Pyle: In the wet firewood business
A long time ago, when the company now known as EnergySolutions had a different name, and was run by different people, its founder came to visit The Salt Lake Tribune Editorial Board and to ask, in the most restrained way possible, why we didn't like him.
"Have I sold you wet firewood?" asked Khosrow Semnani, founder and once again (after having stepped aside for awhile in penance for being involved in a bribery/extortion scandal) head of Envirocare.
Of course, it didn't occur to me until Semnani had departed that the correct answer to his question was, "You are in the wet firewood business."
Now the enterprise is styled EnergySolutions, and is run by the second, or maybe the third, wave of managers since Semnani sold it in 2004. The company has come up in the world in many superficial ways. Spiffier offices. Nice website. NBA arena naming rights.
But its business model is still fundamentally flawed.
EnergySolutions makes money by accepting for long-term storage various shapes and sizes of relatively low-danger nuclear waste, which nobody wants but which has to go somewhere. It is the very definition of "It's a dirty job, but somebody has to do it."
The problem is, EnergySolutions accepts each shipment precisely once. The only way it can maintain a revenue stream is by maintaining the stream of shipments. Thus its financial incentive to deny access to any offered shipment is minimal, and wouldn't exist at all if it were not for laws that tell it what it can and cannot take.
Last week, we were reminded that those laws may be wanting.
A fresh report from the Legislative Auditor General questions whether there is enough oversight of the EnergySolutions site by the Utah Department of Environmental Quality. Apparently, as Ronald Reagan might have phrased it, there is way too much trust and not nearly enough verify going on.
Waste with levels of radioactivity higher than Utah supposedly allows has made its way into the site in at least 23 different containers another 14 were returned to sender and the company paid minimal fines.
The fact that the state knew about some of those shipments only because EnergySolutions 'fessed up is not at all reassuring.
And that's assuming that the stuff that's packed and shipped from a long way away stuff that nobody can examine without pulling the Mr. Spock death scene from "The Wrath of Khan" is what we are told it is.
Here's where the knee-jerk liberal says that private industry can't be trusted to run a nuclear waste storage site. Too much money at stake. Too many campaign contributions to state legislators. So it ought to be strictly a government operation.
The flaw in that thinking, however, can be conveyed in two words: Yucca Mountain. That federal storage site for nuclear waste, in Nevada, has been in the bickering stages for 30 years. And the only toxic material it holds is the air of political rancor.
So, if we're going to stick with a free market approach, we should learn from the best-understood model of capitalism: the board game Monopoly. The way to make money is not by buying property, but by collecting rents.
If the generators of nuclear waste didn't just have to pay for EnergySolutions to take the stuff off their hands once, but every month, for the next hundred years or so, then the company would either have a reliable revenue stream with less need to widen its customer base, or they'd be priced out of the business and have to close. A perfectly free-market cost-benefit analysis.
No wet firewood involved.
George Pyle, a Tribune editorial writer, barely moves the needle in any measure of energy. Email him at email@example.com or follow him on Twitter @debatestate
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