Financial History

The U.S. nuclear power industry has a chequered financial history that involves huge cost over-runs and vast financial subsidies - some estimates run as high as $500 billion over its 50-year history.



"The Rust-Bucket Reactors Start to Fall"

Harvey WassermanHarvey Wasserman, editor of and author of Solartopia, has written a blog inspired by the announced closure of the Kewaunee atomic reactor in Wisconsin. He begins by stating 'The US fleet of 104 deteriorating atomic reactors is starting to fall. The much-hyped "nuclear renaissance" is now definitively headed in reverse.'

He points out that Kewaunee may be but the first domino to fall, describing the impact of "low gas prices, declining performance, unsolved technical problems and escalating public resistance" at numerous other old, age-degraded, troubled reactors across the U.S., including San Onofre, CA; Crystal River, FL; Cooper and Fort Calhoun in NE; Vermont Yankee; Indian Point, NY; Oyster Creek, NJ; and Davis-Besse, OH.

Harvey writes "Many old US reactors are still profitable only because their capital costs were forced down the public throat during deregulation, through other manipulations of the public treasury, and because lax regulation lets them operate cheaply while threatening the public health."

Harvey recounts this abysmal history of nuclear power in the U.S., having much to do with doomed economics: "The announcement that Kewaunee will shut could send the US fleet into free fall. Richard Nixon promised the US a thousand reactors by the year 2000. But in fact there were 104. And with the needle now dropping, it's clear the "Peaceful Atom" is on its way out."

But Harvey also points out the momentum applies to new reactors as well, such as at Vogtle, GA and Summer, SC, as well as overseas, in the wake of Fukushima, not only in Japan, but also India, and even Europe, led by Germany's nuclear power phase out.

Harvey writes about the flagship new reactors proposed in the U.S.:

"The two reactors under construction in Georgia, along with two in South Carolina, are all threatened by severe delays, massive cost overruns and faulty construction scandals, including the use of substandard rebar steel and inferior concrete, both of which will be extremely costly to correct.

A high-priced PR campaign has long hyped a "nuclear renaissance." But in the wake of Fukushima, a dicey electricity market, cheap gas and the failure to secure federal loan guarantees in the face of intensifying public opposition, the bottom may soon drop out of both projects.

A proposed French-financed reactor for Maryland has been cancelled thanks to a powerful grassroots campaign. Any other new reactor projects will face public opposition and economic pitfalls at least as powerful."

Harvey, a senior advisor to Greenpeace USA and Nuclear Information and Resource Service (NIRS), will address "From Fukushima to Fermi-3: Getting to Solartopia Before It's Too Late" in Dearborn, MI on Dec. 7th at the official launch event for the new organization, the Alliance to Halt Fermi-3.


More than $900 million cost overrun documented at Vogtle 3 & 4 new reactor construction project

"Burning Money" image by Gene Stilp, Avenging AngelsA coalition of environmental groups, including North Carolina Waste Awareness and Reduction Network (NC WARN), has issued a press release decrying a nearly billion dollar cost overrun at the Vogtle 3 & 4 new reactor construction project in Georgia. The groups warn that further cost increases are likely, due to rushed design and construction that has led to errors, as in sub-foundation grading, rebar quality assurance, and even radiological containment "shield building" design and construction.

Ironically, Vogtle Units 1 & 2 came in at 3,000% their original price tag! Originally, the proposal was to build four reactors at Vogtle, but only two were built. However, even Vogtle 1 & 2 came in at 1,200% the original price tag for the four reactor proposal. Vogtle 3 & 4's skyrocketing price tag continues a history of massive cost overruns at the Vogtle nuclear power plant -- a tradition that the nuclear industry companies being paid those cost overruns, at ratepayer expense and taxpayer risk -- don't mind too much.

The coalition's expert witness Arjun Makhijani, President of the Institute for Energy and Environmental Research (IEER), said: “Southern Company rushed into this project, as evidenced by the many requests for modifications of the license and early technical difficulties and problems including failure of ‘some details’ of early construction to conform to the Design Control Document, according to Georgia Power’s filing with the Securities and Exchange Commission.  Indeed, a part of the cost increase of $900 million appears to be attributable to overcoming delays and rushing the project again despite construction non-compliance.  The cost increase should not be a surprise; rather it is déjà vu all over again.  Rushing nuclear power reactors is not prudent and stockholders and/or the vendors, not ratepayers, should bear the burden of such costs.  It would be much better if construction were suspended until all design issues were resolved.”


"Stop the Nuclear Industry Welfare Program"

"Burning money" image by Gene Case, Avenging AngelsJust a couple days after rocking an anti-nuke rally in Brattleboro, Vermont, calling for the immediate shutdown of Entergy Nuclear's Vermont Yankee atomic reactor, Independent U.S. Senator Bernie Sanders has joined forces with Taxpayers for Common Sense Executive Director Ryan Alexander to pen an article on theHuffington Post entitled "Stop the Nuclear Industry Welfare Program." Sanders and Alexander list the many, large-scale taxpayer subsidies the nuclear power industry has enjoyed for over half a century. Despite this, Wall Street private investors have long refused to risk their own money on new reactors, unless protected by new, unprecedented federal, taxpayer-backed nuclear loan guarantees. They point out the irony of filthy rich nuclear utility companies, like Exelon and Entergy, receiving such public support in the first place: they take in annual revenues of $33 billion and $11 billion, respectively. 

On March 11, 2011, the Union of Concerned Scientists unveiled two major studies, one by David Lochbaum about the near misses at U.S. reactors in 2010, the second by Doug Koplow, a comprehensive analysis of half a century of taxpayer and ratepayer subsidies to the nuclear industry. The long scheduled press conference was eclipsed by the Fukushima Daiichi nuclear catastrophe which began just hours earlier. In this year's annual review report, "Living on Borrowed Time," Lochbaum documented that 5 of 15 near misses at U.S. reactors in 2011 took place at Entergy owned (Palisades, MI X 2; Pilgrim, MA X 2) or operated (Cooper, NE) plants. Sanders and Alexander point out that, for any catastrophic radioactivity release at a U.S. reactor causing more than $12 billion, U.S. taxpayers would be looked to for picking up the tab, under the Price-Anderson Act.


Fukushima further "explodes myth" of "nuclear renaissance"

Images such as the Unit 3 explosion at Fukushima Daiichi seared itself in the public's mind internationallyIn a new report entitled "Nuclear Safety and Nuclear Economics: Historically, Accidents Dim the Prospects for Nuclear Reactor Construction; Fukushima Will Have a Major Impact," Dr. Mark Cooper of the Vermont Law School's Institute for Energy and the Environment compares the cost increases for new reactor construction -- due to increased nuclear safety regulation in the aftermath of the 1979 Three Mile Island meltdown -- to escalating costs that can be expected after the Fukushima nuclear catastrophe. Cooper points out, however, the new reactor construction costs were already skyrocketing before the TMI and Fukushima meltdowns -- but the accidents accelerated the cost increases dramatically.

He concludes: "From a big picture perspective, Fukushima has had and is likely to continue to have an electrifying impact because it combines the most powerful message from TMI on cost escalation with the most powerful message from Chernobyl on the risk of nuclear reactors in a nation where it was not supposed to happen. And, it has taken place in an environment where information and images flow instantaneously around the world, so the public sees the drama and trauma of losing control of a nuclear reaction in real time."


The staggering cost of replacement electricity for shutdown reactors

A neglected aspect of the astronomical costs of nuclear power is the staggering costs of replacement electricity during the frequent safety related shutdowns of large atomic reactors, which can take hundreds or even thousands of megawatts of electricity off the grid. During the 908 megawatt-electric Davis-Besse atomic reactor's 2002 to 2004 "Hole-In-the-Head-Fiasco" shutdown, FirstEnergy paid over $600 million for replacement electricity, repairs, and record fines (of $33.5 million) imposed by the U.S. Nuclear Regulatory Commission.

Another stunning example is provided by Pat McNamara in Nuclear Genocide in Canada, Part 4 on "Nuclear Costs to Date":

"Cost of Replacement Electricity

Bruce Power had to shut down reactor 6 for three months in the summer of 2002 because an accident had caused holes in the pressure and calandria tubes. As the summer is the 'peak load' time of year, Ontario was forced to buy replacement power at a cost as high as $2 per kilowatt hour instead of the normal domestic price of five cents per kilowatt hour.

It would cost $1.6 million per hour (at $2 per kilowatt hour) to replace the electricity from the 800 megawatt reactor 6 during peak demand instead of the normal price of $40,000. Assuming two hours per day of 'peak load' purchases for the duration of the three-month shutdown, Ontario would have paid $288 million for replacement electricity instead of $7.2 million at domestic rates.

The problem was worsened because of the other reactors at Bruce Power and Pickering that were on permanent or temporary shutdown. Ontario had a shortfall of up to 4000 megawatt hours of electricity during peak demand that summer which would cost $8 million per hour at $2 per kilowatt hour. It would only take 125 hours at this rate to burn up a billion dollars. To make matters worse, the replacement power they bought was from coal-fired generators, the dirtiest energy source of all.

"In New Brunswick, the provincial government has said it will incur $90- million in additional costs to replace the power lost as a result of delays in $1.4-billion project at the Point Lepreau reactor, the first Candu 6 that AECL has undertaken to refurbish." (The Globe And Mail, Friday, February 13, 2009, By: Shawn McCarthy)"

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