Uncertainties Slow Push for Nuclear Plants
Sunday, July 24, 2005
When the nuclear industry looks at the Bush administration's initiatives to promote a new generation of nuclear power plants, it sees a giant dollar sign. Critics see a giant mushroom cloud. For investors and taxpayers, who will have to pony up the cash, the sign may be a giant question mark.
No one has placed an order for a nuclear plant since 1973, but a House-Senate conference committee is weighing an energy bill that includes a clutch of proposals to revive the moribund industry. No matter what bill comes out, however, financial experts and the companies that would order such plants predict that regulatory hurdles and economic risks mean the launch of new plants is at least a decade away -- if ever.
"Moody's would go bananas if we announced we were going to build a nuclear plant," said Thomas E. Capps, chief executive officer of the energy company Dominion Resources Inc., referring to the reaction of credit-rating institutions.
Virginia-based Dominion, which serves nine states and operates four nuclear plants, is among the handful of companies considered most likely to want to build a plant. Capps said the nation should invest more in such plants, but he held out little hope that that would happen without greater incentives than those being discussed on Capitol Hill.
The Department of Energy splits with industry the cost of selecting sites for new plants. Various proposals in the energy bill would have taxpayers share the cost of licensing the first generation of new plants, offer loan guarantees and set caps on industry liability in an accident. A proposal by the White House would protect investors against regulatory holdups by defraying the cost of certain types of delays. Some legislators would give the industry protection against fluctuations in the price of electricity.
Advocates in Congress say such measures are justified because nuclear energy can help reduce the country's dependence on foreign oil, because nuclear energy seems ever more viable as oil prices soar, and because nuclear power does not produce greenhouse gases that are linked to global warming.
Capps said the proposed incentives do not go far enough.
"A new 1,400-megawatt nuclear power plant is going to cost about $2.6 billion," he said. "It is going to take 6 1/2 years to build. While you are building, you have to issue equity, you have to service that equity. You have to issue bonds; you have to service the bonds with interest. You don't have any money coming in. You have an average of $1.3 billion out for 6 1/2 years that is not earning anything."
"We are not going to build one under those financial conditions," he said.
Capps said his main concern is that anti-nuclear activists would tie up the approval of new plants through court challenges, and that such delays would cause unacceptable financial risks. If the nation thinks nuclear power is important enough, he said, Congress ought to eliminate the possibility of lawsuits and decree that the federal Nuclear Regulatory Commission (NRC) will be the final arbiter of concerns raised by the public.
Critics of the new initiatives say the federal government has a long history of subsidizing the nuclear industry, and warn that the proposals would hurt taxpayers -- and undermine public safety.
"If you throw enough money to build four, five power plants at industry, four, five plants may get built, but no one should confuse that with an economically healthy revival of nuclear power," said former NRC commissioner Peter Bradford, an energy policy consultant at Bradford Brook Associates in Vermont.