Friday, May 11, 2012

Too Cheap to Meter:

What Did "They" Mean?

The request for this post comes from what you might initially think is an unexpected source--my husband, who is in telecommunications.  Over the years, he has heard me mention the "too cheap to meter" phrase, and in the odd ways of the world, he now now finds it applies in his field better than it seems to apply in mine.

He thought I had written on the subject and wanted to reference my blog.  When we both discovered that my only mention of "too cheap to meter" had been in a posting in August 2009 [!], in which I merely mentioned the phrase.  I parenthetically said that the interpretations now made of that phrase are wrong, but "that is a story for another time."  Well, almost 3 years later, I guess it is finally another time!  So I write the following account for my husband, and we will cross-link to each other's blogs.

The topic of "too cheap to meter" has come up so often during my career that I maintain a small file of clippings I've collected over the years pertaining to the origins and intended meaning of the phrase.  Perhaps the most telling indication of the persistence of the issue is that it is the one file I can always find easily!  There is absolutely nothing else in my office that I can put my hands on so quickly.

Of course, today, the information in the articles I so carefully tore from old issues of Nuclear News, or saved from newsletters, or carefully photocopied from library journals, is easily duplicated by a Web search.  For the convenience of readers, I will provide web-based references, but for my own purposes, I will continue to save the 25- and 30-year-old clippings that provide the background for some of the more recent material on the Web.

So, where did the phrase "too cheap to meter" come from and what was the intended meaning?  Most accounts date the first expression of this thought to Lewis L. Strauss, then Chairman of the Atomic Energy Commission, in a September 16, 1954 speech to the National Association of Science Writers in New York.  The statement was part of a somewhat glowing vision of the future that Strauss envisioned:

Transmutation of the elements, unlimited power, ability to investigate the working of living cells by tracer atoms, the secret of photosynthesis about to be uncovered--these and a host of other results all in 15 short years.  It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter; will know of great periodic regional famines in the world only as matters of history; will travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds, and will experience a lifespan far longer than ours, as disease yields and man comes to understand what causes him to age.  This is the forecast for an age of peace.

I can only observe that we've only made the smallest increments of progress in the areas outlined by Strauss, and is some cases, no progress at all, so it is perhaps a big disingenuous of the critics of nuclear power to single out that part of the statement as evidence of the "failure" of nuclear power.  As others have pointed out, this is clearly a grand, utopian vision.  It is possible that Strauss was not thinking of any particular technology, just as he was not considering exactly how we would eradicate all disease.   

Furthermore, this is the statement of one individual, and was never endorsed by the AEC as a whole, any other government body, or the industry.  It is true that a statement by the head of an organization often is assumed to be an official statement, but that is not necessarily the case.  Today, when Commissioners of the NRC speak, they routinely point out that they are expressing their own views.  Perhaps in those more innocent times, Strauss did not think it was necessary to do so.  Yet, the criticisms leveled at the industry for failing to achieve electricity too cheap to meter are usually that "they" made this promise and failed to deliver.  

Even more important, most people knowledgeable of the circumstances at that time thought that Strauss was actually referring to fusion power, and not fission power at all.  Here, of course, things get murky, as the statement itself is ambiguous.  Perhaps that is deliberately so.  A number of accounts suggest that he was actually referring to the prospects for fusion.  At that time, there was a secret effort called Project Sherwood that was attempting to develop practical fusion power plants.

Obviously, because of its classified nature, Strauss could not mention it explicitly.  The groundbreaking for Shippingport had occurred only 10 days before his speech, so many people naturally made the assumption that Strauss must have been referring to nuclear fission. Yet a number of people who were familiar with the circumstances, including Strauss' son, Lewis H. Strauss and Kenneth D. Nichols, who served as AEC General Manager under Strauss, all are convinced that Strauss had nuclear fusion in mind when he made that statement.

It is harder to fathom his prediction of 15 years, but the extremely optimistic time period to me reinforces the impression that Strauss was mixing, perhaps intentionally, nearer and longer term visions of the future.  Certainly, the expression "our children" is often used metaphorically to mean future generations, and not literally one's own immediate offspring.

Yet another interpretation of the statement is that "too cheap to meter" should be interpreted as drawing a distinction between the fixed and recurring costs of energy generation.  Whereas fossil-fired plants have large and recurring fuel costs, nuclear power has a large up-front cost, but very small fuel costs.  Thus, conceivably, one could charge customers a fixed fee and not meter the actual usage at all.

My guess is that this is not what Strauss had in mind.  Furthermore, the operating costs of today's nuclear plants include much more than the cost of fuel, and I don't think any utility today would propose an unmetered approach to finance electricity production. 

However, this is just about what has happened in the telecommunications field as discussed today in our sister blog, SpectrumTalk.  It was not so many years ago that long-distance telephone calls were very expensive.  And difficult to make.  I recall that on our first trip to Europe, when I was waiting for a word from a potential employer about whether they wanted to hire me, I had to seek out a Post Office in Switzerland to place a call to the U.S.  (They did offer me the job.)  Today, we can all reach most of the world from any telephone, and most of us have access to services that allow us to contact people in many countries without a per-minute charge--i.e., too cheap to meter!

What is interesting about this comparison is that another utility, the telecommunications area, has evolved to a "too cheap to meter" situation.  This does not necessarily mean that the same scenario is as likely for electricity supply, but it does show that it is not impossible to transition from a situation where a service has high cost per unit of use to a situation where the cost per unit of use is truly negligible.

From today's perspective, the prospects in the electricity arena seem more tenuous.  Although the fuel costs for reactors are low--and fuel costs for solar or wind power are technically zero--electricity production probably inherently has more O&M costs than do telecommunications services.  Furthermore, in today's environment, where public policy encourages people to use energy efficiently, unmetered service would tend to have the opposite effect, so it is unlikely that we will see "free" electricity any time soon.

And yet, in 1954, no one in the telecommunications industry would even have predicted the low cost of telecommunications today, so as my favorite philosopher, Yogi Berra, once said, "It is hard to make predictions, especially about the future."

*** 



19 comments:

  1. Electricity is regularly too cheap to meter. Every time I stay in a hotel, for example. By contrast the charges for phone use are still quite significant.

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    1. Yes, this has historically been the case. However, as the link to Spectrum Talk indicates, this may be changing, and on one recent hotel stay, we even had free long distance calls! See: http://www.marcus-spectrum.com/Blog/files/2cheap.html

      Gail

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  2. This comment has been removed by a blog administrator.

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  3. Well, omitting regulatory and environment hamstringing, is it technically possible to build reactors today "too cheap to meter"? Thorium?

    James Greenidge
    Queens NY

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    1. I think the next comment makes a good start at responding to this question.

      Gail

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  4. This is a good post. It's good to point out that nobody ever *promised* anything, as it seems the anti-nukes turn this into a "failed promise", and that this wasn't any kind of industry statement or marketing for nuclear power.

    However, that said, I still think it is possible that nuclear power could *someday* become too cheap to meter, but in order for that to happen, there are a few prerequisites that have not been, and are not close to being, met. First, the cost of new nuclear reactors would need to come down substantially (if we could get the plants to cost 1/3 as much as they do now, that would be a great start). Second, nuclear would have to provide nearly 100 percent of our energy - in a market, you can't drive the price of a commodity if you only provide 20% or less of that commodity - you will price follow, not price lead.

    Nobody sells power, or any other commodity, any cheaper than the market forces them to. In order for the price of power to come down, there must be a glut of cheaply produced supply. So, cheaper plants brings the cost of production down, while more plants is necessary to create that 'glut' that can ease price pressure.

    As long as anti-nukes do everything they can to prevent more nuclear power from being built, and to keep the cost of new plants from coming down, then it will be a self-fulfilling prophecy that nuclear power will be expensive.

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  5. Gail Marcus wrote:
    Yet another interpretation of the statement is that "too cheap to meter" should be interpreted as drawing a distinction between the fixed and recurring costs of energy generation. Whereas fossil-fired plants have large and recurring fuel costs, nuclear power has a large up-front cost, but very small fuel costs. Thus, conceivably, one could charge customers a fixed fee and not meter the actual usage at all.
    My guess is that this is not what Strauss had in mind.


    I would not dismiss this possibility so easily. At the time Lewis L. Strauss spoke those words, unmetered electricity was still a living memory. My local power utility (Avista Utilities in Spokane, formerly Washington Water Power Company) bought out a large number of small power systems in the late the late 1920s and early 1930. A significant minority of those small power systems did NOT meter power usage. Customers were billed based on watts of connected load. I could easy see a billing system (in a nuclear powered utility) where one's bill would be based on the size of the power entrance to the home. We already have a similar model for telephone, cable TV, and Internet connections.

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  6. The problem with the "too cheap to meter" anti-nuke fraud is that the AEC did issue its official nuclear-specific projections about a month before Mr. Strauss made his general speculations. An excerpt from the August 1, 1954 NY Times: "In its latest semi-annual report the Atomic Energy Commission gives us the benefit of what it calls “our pre-liminary thinking and speculation on the probable pattern of industrial de-velopment and economic benefits that atomic power plants must face.”
    Some of this preliminary thinking and speculation was presented in June by Chairman Strauss of the commis-sion in a statement filed with the Joint Congressional Committee on Atomic Energy. His assumption was that atomically generated energy would be economic if its cost could be reduced to a figure that lies between 4 and 7 mills a kilowatt-hour. There is no prospect that anything like this low cost will be achieved before 1975. Shareholders of light and power companies have no cause to worry, even after 1975, if the hypothetical cost of 4 to 7 mills is really achieved."

    Don Kosloff

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  7. Always interesting how its the public who misunderstands the poor nuclear industry. Either you guys are the most mis-understood people on earth, the poorest communicators, or get caught in the hype YOU promoted! The idea that you are rehashing this now is hysterical.

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    1. @ScottP

      You have hit the nail on the head - the nuclear industry is, in fact, one of the poorest communicators on the planet, especially considering its size and financial resources.

      The industry rarely purchases any advertising so that it can tell its own story in its own way. That is a complete violation of anything taught in marketing 101, which should be a required course for anyone who wants to operate a successful and growing business enterprise.

      For better or worse, most companies involved in nuclear energy are full of people who believe that thermodynamics, material science, and nuclear physics are more important preparatory courses than anything offered on the other end of the campus.

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  8. ScottP,

    You left out another possibity. It is also a reality that I discovered when I was an anti-nuke. That reality is that anti-nukes lie and are not held accountable for their lies. In fact, anti-nukes are enabled in maintaining their falsehoods by the press. The "too cheap to meter" fraud is a case in point and it is being "rehashed" now because it is repeatedly hyped by anti-nukes. Telling lies about important public-policy issues may be hysterical to you, but it is important to the rest of the world.

    Don Kosloff

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  9. Not "hysterical" at all. More like "historical". This whole thing was the subject of an article entitled "Anatomy of a Cliche" sometime back. It is a good lesson in sociological history to see how one thing spoken by one person at one time has been twisted by critics and generalized to be as a tagline for an entire industry.

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  10. see: "The reality today is that the world has changed enough so that it is possible to build a profitable business model around the concept that atomic energy is, in fact, 'too cheap to meter.' I do not even mind if I am quoted as saying so." Rod Adams · March 9, 2005
    http://atomicinsights.com/2005/03/too-cheap-meter-its-now-true.html

    also: "Atomic energy has reached the stage where it is cheaper to avoid meters than it is to keep close tabs on actual consumption. Strauss may have been a little ahead of his time, but he was not wrong about the technical and financial implications of producing power from fuel that is 2 million times more concentrated than its nearest competitors." Rod Adams · March 9, 2005

    I suppose ordinary people will need another "interpretation" since we don't understand.

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    1. @ScottP

      I am flattered that you were able to find my 2005 article and even more flattered that you quoted me as if I was speaking for the nuclear industry when I wrote it.

      In reality, I am a guy who frequently suffers from insomnia and developed a blog and podcast as hobbies that can be pursued during the wee hours of the morning when nearly everyone else who lives in my time zone is sleeping.

      With regard to determining if nuclear generated electricity can be sold with "unlimited minutes" like telecommunications services, please review my math and point to the errors in my logic.

      There really is no need to measure the consumption when customers are using electricity generated in a nuclear fission power plant in the United States. A flat monthly rate high enough to cover capital costs would be sufficient, assuming, of course, that different sizes of wires (power consumption maximum capacity) would require different monthly rates.

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  11. To all readers,

    Wow! More interest than I expected in what I thought was just a review of history. The great comments I received have triggered some additional thoughts that I plan to write up as a new post in the next day or two.

    Thanks to all who wrote, and stay tuned.

    Gail

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  12. Whether or not 'too cheap to meter' has ever been used specifically as a nuclear slogan (or actually believed by its promoters) - it is interesting to note that many renewables advocates are falling into the same trap. They will of course eventually face the same backlash.

    Whenever they claim cost parity on one-hand, or eternally falling technology cost curves - but then race to protect cash subsidies from government they in effect shoot themselves in the foot. Years from now incensed economic commentators will write about 'renewables: the dream that failed' and menace their industry with ill conceived arguments of why they are under-achieving and why the cost of energy just seems to keep going up. You can already see this happening to a certain extent.

    I for one am happy to pay a bit more for energy if that price is stable and if it helps protect public health and the natural environment. We should start thinking more in terms of systems costs - rather than just energy costs.

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  13. David,
    And how many months (centuries) will the waste bill be due? Well....there goes the costs argument.

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  14. Rod,
    I quoted you as if you were speaking for yourself. Others on this page made the point that it was the anti-nuclear movement pointing to and misusing the phrase "too cheap to meter."

    I provided a link to a pro-nuclear individual using that phrase. You need not feel flattered:)

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  15. The nuclear "waste" (actually future fuel) bill has already been paid, unlike for other major sources of energy. For example, most waste from burning coal, that lasts longer than nuclear "waste", goes into land fills with a design life of 30 years. Sometimes such waste kills a lot of people, as it did in Donora PA and Buffalo Creek WV. The rest of the waste from burning coal, including radioactive elements, goes directly into the air and water.

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