A nuclear power plant may be next for new mexico

Federal lawmakers patted themselves on the back, last Friday, in a joint bi-partisan news release issued by three New Mexico politicians: U. S. Senators Pete Domenici and Jeff Bingaman, and U. S. Congressman Steve Pearce. Their celebratory remarks were meant to remind voters why the politicians were in Washington – to bring their state new jobs for at least some of New Mexico’s voters. While the chorus of praise revolved around creating new jobs and bringing millions of dollars into the state’s economy, is there more behind this story, which has not yet been told? For Senator Domenici, this was another major victory as the longest serving U. S. Senator in New Mexico’s history. The Republican Senator heads the Senate Energy and Natural Resources Committee. Domenici made his views on nuclear energy quite clear in his book “A Brighter Tomorrow: Fulfilling the Promise of Nuclear Energy” (Rowman & Littlefield, 2004). He began pursuing Louisiana Energy Services to move to New Mexico in February 2003, after it became apparent Hartsville, Tennessee didn’t want uranium being enriched in their backyard. And again, it was Domenici, whose last minute negotiations with Energy Secretary Samuel Bodman, led to the adoption of the Part 810 Waiver. The waiver allowed Louisiana Energy Services (LES) to contact foreign-owned Urenco Ltd about transferring high technology data (the gas centrifuge technology) to LES so the uranium enrichment technology could be utilized at the new facility. U. S. laws ordinarily prohibit such nuclear technology transfers, but Domenici’s intervention brought the project to the NRC approval stage. LES had been on the drawing boards since 1989, having derived its name from the state of Louisiana. The LES partnership was initially formed with the intent of building its centrifuge enrichment plant in Homer, Louisiana. Senator Domenici’s impact upon the nuclear resurgence in the United States is evident to the entire industry and most politicians. He announced last year, “In 1997, I predicted the resurgence of nuclear energy in the United States. For the last eight years, I have worked to help make that renaissance a reality.” Is there, perhaps, one more achievement Senator Domenici would like to add on behalf of the nuclear industry, before giving up his Senate seat? In his book, “A Brighter Tomorrow,” Domenici bemoans and condemns nuclear fuel reprocessing. With the advent of the Global Nuclear Energy Partnership (GNEP), Domenici may bring a nuclear power plant to New Mexico before he retires. Domenici’s Democratic counterpart, Senator Jeff Bingaman, is the ranking Democrat on the Senate Energy and Natural Resource Committee. We suspect Bingaman may play an integral role in helping Senator Domenici fulfill that dream. Ironically, Senator Bingaman, who last November was invited to a Santa Fe anti-nuclear environmentalist fundraiser, and which highlighted television mogul Ted Turner, was effusive in saying about the LES enrichment facility, “This will be one of the largest construction projects our state has ever seen. And the economic impact in southeastern New Mexico will be tremendous.” Does Bingaman appear to be playing both sides of the nuclear chessboard? No, the former attorney, who reportedly once provided legal advice to uranium mining powerhouse, Kerr McGee, is deftly maneuvering between being a good Democrat and providing what he may honestly believe is best for his state. While Bingaman has curried favor among the environmentalists, in May of this year, he accepted, along with Domenici and others, the William S. Lee Award for Leadership at the Nuclear Energy Institute’s (NEI) annual conference, saying, “I share a belief that nuclear power can make a meaningful contribution to controlling the growth of greenhouse gases, while still allowing our economy to expand.” It was his subsequent remark directed at the NEI, which leads us to believe he may be among the first to support additional nuclear growth in New Mexico. He told the NEI, “I am hoping that you will do your part to use those tools that Congress has put in place to ensure that nuclear power achieves its potential as part of our future energy mix.” The Global Nuclear Energy Partnership In March 2006, Senator Domenici pledged his support to President Bush’s Global Nuclear Energy Partnership (GNEP), “With GNEP, we begin to close the cycle on nuclear waste in ways that prevent proliferation and reduce both the volume and toxicity of waste. By recycling spent nuclear fuel, we can reuse the uranium, which is 96 percent of spent fuel, and separate the most toxic radioactive material to be burned in an advanced burner reactor. By reusing uranium fuel and burning the transuranic material in a new generation of modern reactors, we can reduce the amount of waste placed in Yucca Mountain by a factor of 100.” One of the key technologies in the GNEP program in is the Advanced Burner Reactor (ABR). Deriving its technology from fast reactors, which were used to make nuclear weapons, the concept of the ABR is to minimize the amount of nuclear waste, produced by the nuclear industry’s power plants, to a tiny fraction of content. The concept behind the ABR is to “burn” the transuranic elements, such as plutonium and other long-living radioactive material. In this case, burning the radioactive waste is translated as: destroying the transuranics, by converting them into shorter-lived isotopes. When the transuranic elements are consumed by the ABR, a large amount of energy is released and then converted into electricity. Instead of burying several football fields of nuclear waste in Yucca Mountain (or elsewhere) for one million years, the toxic waste would be recycled as energy to be immediately used to power homes and industry. Part of the GNEP plan is to combine the current, or advanced, light water reactors with the ABR. As the light water nuclear reactors produce transuranics, the ABRs consume those highly radioactive elements. This leaves less nuclear waste for future disposal, and immediately provides energy. The major issue in the western United States, about nuclear waste, is “please don’t put it in our backyard.” Several western states have been approached, and even the Carlsbad area was once discussed. Through the ABR technology, it may be possible to minimize the amount of this waste to make it a less undesirable disposal problem. A look at local New Mexico politics may provide an insight as to where the two U. S. senators may be heading with regards to a nuclear power plant for New Mexico. New Mexico’s Enrichment Facility: Prelude to a Nuclear Power Plant? If Federal lawmakers are happy about the proposed uranium enrichment facility, some of New Mexico’s state politicians were still floating on clouds when we talked to them yesterday. New Mexico legislator John A. Heaton, the Democratic representative serving Carlsbad, waxed enthusiastic about the enrichment facility, “It’s the first step in converting this country to nuclear energy.” Mainly the four state senators and representatives, whom we interviewed, echoed each other’s praise about Urenco’s proposed enrichment facility. “I could not be more pleased,” Senator Carroll H. Leavell told us. “It will have a major, very positive impact on the economy.” At the peak of construction, as many as 1200 workers may be employed. Later, when the facility is operational, about 300 workers will remain. All four were pleasantly surprised that town hall hearings for the proposed facility were overwhelmingly positive, and the local citizens would be delighted to have this facility in built in southeastern New Mexico. Senator Leavell said with disgust, “Most of the (anti-nuclear) protests have come from outside our area, places like San Francisco, DC and Santa Fe.” Senators Leavell and Gay G. Kernan, the state senator from Hobbs, were invited by Urenco Ltd. to tour an enrichment technology plant in Almelo, Netherlands and left impressed with the company, its honesty and especially the management’s attitude of looking at both sides of the issues. Both state senators also observed the surrounding community failed to be negatively impacted by the enrichment facility. Looking for deeper insights into what the future might hold, we asked all four about the possibility of a nuclear power plant in New Mexico. All four agreed it would be desirable. Additional comments by the four state politicians led us to believe there might be a second step, following Heaton’s remark about the enrichment facility being the first step. Donald L. Whitaker, the Democratic legislator from Eunice, the closest town to the proposed enrichment facility, told us, “I would like to see a nuclear reactor in New Mexico.” Whitaker has toured a nuclear facility, and believes one would be great for the state’s economy. “They employ about one thousand and bring high-paying jobs,” he said. Representative Whitaker was not the lone voice among his fellow eastern New Mexican legislators. “Yes, we want a nuclear reactor in New Mexico,” Representative Heaton said. Heaton is the legislature’s Vice Chairman of the Radioactive and Hazardous Materials committee and a member of the Energy & Natural Resources Committee. He discussed the ABR technology and GNEP, explaining how this would solve the waste disposal problem of nuclear reactors and sway public opinion on nuclear energy. Senator Leavell took a more cautious approach, explaining how nuclear reactors need tremendous amounts of water. “I don’t think New Mexico could have a nuclear reactor, not with the current technology.” But, he still agreed it would be a good idea if new technologies were developed, which used less water. Senator Gay Kernan told us, “I don’t know if I should be talking about this, but we are one of the candidates for the GNEP program.” Having heard a rumor that General Atomics may propose building a nuclear power plant in eastern New Mexico, Senator Kernan confirmed such a plant may be on the drawing boards, and telling us West Texas is likely to be developed as an “alternative energy corridor.” She told us, “It would stretch from Carlsbad, New Mexico to the Odessa-Midland, Texas area.” Senator Kernan would also like New Mexico to have a nuclear plant, “I don’t have a problem with that.” The third politician, joining Senators Domenici and Bingaman, in praising the NRC approval of a draft license for LES and Urenco Ltd, was U. S. Congressman Steve Pearcements, issued by his press secretary on Friday and praising the LES announcement, may foreshadow New Mexico’s next step, “Today’s announcement marks a major milestone in our efforts to cement our state’s leadership role in the development of alternative energy.” What greater leadership by a state than in introducing the new GNEP ABR technology in New Mexico? After all, the state of New Mexico remains the founding home to nuclear technology, where the world’s first atomic technology was designed at Los Alamos. In a related development, David Watts, President of the University of Texas of the Permian Basin, recently met with Congressman Pearce about developing a helium-cooled nuclear reactor facility, which would be built underground in either Lea County, New Mexico or Andrews County, Texas. General Atomics of San Diego has funded the pre-conceptual design, which is underway and scheduled for completion in August. Waste Control Specialists has a low-level radioactive waste storage site in Andrews County. Realistically, a nuclear reactor in New Mexico is not out of the question. The legislators may get what they want. We believe Senator Domenici will ultimately set into motion the plans to bring New Mexico its first nuclear power plant. It would become his crowning achievement in helping the nuclear renaissance blossom in this country and in his state.

The importance of maintenance cap ex

Copyright 2006 Geoff Gannon Maintenance Cap-Ex The nice thing about having low capital spending, is the pleasant surprise it creates. You find a company that is earning more (economically) than other companies with the same GAAP numbers. So, the P/E ratio tends to exaggerate how expensive the business is. This is kind of like finding a business with excess cash. While it's true that a business can have too much cash from an efficiency point of view, finding more cash on the balance sheet than you expected is always a good thing, right? The point in each case is that the headline numbers (EPS, P/E, etc.) sometimes lie - and an inordinate number of bargains are found where such "lies" exist – simply, because others aren’t looking there (it’s a less conspicuous bargain). "Wouldn't it mean the company wasn't reinvesting in P&E?" Some businesses have a very strong relationship between the value of the assets in the business and earnings. Others have almost no correlation between the two. For an example of a business that will likely have very different ROAs from year to year (and longer-term) look at Forward Industries (FORD). A less extreme example is Craftmade International (CRFT), further down the spectrum (but still very asset light) you have companies like Timberland (TBL) and K-Swiss (KSWS). For an example of a business, that long-term at least, has to add to assets to add to earnings look at Village Supermarket (VLGEA). In this case (as in the case of most retailers), the long-term correlation between assets and earnings is somewhat obscured by operating leverage; however, logically at least, you do recognize that a supermarket’s earnings will be determined in large part by the number (and size) of the stores being operated. Also on this side of the spectrum (businesses with a strong long-term correlation between assets and earnings) you have various businesses that own distinct, identifiable assets such as: theme parks, pipelines, parking lots, bowling alleys, golf courses, hotels, etc. Of course, you also have asset-heavy manufacturing businesses, especially in price sensitive, commodity-like products. Both of these types of businesses tend to have more predictable returns on assets (at least on the margins). I add the qualifier, because it’s a rare business that is both capital intensive and highly profitable - although I'm sure you could name a handful of such conglomerates. Some asset-light businesses have predictable returns on assets – not so much because there is a strong correlation between assets and earnings, but rather because there is the absence of disruptive change and some real protection from price competition. An example would be McCormick (MKC) – a business that has a fairly predictable ROA largely because it’s simply a great business (albeit a slow growth business). One of the greatest investing conundrums is the fact that it is usually easiest to reinvest retained earnings at past rates of return in a poor business and hardest to reinvest retained earnings at past rates of return in a good business. In other words, many of the least limited businesses tend to be the least profitable, and many of the most profitable tend to be the most limited. That’s why you hear me talk so much about “franchises” and “niches”. I may not have played this point up as much as I should have. But, if I were forced to invest every dime I had in a single business and hold it for the rest of my life, the first characteristic I would look for is a business with virtually no need for maintenance cap-ex. The Pleasant Surprise The pleasant surprise is finding that the GAAP earnings are lower than the actual amount of cash a 100% owner would be able to extract from the business, if he chose not to expand it (via additional spending). A lot of companies have depreciation charges that adequately mirror maintenance cap-ex requirements. That isn’t to say the two items are necessarily the same amount; but, the extent to which they diverge from each other is not terribly specific to the business. The most obvious reason for a major divergence is inflation. Regardless, stocks with similar P/E ratios generally also have similar “owners’ earnings” multiples. This isn’t true if the assets on the book don’t really need to be replaced to maintain the same earnings power. Some businesses do have assets that need to be maintained (brand, technology, etc.) – but, these assets are maintained as a part of daily operations and are not broken out as a separate item (it would be nearly impossible to separate “brand maintenance” from other expenses anyway). The most conspicuous examples of such brand maintenance are all the ads you see for GEICO, 1-800-PetMeds, etc. At least in these two cases, there is no doubt such advertising creates an economic asset that helps generate earnings in future periods. Such spending is not treated as a capital investment. Therefore, GAAP accounting tends to exaggerate the actual cost of day-to-day operations for these businesses and understate the amount of additional investment in the business (both GEICO and 1-800-PetMeds are heavily investing in future growth – it’s just that those investments aren’t in the form of tangible assets such as a new plant). I’m sure it sounds like I’m taking quite a leap here. After all, there have been businesses that argued for the amortization of certain operating expenses that clearly did not have much of a useful life. You may remember a few such instances from the late 90s. However, a review of the past financials for PetMeds Express (PETS) illustrates my point. Since 2000, the company’s revenues have increased roughly tenfold while net Property, Plant, and Equipment has been cut by two-thirds. The reason? Advertising. The majority of the company’s operating expenses are advertising expenses. Let me put the difference between the intangible asset of the 1-800-PetMeds brand and all of the company’s tangible assets into perspective. In 2005, depreciation expenses totaled less than 0.5% of sales while advertising expenses totaled more than 15% of sales. In previous years, advertising expenses were even greater as a percentage of sales. My point is simply that some of this advertising spending (and I’m guessing a whole lot) creates economic benefits in future periods. In other words, economically, part of that advertising spending is an investment, not an expense. I’m not saying GAAP accounting should treat the advertising as an investment in an intangible asset, I’m just saying, the advertising is such an investment. So, the pleasant surprise is the phantom investment. GAAP earnings in previous years were lower than economic earnings, because an investment in future growth was treated as an operating expense. Again, I think this is, in fact, how the item should be treated by accountants. However, investors need to recognize the distinction and adjust their expectations accordingly. To better explain what all this talk of accounting for advertising is about, I’ll provide an excerpt from the company’s 10-K: The Company's advertising expense consists primarily of television advertising, internet marketing, and direct mail/print advertising. Television costs are expensed as the advertisements are televised. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related catalog and postcards are produced, distributed or superseded. Simply put, the hit to earnings is immediate, while the full economic benefits are only realized over a period of many years. That’s what I meant when I said the EPS number (and thus the P/E ratio) “sometimes lie”. This is one of those times. An owner would see the advertising spending differently than the GAAP portrayal. Therefore, he would believe the true P/E ratio was lower than it appeared to be. The Value of Intangibles Intangible assets are often harder to reproduce than tangible assets. There is a nearly infinite potential supply of new plants and stores if a competitor wants to build them - and they can usually be built at the same cost regardless of who builds them. Already, if a competitor wanted to reproduce the 1-800-PetMeds or GEICO brands, they would have to spend considerably more than those companies did, because both brands are fairly entrenched within our minds - they've staked a claim to the territory in our mind where we think "pet meds" or "auto insurance". You can't reproduce those brands at the same cost. Furthermore, in both of these cases, you'd have to lose money or accept a much narrower margin while you did build the brand up. So, while the barriers to entry may not be obvious, the barriers to profitability and dominance are quite clear. Both companies already own a little piece of your mind. That’s valuable real estate – even if it doesn’t show up on the books. Hidden Bargains How does one parse the numbers to find these hidden bargains? There is no purely quantitative way of doing this. Qualitative considerations loom large in any estimate of cap-ex requirements, because the nature of the business and the competitive position of the firm are key determinants of how effective new cap-ex spending is. If you can't explain why one company spends less on cap-ex than its competitors, you have to assume the current skimping on cap-ex is not sustainable. One important caveat though: many companies in the same industry are not competitors, and therefore cap-ex comparisons between them are of little use. For example, Strattec (STRT) and Lear (LEA) both make auto parts. However, they aren't competitors. Lear makes interiors; Strattec makes locks. The lock business is not the same as the interior business. The industries aren't equally profitable and they aren't equally competitive. You have to analyze each business separately - just as you can't lump Amazon (AMZN) and 1-800-PetMeds together, even though they both sell a lot of stuff on the web. Any consideration of cap-ex spending and how it's really divided between "maintenance" and "investment" has to begin with your assessment of the nature of the industry in general and the specific competitive position of the company you're looking at. Then, you can start making cap-ex comparisons. But, don't allow yourself to become unduly wed to the numbers. Bring your understanding of what's needed to maintain and expand the particular business and what competitors are likely to do (and the unintended consequences those likely actions will produce). Some industries are easy. Unless you have a very special case, a steel company's cap-ex will be determined by the long-term economics of the steel industry (which is not extraordinarily profitable). You aren't going to find one company that can skimp on capital spending - they all have to ante up each round. At any one time, the numbers for the last few years may not make this fact obvious, but you'll know it, because of the qualitative judgments you bring to your analysis of any particular steel company. Just as your qualitative judgments about 1-800-PetMeds would have helped you realize the low cap-ex spending there was perfectly fine, because the real investment was the advertising. These are the things the numbers alone can’t tell you.

What you should know about interest rates

For all people shop around for the best rate, there are few who have taken the time to sit down and add it all up. After all, why would you bother? The answer is that understanding just how interest rates work can help you see how important small differences in rates and payment amounts can be. Interest Rates are Compound. It is important to remember that what you owe is compounded - that means you pay interest on the interest you owe from the month before. That means that if you're paying 2% per month in interest, you're not paying 24% per year - you're actually paying 26.82%. Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing. A Thought Experiment. Here's a question: would you rather have $1 million, or $10,000 in a savings account earning 20% per year in compound interest? Well, let's see how that $10,000 would grow. After 10 years: $61,917. 20 years: $383,375. 30 years: $2,373,763. 40 years: $91,004,381. 50 years: $563,475,143. So after fifty years, you'd have over $500 million?! Well, not so fast. Of course, you have to take inflation into account - if we say inflation is 5%, then that money would have the buying power that $10,732,859 does today. Still, that's not a bad return on your investment of $10,000, is it? That's the power of compound interest, and the way the credit card companies make their money (it's also the way pensions work, and the reason the prices of things seem to rise massively as you get older). Be very, very afraid of compound interest. Or, of course, you could start saving, and be very glad of it… Compound Interest Adds Up. Let's work through an example on a more real kind of scale. Let's say you have an average unpaid balance of $1,000 on a card at 15% APR. You will owe $150 in interest for the first year you borrow. However, this amount is then added onto the balance, and interest is charged on that. The second year, you'd owe another $172.50, for a total of $1322.50. It goes on, with totals like this: $1,520.88, $1,749, $2,011.35. After just five years at 15%, you'd owe double what you borrowed. And after 10 years, you'd owe four times what you borrowed! Bet you weren't expecting that. If you let something like that carry on for long enough, you'll end up paying back that credit card for years afterwards, paying back what you borrowed many times over and still not clearing the debt. Most people don't work this out, and feel that the payments must simply be their fault for spending too much money to begin with. One Percent of Difference. One more thing. You might think there's not that much difference between a card that charges 15% APR and one that charges 12% APR. Let's see the difference the lower rate would make to that $1,000 borrowed for five years. Remember, after five years at 15%, you owed $2,011.35. At 12%: $1120, $1254.40, $1404.93, $1573.52… $1762.34 after five years. So you've saved $249.01 from that 3% difference in APR - in other words, you've paid almost 25% less interest.

Personal finance a quick introduction to three money generating instruments

Most people when asked today are either floundering in debt or asset rich and cash poor. This is because most of the funds and plans that people invest in are usually capital appreciation instruments. This means that you can make money due to the difference in the buying and selling price of the instrument. So while you are invested in the instruments, you do not make much with the exception of dividends issued either once or twice a year. This article will therefore introduce you to three common cash flow generating instruments which can help you generate such cash for your investment portfolio. REITS also known as Real Estate Investment Trusts are basically instruments which allow individuals to get a stream of income from the rental income of the properties after the management companies deduct their operating expenses to manage the properties. Yields may vary between classes of properties and you buy the shares in the REITs and have a share of the rental income. Spend time looking at the return of the REIT and the properties portfolio to decide if that REIT is for you to invest in. Avoid REITs with overly high management fees since its not in your best interest. Forex Managed Accounts represent another income stream if you are not into Forex Trading yourself. Some banks and large financial institutions have Forex Traders trading on your behalf and they can give you certain fixed monthly returns each month. Look for companies that have good money management strategies and look at some of their returns before investing in these companies. But that said in Forex the risk comes with great reward so do consider Forex Managed Accounts a possible investment alternative. Oil Trusts work like real estate investment trusts, except that the amount that you get is dependent on the price of oil. You are basically sharing the oil proceeds with the oil field and each month they calculate the price of oil sold and you get a share of that. This means that you will earn more in a month where the price of oil is high. Thus the best time to invest in these more exotic investments is when the price of oil is low and you can purchase more shares of the oil field at a lower price. In conclusion, its not all and gloom in investment land. Spend some time looking and shopping around for cash flow generating money making investments to balance your investment portfolio so that you will not end up asset rich and income poor. Even better, take your capital gained from your other instruments and then slowly place them into real estate of you own and generate even more cash each month to spend. Take massive action today and reach your financial destiny earlier rather than later! Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)

Loan options for your mortgage

There are many new types of loans available for financing your new home purchase. Determine the length of the loan. You have a few options such as 15 years, 20 years or 30 years. There are even some circumstances when the loan can be set for 40 years. This is how long the lender sets for the term of the loan. A shorter length of the time will give you higher monthly payments, but less interest will be paid. Decide on the type of mortgage. A fixed-rate mortgage is the most common with a fixed interest rate over the life of the loan. In the United States you have the option of a government insured FHA loans or a VA loan available to veterans who have served in the U. S. armed services. Your typical loan payment includes interest and principal. With time, the principal is paid down. Other factors affecting your payments might include the option to pay interest only for a certain period. This will allow you to make lower payments but doesn’t reduce the size of the loan. A negative amortization loan allows you to pay less than interest-only. The shortage of the payments are added to your. This type of loan offers the lowest possible payment for a minimum number of years. A hybrid loan is a type of loan where the terms are fixed for a certain period but payment options vary. A 30 year fixed loan that allows interest-only payments for the first 10 years is a hybrid loan. An Option ARM mortgage loan is complicated. They are adjustable rate mortgages with the options of a payment and interest variety. Piggyback or combo mortgages are first and second mortgages combined. Borrowers take out two loans if they have less than the 20% down. Another type of special mortgage loan is the bridge/ swing loan. With this type of loan the seller uses the equity in the first home to buy another home. A Reverse Mortgage is available for anyone over the age of 62 who has enough equity in their home. The lender makes the monthly payment to the borrower as long as they reside in the home. Many mortgage loans come with a prepayment penalty. You must make this payment if your loan is repaid too quickly. If you have a prepayment penalty in the original loan you will have to pay a penalty according to the terms of the loan. You may be allowed to cash out on the equity in your home. The value of your home rises over time allowing your use that equity for financial needs. Generally lenders won’t allow you to cash out until 6 months to a year after you purchase the home, no matter how much equity is built up. Many mortgage loans are available for real estate investors. Using 100% financing for single-family homes gives the investor leverage. Lenders restrict the total number of properties an investor may finance. By doing some research and asking questions, borrowers can find the financing that will fit their needs.