But one word that's never used in connection with nuclear power is "cheap" and it may be that the best kept secret regarding nuclear generation is that it costs taxpayers a huge amount of money. In fact, nuclear power is practically guaranteed to be a money loser -- Wall Street won't finance plants -- and it's almost inevitable that every new generation facility will require an infusion of federal money at some point.
According to the Union of Concerned Scientists (UCS), "Originally conceived as providing power that would be 'too cheap to meter,' nuclear energy was seen as the future of the electric industry. Reality quickly overtook this utopian vision in what has been called 'the largest managerial disaster in business history,' leading to two bailouts of the industry in the 1980s and 1990s."
In fact, UCS warns that, if we go ahead and expand nuclear power generation to the extent that the industry wants, we'll wind up bailing them out to the possible tune of more than a trillion dollars.
In a report titled "Nuclear Loan Guarantees -- Another Taxpayer Bailout Ahead?" [PDF], UCS makes a good case for taking a skeptical look at nuclear generation from merely a financial standpoint. Add questions about nuclear waste storage and the grossly understated carbon footprint of the process and we have "unsafe, unclean, and expensive" nuclear power. Starting to look a little less attractive now, isn't it?
"With estimates of the capital costs of the next generation of nuclear plants now quickly rising, the industry is again seeking massive assistance, aiming to shift the financial risks away from the companies building these plants onto taxpayers and ratepayers," the UCS report tells us. "A principle mechanism for such risk shifting is a new federal program of loan guarantees for nuclear power plant construction. The nuclear industry and its advocates in Congress have now proposed a huge expansion of this program before it has even begun."
As we've seen with other bailouts, the idea is that the industry enjoys privatized profits, but socialized risk. Which is really the only way that the industry could exist. When the industry was born in the '50s, it was heavily subsidized with the belief that the technology would eventually become economically feasible. In 1962, the head of the head of the Atomic Energy Commission reported:
Nuclear power is on the threshold of economic competitiveness and can soon be made competitive in areas consuming a significant fraction of the nation's energy... [E]conomic nuclear power is so near at hand that only a modest additional incentive is required to initiate its appreciable early use by utilities.
By 1963, the "economic competitiveness" that was so "near at hand" resulted in cost overruns for plants of $800 million to $1 billion. By the '70s, this resulted in what Forbes called "the largest managerial disaster in business history, a disaster on a monumental scale." By 1976, nuclear power -- which had been estimated to cost $1,630,000 per megawatt -- cost $4,377,000 per megawatt.
"Nuclear power plants abandoned by their sponsors cost the nation almost $50 billion in today's dollars, according to a 1992 study by economists Charles Komanoff and Cora Roelofs," UCS reports. "Specifically, the 100 nuclear plants canceled from 1972 to 1982 cost about $10 billion. Fifteen more plants canceled in 1983 and 1984 added $11 bil;lion to that figure. And more cancellations after 1984 (such as of Washington Public Power Supply System's Units 1 and 3 in 1985) may have added another $4 billion.Together, these costs total $25 billion, or $40 billion to $50 billion in 2006 dollars." Ratepayers and taxpayers "bore as much as one-half to three-quarters of the costs of these abandoned plants."
Those predictions of the technology making nuclear power competitive never came to pass. Nuclear generation remains a money loser. In 2007. six Wall Street investment banks (CitiGroup, Credit Suisse, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley) informed the Department of Energy that they wouldn't extend loans for new nuclear generation facilities unless taxpayers took every penny of the risk.
"We believe these risks, combined with the higher capital costs and longer construction schedules of nuclear plants as compared to other generation facilities, will make lenders unwilling at present to extend long-term credit..." the banks wrote in a letter to the DoE. "[L]enders and investors in the fixed income markets will be acutely concerned about a number of political, regulatory and litigation-related risks that are unique to nuclear power, including the possibility of delays."
Nuclear power is officially a bad investment. When Goldman Sachs and Citigroup turn you down as too risky, you've got a really awful business plan. And that business plan is guaranteed by the feds, since no one else will take on the risk. With as many as 300 new plants proposed as part of a new "nuclear renaissance," we'd be on the hook for as much as $1.6 trillion in loan guarantees.
That's serious money to invest in an industry that has yet to be competitive with other industries. Nuclear energy is a pretty lousy investment in the future.