Nuclear Subsidies: $7.1 billion
excerpted from the book
Take the Rich Off Welfare
by Mark Zepezauer and Arthur
Odonian Press, 1996
Nuclear Subsidies: $7.1 billion
As Noam Chomsky points out, most successful
US industries wouldn't be competitive internationally if the federal
government hadn't developed their basic technology with your tax
dollars, then given it away to private companies. Computers, biotech
and commercial aviation are examples, and so-preeminently-is nuclear
power. Nuclear power still can't stand on its own two feet, but
with a sugar daddy like the federal government, it doesn't need
The feds still provide the industry with
most of its fuel and waste disposal, and much of its research.
Between 1948 and 1995, the government spent more than $61 billion
(in 1995 dollars) on nuclear power research- almost two-thirds
of all federal support for energy research and development. The
1996 figure was $468 million.
The insurance subsidy
Since 1959, the government has also limited
the liability of nuclear utilities for damage caused by accidents.
Until 1988, the utilities were only responsible for the first
$560 million per accident; then the limit was raised to $7 billion.
But $7 billion wouldn't begin to cover
the costs of a core meltdown, or even a near meltdown like Chernobyl.
That accident's total costs are estimated at $358 billion-not
to mention the 125,000 deaths the Ukrainian government figures
it has caused.
The Energy Information Administration
calculates that if nuclear utilities were required to buy insurance
coverage above that $7 billion on the open market, it would cost
almost $28 million per reactor, for a total annual subsidy of
$3 billion. (Even if it could pay its own way, the risks of nuclear
power far outweigh its benefits. But that's the subject for another
Enriched uranium fuel
Before 1993, the DOE (Department of Energy)
was responsible for all domestic production of enriched uranium
fuel for nuclear power plants. Since then, that's been the job
of a government corporation called the US Enrichment Corporation
(USEC). The USEC has been a financial disaster, even for a government
program; taking into account lingering liabilities like environmental
cleanups, it's more than $10 billion in the hole.
Having made a fine mess of things, the
government plans to privatize the USEC. Naturally, they'll try
to give the private company buying USEC as many assets as possible,
and keep as many liabilities as they can, so that we and our children
can pay for them. For example, the DOE plans to take large amounts
of radioactive waste from the eventually privatized corporation,
even though it has no place to safely store them. These liabilities
will cost taxpayers an estimated $ 1.1 billion.
But wait-there's more. We lose on the
selling price too, which the GAO (Government Accounting Office)
estimates at $1.7 to $2.2 billion. Since the net present value
of USEC cash flows is $2.8 to $3.5 billion, taxpayers would be
out between $600 million and $1.8 billion on the deal. So the
total we'll pay for privatizing the USEC will fall between $1.7
and $2.9 billion.
Reprocessing fuel rods
Nuclear power plants create radioactive
waste. Naturally, the government feels that it's our responsibility
as taxpayers to take this waste and either reprocess it into new
fuel rods or find some place to store it for the next 10,000 years
or so. Let's talk about reprocessing first.
Argonne National Laboratory (outside of
Chicago) used to operate an enormously expensive facility for
separating plutonium, uranium and the like from spent nuclear
fuel rods, so that these elements could be used in new fuel rods
or nuclear weapons. In 1994, Congress killed funding for that,
but the same sort of reprocessing is still taking place in Idaho,
at an annual cost to us of $25 million. And Argonne is still getting
$25 million a year to terminate its program.
The Savannah River site in South Carolina
was originally used for weapons production. As a result of that
activity, several square miles of land are so badly contaminated
that human beings will probably never be able to use them again.
This site is now used for reprocessing spent and corroded fuel
rods, and may reprocess foreign fuel rods as well. This new business
is going to cost us $340 million a year.
Their waste-our responsibility
A place like Savannah River naturally
brings the subject of waste to mind. Nobody wants nuclear waste
stored in their state, so Congress picked a place in Nevada, a
state with little congressional clout. Called Yucca Mountain,
it's the least stable site of any considered to date, with 33
known earthquake faults in the area.
Work on Yucca Mountain can't proceed until
the Supreme Court rules on a law Nevada passed that prohibits
the storage of nuclear waste in the state. Yucca Mountain's planned
opening has been moved back from 1998 to 2015, but we're still
being charged $250 million a year just to study the situation.
If Yucca Mountain does go ahead, it will
cost us $33 billion-some say $40 or $50 billion-to build the facility,
transport radioactive waste to it from all over the country, and
seal the waste into thousands of containers. Meanwhile, there
are no long-term storage sites for nuclear waste (and Yucca may
never be one either).
The nuclear industry is lobbying hard
to build a vastly inadequate short-term storage facility above
ground at Yucca Mountain. Their eagerness is explained by the
fact that once they turn the waste over to Uncle Sam, it's our
problem, not theirs. The Public Interest Research Group (PIRG)
says that this whole boondoggle has the potential to turn into
"the S&L bailout of the Nineties."
Yucca Mountain is supposed to be financed
by the Nuclear Waste Fund, which is generated by charging utility
customers a fee of 1/10 ¢ per kilowatt hour for nuclear-generated
power. But in its thirteen years of existence, the fund has never
been adjusted for inflation, which has cut its purchasing power
There's another catch: The funds come
from existing reactors, and no new ones are on order in the US.
As the old reactors are retired, the fund's revenues will decline
and ultimately disappear, leaving taxpayers holding the bag.
And there's another problem: Money in
the fund is currently being used to pay for interim storage, which
depletes the amount available for Yucca Mountain (or whatever
long-term storage site is eventually decided on). If everything
remains unchanged, the Nuclear Waste Fund will fall $4-$8 billion
(in 1995 dollars) short of the money it needs, according to the
DOE and the State of Nevada.
The cost of closing them down
Nuclear reactors are licensed to operate
for 40 years, but only one has survived past 30. Of the 110 reactors
in the US, only three have begun to be "decommissioned"
(closed down), but 25 others will need to be soon.
The Yankee Rowe plant in Massachusetts,
the nation's first commercial reactor, was the first to begin
the process (except for the Shoreham plant on Long Island, which
only operated for 300 hours). How much will decommissioning Yankee
Rowe cost? The figure continues to rise; the owner's latest guess
is $375 million- ten times what it cost to build the plant. Other
estimates go as high as $500 million.
Let's say it costs about $400 million,
on average, to decommission a nuclear reactor. That means that
closing down 25 plants will cost about $10 billion, which is more
than the nuclear industry has set aside for all 107 remaining
plants. Decommissioning all the plants will cost almost $42 billion.
The utilities are supposed to maintain
a trust fund for decommissioning each plant. Chicago's Commonwealth
Edison owns six elderly nukes, which will cost close to $2 billion
to decommission; it has about $542 million set aside in trust
funds for this purpose. Assuming this 73% shortfall is typical
of the industry, the public's eventual share of the cost of closing
all nuclear power plants will run more than $30 billion.
To help bail the industry out, Congress
dropped the corporate tax rate on the industry's decommissioning
trust funds from 34% to 20%. This has cost taxpayers $76 million
for the five years from 1992 through 1996, and it's projected
to rise to "several hundred million more" in the future.
The nuclear industry is lobbying for relaxed restrictions on what
they can put the trust funds' money into, obviously hoping that
riskier investments will make up some of the shortfall.
A sympathetic federal appeals court has
ruled that instead of decommissioning them, the utilities could
turn their nuclear power plants into "sealed waste sites"
for some unspecified period of time. This will probably make the
eventual decommissioning even more expensive, since these reactors
weren't designed to be used as storage facilities.
There's another problem with that plan.
Because nuclear power plants need some place to discharge the
water that cools the reactor, they're all situated near large
bodies of water-usually rivers. Rivers flood at least every hundred
years, which is a fraction of a second compared to the half-life
of radioactive waste. Lakes can flood too, given enough rainfall.
And if ocean levels rise significantly over the next century-as
is predicted-seaside plants would also be threatened by high tides.
One way or another, the decommissioning
of all these reactors will have to be paid for. It's not likely
the utilities will cover the costs themselves. They'll probably
leave the government to pick up the tab, along the lines of the
Compared to fission (the process used
by all commercial nuclear reactors to date), fusion-the way the
sun makes power-is much cleaner, safer and cheaper. Theoretically,
that is. A few practical design problems crop up when you try
to build a fusion reactor smaller than the sun.
Fusion research has been going on for
more than 40 years, but even its most optimistic proponents admit
that commercial applications can't be expected until the middle
of the next century. While commercially viable reactors would
theoretically-there's that word again-generate no waste, the currently
existing experimental ones use radioactive tritium as a fuel and
generate large amounts of waste.
A 1991 DOE memo that evaluated energy
options in terms of economics and environmental risk ranked fusion
22nd out of 23. Despite that, the DOE spent $244 million on fusion
research in fiscal 1996.
(Here's a little insight into how Congress
works. The House originally approved $229 million and the Senate
$225 million. When they got together to work out a compromise,
they came up with $244 million!)
The "next generation" of nuclear
There hasn't been a nuclear power plant
built in this country since 1973, and 89% of all utilities say
they would never order one. So, naturally, our government is busy
funding development of "the next generation of nuclear plants."
For fiscal 1996, the DOE contributed $40 million to a consortium
of companies-including GE (which recently became the world's largest
company) and Westinghouse. The DOE even helps consortium members
deal with the Nuclear Regulatory Commission's approval process
for new technology.
Since there's no market for nuclear reactors
in the US, any new reactors built here will probably be sold to
East Asian countries. In fact, reactors based on the consortium's
designs are already being built in Japan and have been offered
to Taiwan-which shows that they're commercially viable and don't
need continuing government support.
Adding it all up
* The government spent $468 million on
nuclear research in 1996.
* The nuclear industry's insurance subsidy
runs $3 billion a year.
* Privatizing uranium fuel enrichment
will end up costing us between $1.7 and $2.9 billion. Let's take
an average ($2.3 billion) and say the government issues 7% bonds
to pay for it. The interest on those bonds will cost us $161 million
* Reprocessing spent fuel rods costs us
$390 million a year ($340 million in South Carolina, $25 million
in Illinois, $25 million in Idaho).
* Just planning for long-term storage
of nuclear waste currently costs us $250 million a year.
* Estimates of the shortfall in the Nuclear
Waste Fund range from $4 billion to $8 billion, and will go on
virtually forever. Let's take an average ($6 billion) and issue
7% bonds; interest on them will run $420 million a year.
* Closing nuclear power plants is already
costing us $15 million a year in lost taxes (a figure that's projected
to rise substantially).
* But the real cost will come when the
utilities admit they haven't set enough money aside to do the
job. If we have to pay for the estimated $30+ billion shortfall
with 7% bonds, the yearly interest will run about $2.1 billion.
* Fusion research cost us $244 million
in fiscal 1996.
* Development of the "next generation"
of nuclear plants cost us $40 million in fiscal 1996.
Put all these numbers together and you
get a total subsidy for nuclear power of almost $7.1 billion a
the Rich Off Welfare