Bradford: Nuclear power’s search for the taxpayer’s wallet

Editor’s note: This op-ed is by Peter Bradford who teaches Nuclear Power and Public Policy at Vermont Law School. He is a former commissioner of the U.S. Nuclear Regulatory Commission and chaired the New York and Maine utility regulatory commissions. His commentary first appeared on www.rockbridgeweekly.com. The column was distributed by Blue Ridge Press.

As the new Congress convenes in Washington next year, nuclear power’s apparently limitless quest for federal subsidies will test the resolve of representatives elected to end Washington’s culture of entitlement and the costs it imposes on American taxpayers.

For ten years now, lobbyists favoring a “renaissance” in building new U.S. reactors have been lining up financial help from taxpayers. They need this help because these new reactors are far more expensive than other ways of generating or saving electricity. Consequently, private investors won’t take the risk of losing a lot of money.

As of late 2008, the lobbyists’ quest seemed to be succeeding. Congress provided subsidies worth tens of billions. Twenty-seven new reactors were awaiting construction licenses, with seven more applications expected in 2010. But then the entire enterprise went off the rails due to the high cost of the nuclear plants coupled with lower electric demand and falling costs of alternatives, especially natural gas.

Today only four plants are making any forward progress. Nothing but a massive new infusion of subsidies from taxpayers and customers can get the renaissance back on track.

The nuclear industry has spent more than $700 million lobbying and contributing to politicians in the last ten years, so the groundwork for rebranding has been established.

This quest for “dumb money” (public money put up with no expectation of any profit) now exceeds $100 billion, or $1,000 in risk exposure per American family. To obtain these funds, the nuclear industry has been trying to convince Washington to pick new reactors as a winning technology in the fight against manmade climate change. So the recent election of newcomers skeptical of climate science and committed to avoiding tax increases and bailouts seems a catastrophe for this special interest.

But not necessarily. Rebranding could save them. Taxpayer backing must be disguised as self-supporting loan guarantees. Governmental favoritism must be called jobs. Climate change must morph into national security.

The nuclear industry has spent more than $700 million lobbying and contributing to politicians in the last ten years, so the groundwork for rebranding has been established. Here’s how the strategy will play out:

Federal loan guarantees will be described as free money. New reactors will be said to have a miniscule chance of economic failure. The industry will offer to pay a fee to cover that tiny risk. Senate Energy and Natural Resources Committee Chair Jeff Bingaman is emphasizing a Clean Energy Deployment Administration that could give the nuclear industry unlimited ability to shift risk onto the taxpayer. Senate Republicans led by Lamar Alexander want socialistic government commitments to underwrite 100 reactors by 2030.

Those loan guarantees will assure a taxpayer bailout even before a collapse. Talk of low risk and self-support is nonsense: Half the reactors ever given licenses in the U.S. were cancelled, some after more than $1 billion had been spent on them. The risk of cancellations and cost overruns remains real, especially because many states now require direct competition among all electricity providers, thereby creating markets in which new reactors can’t compete.

When the government recently suggested a realistic fee for a loan guarantee for two proposed plants in Maryland, Constellation Energy said that such a fee would make the project uneconomic. Constellation sold its share to its partner EDF, most of which is owned by the French government. EDF continues to seek a loan guarantee.

Subsidizing new reactors will also come disguised as job creation. It takes a lot of people to build a nuclear plant. However, it also takes a lot of people to build other types of power plants or to install energy efficiency measures. And these other technologies really are shovel-ready. They don’t require licenses that take years to acquire. And – because they are cheaper than new reactors – they don’t impose job-killing rate increases on industries with big electric bills.

Morphing from climate change to energy security as the menace from which only nuclear power can save us doesn’t hold water either. Our energy security problem is that much of the gasoline we put in our vehicles comes from unstable and sometimes hostile places, especially Iran. Nuclear power doesn’t go in gas tanks, and we don’t burn Middle Eastern oil to generate U.S. electricity. So new reactors will only distract us from the gasoline saving measures that really can make us more secure.

When the nuclear renaissance hoopla began ten years ago, the idea was to support four or five new reactor designs to see if the industry could overcome its history of massive cost overruns to produce cheap electricity safely and cleanly. If the newly elected Congressmen and Senators are true to their principles, they will firmly limit any taxpayer support to those few first mover reactors. If those are successful, private finance in competitive markets should follow. That course, rather than current efforts to have taxpayers underwrite an open-ended renaissance, would certainly shake up Washington’s culture of entitlement.


Comments

  1. Bob Stannard :

    This is perhaps one of the best pieces ever written describing the true costs of nuclear power; at least on the front end.

    People oftentimes say, “Why don’t we do what France is doing?” France’s program is completely subsidized by its government. If we want to become a socialist country then we could follow France’s lead.

    It’s interesting to observe American corporations these days. They cry out against government regulation and say that they want a free capitalist society, until it comes to needing taxpayer’s help for covering the costs of nuclear power, because no private investors would ever invest in such a risky enterprise.

    If placed on a true, even playing field with all sources of energy, nuclear power cannot compete, as Mr. Bradford mentions. They can only compete when they rig the game.

    Doesn’t it seem more reasonable that if the taxpayers are going to be on the hook that they financially support energy sources that don’t leave us with exhorbitant legacy costs?

    Happy Thanksgiving

  2. The Nov./Dec. issue of MIT’s alumni magazine, Technology Review, has an excellent piece on nuclear power and the cost issues, by Matthew Wald who often writes for the New York Times:
    http://www.technologyreview.com/energy/26542/

  3. walter carpenter :

    Capitalism is socialism for the rich.

  4. Howard Shaffer :

    Commissioner Bradford focuses only on the up front cost, as correctly noted by Mr. Stannard. The Florida Public Utilities Commsssion recently approved going ahead with new reactors based on the total lifetime cost.

    A super energy efficient house, with maximum solar heat and solar electric power is more expensive up front, than a house built to present code with fossil, or even wood heat. Advocates of efficiency and solar power have no trouble selling this correct idea. How is it they reverse field when it comes to nuclear power?

    Put another way, since nuclear plants are so large due to the economies of scale, a 1000 room hotel can rent rooms for less than a five 200 room hotels can. The 1000 room hotel has a hard time raising the up front money.

    Investors who got burned by cancellations are wary now. Many were due to activities of intervenors, including the cancellation of Seabrook 2 and the bankruptcy of Public Service Company of New Hanphsire. Intervenors only boast of these successes verbally at public meetings. “We stopped…”

    Finally, how is it the tax credits and Feed In Tariffs for solar and wind power are not subsidies that cost taxpayer-ratepayers money?

  5. Howard Shaffer :

    The super efficient house costs more up front, but is cheaper over its lifetime. This is also true of nuclear power plants, as proven by their record.

    Saying natural gas power is now less expensive than nuclear power accepts that the CO2 produced is OK, doesn’t it?

  6. Peter Bradford :

    Contrary to Mr. Shaffer’s postulation, new nuclear is projected to be far more expensive than many alternatives on a life cycle basis (i.e. initial construction cost, operating cost, fuel cost, later capital investment). This is true even when likely carbon costs are factored in. See, for example, the view of Exelon (operator of the largest U.S. nuclear plant fleet) of the relative cost of carbon abatement options (electric sector only) at http://www.exeloncorp.com/assets/newsroom/speeches/docs/Rowe_RFF_Remarks_Slides_FINAL%2020100512.pdf (especially p. 12). This explains why Exelon recently deferred indefinitely its plans for a new reactor in Texas.

    See also my “Honey. I Shrunk the Renaissance” at http://www.electricitypolicy.com/index.php?option=com_content&view=article&id=2553:honey-i-shrunk-&catid=99:article&Itemid=710.

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