyone agrees we need to repair our roads.

There are many other reasons to oppose nuclear power: the low-but-not-zero probability of a catastrophic accident, the health risks associated with routine radiation releases, and the lack of any long-term, high-level nuclear waste solution. But, however you view these safety and health risks, the nuclear option is simply unnecessary and uneconomic.

Yet, DTE is the only utility in the entire Midwest charging its ratepayers for nuclear plant planning. Why is DTE wasting our money?

The most plausible explanation is that DTE wants to up the ante in the Nuclear Con Game by trying to convince the PSC to approve the use of “construction work in progress” to build Fermi 3. This extreme form of corporate welfare would permit DTE to charge ratepayers in advance for the $10 billion or more needed to build Fermi 3. DTE could place all of the financial risk on its customers and would likely make a profit even if the plant turns out to be a nuclear white elephant.

In this scenario, every DTE customer, over the course of many years, would pay thousands of dollars to build Fermi 3, whether it ever successfully operates or not. This is one of the most important financial decisions affecting families in southeastern Michigan, yet most are completely unaware as so little is known about the project by its customers. DTE’s website makes only brief mention of Fermi 3, does not appear to have been updated since 2008, and also appears to make no mention of the $100 million spending to date or the billions that may be spent in the future.

If you want to influence your family’s financial future and prefer that your ratepayer dollars go toward conservation, wind, and solar rather than Fermi 3, then you should let DTE and the PSC know that it is time to come clean with ratepayers and shut down the Nuclear Con Game.