Saturday, April 26, 2014

The Truth About Nuclear Power - Part 13

Subtitle: US Nuclear Plants are Heavily Subsidized

In an attempt to revive a dead industry, nuclear power plants have received, and continue to receive strong subsidies. This, the thirteenth article in the series, discusses nuclear subsidies.  Updated 5/28/2014 -- see below for state of Illinois' attempt to bail out money-losing nuclear plants. 
source: Wiki Commons

Previously, the articles on The Truth About Nuclear Power showed that (one) modern nuclear power plants are uneconomic to operate compared to natural gas and wind energy, (two) they produce preposterous pricing if they are the sole power source for a grid, (three) they cost far too much to construct, (four) use far more water for cooling, 4 times as much, than better alternatives, (five) nuclear fuel makes them difficult to shut down and requires very costly safeguards, (six) they are built to huge scale of 1,000 to 1,600 MWe or greater to attempt to reduce costs via economy of scale, (seven) an all-nuclear grid will lose customers to self-generation, (eight) smaller and modular nuclear plants have no benefits, (nine) large-scale plants have very long construction schedules even without lawsuits that delay construction, (ten) nuclear plants do not reach 50 or 60 years life because they require costly upgrades after 20 to 30 years that do not always perform as designed, (eleven) France has 85 percent of its electricity produced via nuclear power but it is subsidized, is still almost twice as expensive as prices in the US, and is only viable due to exporting power at night rather than throttling back the plants during low demand, and (twelve) nuclear plants cannot provide cheap power on small islands.  Links to previous articles are found at the conclusion of this article. 

Carbon Tax   

Nuclear advocates argue, firstly, for a carbon tax so their plants will be economically attractive. The idea is that, since nuclear plants are powered by radiation-spewing uranium fuel that produces no carbon dioxide, these type of plants should be credited for not producing CO2.  Their argument is based on the fundamentally flawed premise that increased CO2 in the atmosphere causes global warming.  Other forms of power generation that burn fossil fuels, coal, natural gas, do emit CO2.  Congress did not pass a carbon tax, but the present administration accomplished the same goal via the US EPA.  The US EPA effectively got the same result by regulating CO2 emissions from power plants so that coal-fired plants must shut down.  Nuclear advocates see this as a huge victory.  In a sense, the EPA regulations are a form of federal subsidy for the nuclear industry.  

UPDATE 5/28/14:  see link  From the Chicago Tribune, Nuclear plants cannot compete economically, so the Illinois Speaker of the House introduces a resolution urging federal policies to subsidize nuclear plants based on their zero-emissions of CO2.    "Three nuclear plants owned by Chicago-based Exelon Corp. failed to secure contracts to provide power to the electrical grid at an annual auction held last week.
Exelon’s Byron and Quad Cities plants in Illinois were priced out of the auction by competing power providers, the company said Tuesday, placing the future of those assets in question. Its Oyster Creek plant in New Jersey, which is slated to close in 2019, also didn’t clear the auction."     also, 
". . . [Illinois] House Speaker Michael Madigan [D - IL] wants to help keep those plants open. They are among the top employers in the towns and counties in which they operate. A resolution sponsored by Madigan was introduced to the House last Friday urging the U.S. Environmental Protection Agency, the Federal Energy Regulatory Commission and the electric grid operators, to adopt policies that are "friendly" to nuclear power. Translation: enact a new rule to curb carbon emissions, which would be a boon to Exelon because its nuclear plants do not release greenhouse gases."  -- end update

Double Standard on Subsidies

Secondly, nuclear advocates also have a double standard in decrying any subsidies for their competition - primarily wind but also other renewable forms of power generation.  Then, the industry happily accepts subsidies of their own, not just the EPA boost from regulating coal-fired plants out of operation.  The nuclear industry also receives subsidies in the form of: 

1) huge loan guarantees from government, approximately $8.3 billion for the Vogtle plant alone.  (Update 5/4/2014: For more on new nuclear projects with loan guarantees, see link -- end update)
2) government legal relief from radiation liability, under the Price-Anderson Act, (see update just below)
3) regulation that no lawsuits during construction will be allowed (with a minor exception),
4) regulation to raise electricity prices during construction to avoid interest costs on construction loans; [UPDATE - 5/31/2014: South Carolina has already increased rates to pay for nuclear construction, now seeks another increase.  "The latest request, if approved, will mean customers will be paying about $20 more per month for their power than they were at the beginning of 2009. "  see link   end update]

5) operating regulations that are routinely relaxed to allow plants to not spend money to comply. (see Article 15 in the series, link here)  

Each of the five subsidies just listed will may be the subject of a more detailed article.  

Update: 5/11/2014 - Price-Anderson Act, summary.  The Act limits the liability of nuclear plant owners to $10.2 billion, with the US government taking the excess liability above that stated limit.  This is, probably, the greatest subsidy of all.  No nuclear plant would be constructed absent this shielding from lawsuits and damage claims from a major nuclear meltdown and release of radioactive materials.   (see link for more details and analysis on Price-Anderson Act on SLB - Part 25 in TANP series)

The language of the Act states: "The Price-Anderson Act requires owners of commercial reactors to assume all liability for damages to the public resulting from an
‘extraordinary nuclear occurrence’ and to waive most legal defenses
they would otherwise have. However, in exchange, their liability
will be limited to capped amounts established in the Act.
First, each licensed reactor must carry the maximum amount of
insurance commercially available to pay any damages from a severe
nuclear accident. That amount is currently $300 million.
Any damages exceeding that amount are to be assessed equally
against all covered commercial reactors, up to $95.8 million per reactor
(most recently adjusted for inflation by NRC in August 2004).
Those assessments would be paid at an annual rate of no more

than $10 million per reactor. According to the NRC, all of the nation’s 103 commercial reactors are currently covered by the Price-
Anderson retrospective premium requirement.
Funding for public compensation following a major nuclear incident
would therefore include the $300 million in insurance coverage
carried by the reactor that suffered the incident, plus the
$95.8 million in retrospective premiums from each of the 103 currently
covered reactors, totaling $10.2 billion. On top of those payments,
a 5 percent surcharge may also be imposed, raising the total
per-reactor retrospective premium to $100.6 million and the total
potential compensation for each incident to about $10.7 billion.
Under Price-Anderson, the nuclear industry’s liability for an incident
is capped at that amount, which varies depending on the
number of covered reactors, amount of available insurance, and an
inflation adjustment that is made every 5 years.
The Act provides that in the event that actual damages from an
accident are in excess of this amount, Congress will ‘‘thoroughly review’’
the incident and take such action as is necessary to provide
‘‘full and prompt compensation to the public.’’ " -- source: Price-Anderson Act Amendments of 2005. [end update]

Cannot Compete Even With Subsidies

Even with the subsidies in the US, nuclear power has stagnated and is barely limping along on life support.  More plants are shutting down than are being built.


Nuclear power plants in the US are, and have been, heavily subsidized via loan guarantees, liability relief, relief from some lawsuits, a form of a carbon tax that shuts down their coal-based competition, and others.   The only conclusion that can be drawn is US nuclear power plants are heavily subsidized. 

Previous articles in the Truth About Nuclear Power series are found at the following links.  Additional articles will be linked as they are published. 

Part Thirteen - this article  

Part Fifteen - Nuclear Safety Compromised by Bending the Rules

Part Sixteen - Near Misses on Meltdowns Occur Every 3 Weeks

Part Seventeen - Storing Spent Fuel is Hazardous for Short or Long Term

Roger E. Sowell, Esq.
Marina del Rey, California

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