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April 2004 There are 103 operational commercial nuclear power plants in the United States today, and a 104th is expected to resume operations in a few years.1 With only a few notable exceptions they are typically operating very efficiently, that is, at high capacity factors, in an increasingly competitive environment.2 These plants, by in large, compete favorably with fossil-fueled (coal and natural gas) plants in terms of their respective forward costs (operating and maintenance and fuel costs). For 2002, the average nuclear production costs of 1.71 cents per kilowatt-hour (c/kWh) were just slightly less than those of coal plants which were 1.85 cents/kWh.3 On the other hand, the last unit to enter commercial operation was TVA's Watts Bar Unit 1 in June 1996, and the last successful order for a U.S. commercial nuclear power plant was in 1973. No energy generation company in the Unites States has been willing to order and construct a new nuclear plant in more than thirty years, and none have taken anything more than preliminary steps towards purchasing and constructing a new nuclear plant today in the absence of a promise of huge Federal subsidies. This is not because of public opposition; not for want of a licensed geologic repository for the disposal of spent fuel; and not because of the proliferation risks associated with commercial nuclear power. Rather, it is because new commercial nuclear power plants are uneconomical in the United States.
Arguably the best and most current economic comparison of nuclear and fossil-fueled plants is by Professor Paul L. Joskow in a recent interdisciplinary MIT study, "The Future of Nuclear Power."4 As seen from the following table from the MIT Study, in the United States today new nuclear plants are far from being competitive with new natural gas or coal-fueled power plants. The levelized cost of electricity5 generated by a new nuclear plant is estimated to be about 60 percent greater than the cost of electricity from a coal plant or a gas-fueled plant assuming moderate gas prices.
Source: Table 1.3, The Future of Nuclear Power: An Interdisciplinary MIT Study, MIT (2003).
As seen from the Table 5.1 from the MIT Study, reproduced on the next page, this scenario would change if there were a significant tax on carbon emissions, or if an equivalent economic penalty were imposed on fossil-fueled plants through a cap on carbon dioxide (CO2) emissions or a requirement that CO2 be sequestered. Nuclear would be competitive with coal if there were a carbon tax of about $100 per ton of carbon ($100/tC), and with moderately priced natural gas if the tax were about $200/tC.
Source: Table 5.1, The Future of Nuclear Power: An Interdisciplinary MIT Study, MIT (2003).
Alternatively, without the introduction of a significant carbon tax (or capping carbon emissions), in order for new commercial nuclear power generation to become competitive with power generation from fossil plants, some unlikely combination of factors would have to occur -- for example, a 25 percent reduction in nuclear plant construction costs and sustained high gas prices could conceivably lead to a competitive comparison. The nuclear industry has reached a similar conclusion.6 According to Exelon, the largest U.S. nuclear operator with 17 nuclear plants, "Exelon preliminary analyses estimate that gas prices consistently above $5 to $6/mmBTU [approx. $5 to $6/MCF] are needed for new nuclear plants to be competitive."7 Exelon has also stated, "[t]he industry has informally conveyed an acceptance window of $1000-$1200/kwe for capital cost, excluding financing, for any new nuclear facility."8 This is well below the MIT Study's estimated current overnight construction cost of $2000/kWe.9 Combinations of high gas prices and significantly lower capital costs could make nuclear plants competitive with fossil fuel plants, but the bottom line is that in the current economic climate, commercial nuclear generation is not even close to being competitive with fossil-fueled plants and there is no easy path to a competitive market for new nuclear plants. This conclusion is underscored further by the availability of abundant energy efficiency and renewable energy resources, which are emerging as nuclear power's most formidable rivals.
The Industry Response to Its Lack of Ability to Compete in the Power Generation Marketplace Faced with these marketplace realities, the commercial nuclear industry is pursuing another alternative. The industry is pursuing, and is now beginning to receive, taxpayer dollars to subsidize the difference in the cost of nuclear and fossil-fueled generated electricity. Some of the largest and most successful energy companies are lined up at the public trough for what the industry calls an "investment stimulus." First, in 2001, the nuclear industry succeeded in getting the Bush Administration "to support the expansion of nuclear power in the United States."10 Next, in early 2002, the Secretary of Energy unveiled the Department's "Nuclear Power 2010 Program," "a joint government/industry cost-shared effort to identify sites for new nuclear power plants, develop advanced nuclear plant technologies, and demonstrate new regulatory processes leading to a private sector decision by 2005 to order new nuclear power plants for deployment in the United States in the 2010 timeframe."11 As part of the Nuclear Power 2010 program, three nuclear generation companies have applied to the NRC for Early Site Permits for new nuclear plants -- Exelon Generation, Dominion Energy and Entergy Nuclear. The early sites permits would be for sites at the Exelon site near Clinton, Illinois; the Dominion Mineral plant at North Anna, Virginia;
and the Entergy Grand Gulf Nuclear Station in Port Gibson, Mississippi. The federal government is paying one-half the cost of developing each of these companies' early site permit application. The permits, once obtained from the Nuclear Regulatory Commission (NRC), will be good for 20 years and can be renewed for an additional 20 years. Notably, these three corporations are among the largest and most successful electricity generation companies, with combined revenues of $37.1 billion in 2003.12 While quick to grab the taxpayer-supported nuclear pork, none have committed to construct new nuclear plants at any of the sites. And why should they. As I explain below, much more taxpayer support is potentially on the table. The companies recognize that if they make no commitment to build a new plant, the Administration would continue to feed them with an ever-increasing sum of taxpayer-supported largesse. Two weeks ago, two consortia of nuclear companies, including Exelon, Entergy and Dominion, announced they are seeking DOE funds "to demonstrate the licensing process," a euphemism for having the taxpayers pay half the cost of getting a combined construction and operation license from the NRC.13 Again, there will be no commitment to build a plant because the companies know that DOE and the nuclear boosters in the Congress are preparing an even larger nuclear golden egg. In April 2003, Senator Pete Domenici introduced his Energy bill, S.14, which contained a $6.8 billion tax subsidy to the energy companies for 6,000 megawatts of new nuclear generating capacity (approximately six plants).14 In other words, proponents of the Energy bill are prepared to provide multi-billion dollar energy companies about $1 billion in subsidies for each new nuclear plant they build. This bill was filibustered in November 2003, and failed to pass. This year Senator Domenici has reintroduced the bill without the subsidy, but if the new bill, S.2095 passes the Senate, the House may reintroduce the nuclear plant tax subsidy.15 In any case, the handwriting is on the wall. The nuclear industry is looking for huge taxpayer subsidies to jump-start nuclear power plant construction and create the artificial impression that the industry is competitive -- and its allies in the Congress are prepared to provide the necessary support. While having done a fine job of comparing the economics of nuclear v fossil-fueled plants, the MIT Study calls for of a similar array of taxpayer subsidies, but with a somewhat smaller production tax credit to offset the higher risk premium associated with borrowing money for construction costs of a few plants. In addition to endorsing the cost sharing arrangements under DOE's Nuclear Power 2010 program, the MIT Study calls for "a production tax credit for up to $200/kWe [i.e., $200 per kilowatt of electric power] of the plants construction tax credit" for ten so-called "first mover" plants.16 This last proposed subsidy is pegged to the 1.7 cent per kilowatt-hour production tax credit for wind energy, and alone represents an additional $2 billion worth of subsidies for nuclear power plants to be constructed in the United States.17 These proposed subsidies are unjustified in my view, promoting both negative economic and environmental consequences relative to substantially more benign renewable energy generating technologies. It makes no sense to take huge sums of taxpayer dollars from small businesses and working stiffs in the west and give those sums to large, highly profitable energy companies in the east to subsidize uneconomical power plants.
Moreover, by any standard nuclear power is a mature industry that has already benefited from tens of billions of dollars in government subsidies over many decades. The commercial nuclear power industry should sink or swim of its own accord in the free market without additional taxpayer assistance. In the end, if the government subsidized six more nuclear plants, we will have 110 nuclear plants instead of 104 nuclear plants. This will not make nuclear power competitive or solve any of the nation's pressing longterm energy needs or the global warming problem.
Let the marketplace work to address the problems we face and price energy at its full societal cost by internalizing the cost of environmental pollution. Assuming you believe in economic efficiency and a free market, you should be advocating a reduction in subsidies to energy companies for production of electricity by nuclear and fossil-fueled plants. Moreover, to level the playing field and allow all new innovations to compete, you should be advocating internalizing the environmental costs of these technologies. Therefore, you should support a cap on CO2 emissions to limit global warming or accomplish the same by placing a tax on carbon emissions. Global warming is real. It will affect western states in negative ways that we do not fully comprehend, and severe damage may occur sooner than you think. You should work to remove the anticompetitive advantages that poorly-controlled, inefficient, incumbent coal-fired power plants presently enjoy over newer, cleaner, and more efficient coal-fired plants. The country's oldest and dirtiest coal-fired plants continue to get away with pollution-boosting refurbishments that extend their dirty lives and impede the market entry of more efficient, cleaner coal power technologies such as integrated gasification combined cycle. You should devote resources to enforcing the Clean Air Act's new source review requirements, and resist the federal EPA's efforts to weaken those requirements. Finally, you should work to halt the significant damage to western aquifers from coal and uranium mining companies. I don't need to tell this group that water is the West's most scarce and most precious resource. Not one aquifer that has suffered the introduction of uranium solution mining has had its water quality restored to pre-mining status. Severe damage to pristine aquifers and drinking water sources from mining endangers the public health of communities and harms the long economic prospects of the American West. The innate problems facing the nuclear industry have not been solved. When a commercial nuclear generating station irradiates a nuclear fuel rod, nuclear power production does not result in significant greenhouse gas emissions and during normal operations the radioactivity emissions produce far fewer health effects than emissions from coal-fueled plants. Despite this one favorable comparison, nuclear power generation has its own set of unique problems -- proliferation, reactor safety, and disposal of the nuclear waste. These problems need to be solved before expanding our commitment to nuclear power. 1. The "once-through" fuel cycle is the only viable security and economic option. There are serious proliferation risks associated with uranium enrichment and the use of plutonium as a fuel. Currently these are not significant problems in domestic fuel cycle
activities, but they are serious problem at the global level, particularly in developing nations with nuclear programs (e.g., our serious security concerns with the domestic nuclear programs of Iran and Pakistan). Indeed, terrorism is generally regarded as highest security concern of the United States. If we are going to reduce the risk of nuclear terrorism at home and abroad, we must halt the commercial use of nuclear weapon-usable materials such as highly enriched uranium and plutonium. The MIT Study found that reprocessing and recycling plutonium -- which creates weapon-usable material and some of the most radioactive waste in the world -- is also is uneconomic and likely to remain so for decades to come. Separating more weapon-usable material at a tremendous economic loss simply makes no sense. We are not running out of low-cost uranium and reprocessing offers no nuclear waste management benefits. For existing commercial nuclear generators (and for any new facilities built in other countries), we should stick to the so-called "once through" fuel cycle, with direct disposal of spent fuel, and strongly encourage other countries to do likewise. The use of highly enriched uranium fuel is largely confined to about 100 research and test reactors around the world and a few hundred naval reactors in the United States, Russia the United Kingdom and France. There is simply no reason to continue to fuel research and test reactors with weapon-usable highly enriched uranium. IAEA Director General Mohamed ElBaradei, on March 18th said that the U.S. government is working on an "action plan" to get countries worldwide to stop using highly enriched uranium, which can be the raw material for nuclear weapons. The effort to shift research reactors to low enriched uranium fuel, begun during the Carter Administration, is moving too slowly; and with regard to naval reactors, there has been no progress whatsoever due to opposition by the U.S. Navy. 2. Safety of commercial nuclear generation, despite what you may hear, is still a concern. Fortunately, there has not been a catastrophic nuclear accident in the United States, and no partial core meltdown accident since Three Mile Island in March 1979. The risk of a catastrophic accident is widely viewed to be lower today than it was two decades ago. However, in March of 2002, a 6-inch deep boric acid-created hole was discovered in the reactor vessel head at the FirstEnergy's Davis-Besse nuclear generating station in Oak Harbor, Ohio. Only the outer layer of stainless steel, roughly one-half inch thick, remained as part of the reactor's pressure boundary, when the softball-size hole was discovered -- thus avoiding a loss-of-coolant accident that potentially could have turned catastrophic. The complacency of the company, which ignored earlier warning signs, and the NRC regulators in allowing such a situation is inexcusable and raises legitimate questions about the continued safe operation of these aging plants. In the future, for existing plants, the aging of equipment lessens safety, while our increased knowledge base should continue to improve safety. Ultimately, the safety of a nuclear power plants rests on the ability to sustain a robust safety culture among the plant work force. Whether this can be sustained at 100 or more nuclear plans for decades to come remains to be seen. 3. Nuclear waste disposal must be based on a geologically adequate site, not on
standards designed to ensure any site selected is licensed. Finally, there is the problem of nuclear waste disposal. The United States government has put all its eggs in the proposed Yucca Mountain basket. When this site was first selected, it looked far more promising in terms of its ability to geologically isolate the nuclear waste than it does now. To address the growing observation that the proposed site cannot geologically isolate the waste, as seen in the attached figure, the Environmental Protection Agency (EPA) gerrymandered the zone of compliance for environmental laws -- what is called the "controlled area" -- around the Yucca Mountain site to allow for the site to be licensed, rather than protect the public health and environment for generations to come. In simple terms, the controlled area is the boundary beyond which the radiation dose to individuals living nearby must not exceed acceptable levels as the spent fuel canisters corrode away and radioactivity leaks from the site tens of thousand of years into the future. In the direction that radioactivity is projected to leak from the site, the EPA extended the controlled area from five kilometers (km) to 18 km (from 3 mi to 11 mi). Placement of the controlled area boundary any closer than 11 miles from the site would, in short, mean that future radiation doses might be too high for the site to be licensed. EPA now admits that the site will leak. And placement of an environmental compliance boundary far enough away to allow for licensing essentially creates a radioactive septic field rather than the "geologic isolation" contemplated by the Congress in the Nuclear Waste Policy Act. Also betraying the geological inadequacies of the site, EPA applies its site-boundary dose-limit criteria at 10,000 years from now, even though the projected peak doses occur many tens of thousands of years later. This regulatory strategy of gerrymandering the site boundary and ignoring doses after 10,000 years is unjust, morally bankrupt and should be opposed and rejected. The Nuclear Waste Policy Act calls for the siting of more than one geologic repository for spent nuclear fuel and high-level radioactive waste. If the first repository sited is done so on grossly inadequate standards, a terrible precedent will have been set for all future repository sites (which may very well be in the West despite the region's comparative lack of nuclear generating capacity). In sum, my advice to strengthen the state economies and the wonderful natural environment of the West, you should:
oppose continued and massive taxpayer subsidies to mature energy technologies, including nuclear power; internalize the environmental cost of nuclear, and fossil-fueled plants by supporting a cap on CO2 emissions, and tightening regulatory controls on aquifer polluting coal and uranium mines and uranium mills; and call for a repeal of the inadequate EPA regulatory standards for the Yucca Mountain site.