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A Company's Gain From Energy Report's Recommendation
Don Van Natta Jr . NY Times . 24 march 2002

Henry A. Waxman of California is a critic of Bush energy policies.

WASHINGTON, March 23 — In Chapter 5 of Vice President Dick Cheney's national energy report, executives of the once-moribund nuclear power industry were probably thrilled to read that the White House supported "the expansion of nuclear power in the United States as a major component of our national energy policy."

The energy report had embraced a wide array of proposals that the executives advanced in private meetings with Mr. Cheney and documents submitted to members of the task force that formulated a national energy policy.

One such proposal was the development of a new nuclear reactor designed to produce electricity — a gas-cooled reactor built on tennis-ball-size graphite spheres — that the report said "has inherent safety features."

"The industry has an interest in this," the report said, "and other advanced reactor designs."

But only one company, the Exelon Corporation of Chicago, which provided hundreds of thousands of dollars to Republican campaigns in recent years, has an interest in promoting the so-called pebble-bed reactor.

Exelon, the nation's largest nuclear energy company, is the only American corporation developing a design for the pebble-bed reactor, which it says will lead to a new generation of cheaper, smaller and more efficient nuclear reactors. The company says the pebble-bed reactor will be safer, too, though environmentalists in the United States and in other countries have sharply disputed this, calling the pebble-bed reactor a failed system vulnerable to terrorist attack.

The May 2001 national energy report is filled with dozens of positive assessments of proposed new technologies, including nuclear designs and wind-generated power. Most of those assessments favor sectors of various industries, and some undoubtedly favor individual corporations.

But it is impossible to know how and why the task force endorsed most of those proposals, and which corporations they help, because Mr. Cheney has steadfastly refused to release the names of industry executives who advised the energy task force as it was researching and compiling its report.

Next week, more than 14,000 pages of documents related to the task force will be released by the Energy Department, which was ordered by a federal judge to make the material public under the Freedom of Information Act. The Natural Resources Defense Council, an environmentalist group, had sued for the information.

The General Accounting Office, an investigative arm of Congress, has sued Mr. Cheney for a list of industry executives who advised the task force.

The administration's endorsement of Exelon's technology was learned through interviews and documents provided to The New York Times by the corporation itself.

Although Exelon's name is not mentioned in the energy report, its executives lobbied the task force on the benefits of the pebble-bed design.

The task force's endorsement of the reactor was contained in a single paragraph. But a paragraph in a national energy report, like a sentence in a State of the Union Message or a line in a legislative bill, can be a huge boon to a corporation.

Don Kirchoffner, a spokesman for Exelon, said campaign contributions had nothing to do with the pebble-bed reactor's mention in the report. "We didn't influence anybody," Mr. Kirchoffner said.

Using the initials of the Pebble Bed Modular Reactor, he added: "I don't think that it's correct to connect dots between contributions the company made and the fact something on P.B.M.R. appeared in the national energy policy. The P.B.M.R. is just an example of the advanced nuclear technology that everybody says we need."

For Exelon, the paragraph was seen as "a good thing," Mr. Kirchoffner said, but he insisted that the mention of the reactor's design did not necessarily represent a boon for the corporation.

"A good thing for the industry and the country was the fact that the administration came out with a recommendation for new forms of nuclear power, and our pebble-bed modular reactor is a byproduct of that," Mr. Kirchoffner said. "We just happened to have it. They took a look at what we gave them and they said this kind of makes sense."

Exelon owns and operates about 20 percent of the nation's nuclear capacity. Its co-chief executives, John W. Rowe and Corbin A. McNeill Jr., who has since retired, were among a group of about 75 energy executives who met with Mr. Cheney in March 2001. Along with other participants of the Nuclear Energy Institute, the industry's trade group, Mr. McNeill also met that month with Karl Rove, President Bush's chief strategist, and Lawrence B. Lindsey, the president's top economic adviser.

That information was revealed by Exelon officials, not the White House.

Critics of the task force have noted that many companies represented at its meetings gave financial support to the Bush campaign or the Republican Party in the 2000 election. Exelon was no exception.

Exelon, its executives and its political action committee, gave the Republican Party a total of $564,661 in the two years before the 2000 election. Last year, Exelon increased its donations to the Republican Party, giving it a total of $347,514, according to Federal Election Commission reports.

Representative Henry A. Waxman of California, a frequent critic of the administration's energy policies, said: "The more we learn about the Cheney task force, the easier it is to understand why the White House is fighting so hard to keep everything secret. The biggest donors didn't just have the best access — it now appears they were allowed to write specific sections of the administration's energy plan."

Anne Womack, a spokesman for the White House, disputed the notion that campaign contributions were responsible for the endorsement of Exelon's reactor design.

"Advanced reactor technology would increase our energy supply and do it in a way that is safe and clean," Ms. Womack said. "That benefits not only the industry but the American people."

Ms. Womack also said that the task force had consulted "a broad variety of groups, including industry, unions, environmental groups and consumer groups."

"They all had input, and the product of all the input is in the report," Ms. Womack said.'

More than 400 corporations and groups sought meetings with the energy task force last spring. About half that number were granted access, a group that included 158 energy companies and corporate trade associations, 22 labor unions, 13 environmental groups and a consumer organization, task force staff members have said.

Some environmental groups and Congressional Democrats have complained that industry executives — and, in particular, executives from corporations that supported the Republican Party — received far more time and had greater influence than environmental groups.

On Friday, Mr. Waxman released a study that identified 65 provisions in the energy report that he said benefit donors to the Republican Party who had met with task force members or Mr. Cheney last year.

The pebble-bed reactor has attracted sharp criticism from environmentalists as being unsafe and vulnerable to terrorist attack.

"There are many safety problems with this reactor," said Carl Pope, the executive director of the Sierra Club. "It's not safe, and it's certainly not clean. It has already failed once, in Germany.

"And this pebble-bed facility is not going to have a containment shell. It will be a terrorist target just sitting out there waiting for someone. This is just not sensible."

Exelon lobbied the task force on the safety and economic benefits of its design, according to interviews and several documents turned over to the task force.

Exelon provided The New York Times with two documents that the company submitted to the task force that had not been made public by Mr. Cheney: a pamphlet describing the pebble-bed reactor and a one-page description of the reactor's benefits.

The document begins, "Exelon Corporation believes that we have found a technology that possesses the characteristics necessary to successfully compete in a deregulated environment in the P.B.M.R., a design under development in South Africa."

The document argues that the reactor is "safe, economic and clean."

"We provided it to them," Mr. Kirchoffner said of the single-page document. "I can't tell you what they did with it."

The pebble-bed reactor would be cooled by helium, in contrast to the water-cooled reactors now used in the United States. The plant has fewer moving parts and requires a smaller crew, making its operations less prone to problems, the company said.

Exelon has a 12.5 percent interest in the project with Eskom, the state-owned utility in South Africa, the Industrial Development Corporation of South Africa, a state-owned investment firm, and B.N.F.L., the former British Nuclear Fuels Limited. The partnership is studying the feasibility of the pebble-bed reactor, company officials said.

In its papers submitted to the task force, Exelon wrote that the technology "is an evolutionary improvement of a proven design previously utilized in Germany." But several environmentalists said that the Germany prototype failed.

"When you build a design on a proven failure, you are likely to get another failure," Mr. Pope said.

Mr. Kirchoffner said company executives were somewhat less enthusiastic about the pebble-bed reactor today than they were a year ago.

"As a result of the decrease in natural gas prices, and the economy and the less than favorable weather, things have changed since then," he said. "We are being very disciplined now in our approach to looking at P.B.M.R., which may be a lot farther off than it was a year ago."

But the pebble-bed design is still scheduled to be reviewed by the Nuclear Regulatory Commission soon. This month, the commission announced that the design was submitted for its approval by Eskom, the South Africa utility.