In February 1999, residential consumers paid an average of 7.94 cents per kilowatt-hour for electricity; industrial users paid an average of 4.33 cents per kilowatt-hour. Compare that with 1997, when electricity cost about 5% more; the cost of hydroelectric power on a ratepayer's bill was from two to eight cents; gas, from three to five cents; coal, five to six cents; oil, six to eight cents; and nuclear power, 10 to 12 cents.
The cost of nuclear power would be much higher still if not for federal subsidies. Nuclear power is tied up in what economists call "externalities" and "external costs and benefits." Externalities are when "some people bear costs that they are not paid or compensated for, these costs are said to be external costs," says Dr. Roger A. McCain, Professor of Economics at Drexel University. "The idea is that the decision-maker, who does not pay for the costs nor get paid for the benefits, doesn't take them into consideration in deciding how resources shall be allocated. He has no motive to produce benefits that he doesn't get, nor to cut back on costs that he doesn't pay. In general, if there are 'external' costs or benefits or both, we say that there are 'externalities,' and we can expect markets to be inefficient when there are externalities."
Externalities in the nuclear power business are extensive. In 1993 Greenpeace released Fiscal Fission: The Economic Failure of Nuclear Power, a study estimating that federal expenditures from 1950-1990 for nuclear power totaled $97 billion in (1990 dollars). These funds were money the government spent on research, development, regulation, construction costs, uranium enrichment, and for our contributions to the nuclear waste fund. These funds did not pay for the environmental destruction caused by nuclear accidents. A 1989 study by the General Accounting Office found that the Department of Energy (DOE) failed to collect $11 billion by underselling its uranium both here and abroad. These subsidies create an underestimation of the true cost of nuclear power. Why are federal decision makers so interested in giving money to the nuclear industry? One answer may be found in a study by the Nuclear Information and Research Service and U.S. Public Interest Research Group that found that between 1985-1992, only three members of the Senate and seven members of the House took no money from the nuclear industry's Political Action Committee campaign contributions!
Externalities in our nuclear programs go beyond what the federal government has obligated us to. The Shoreham Nuclear Generating Station in New York was finished in 1988 at a cost of $7 billion. It was decommissioned shortly thereafter without ever producing a watt for the ratepayers who must pay most of the bill. Then New York Governor Mario Cuomo refused to accept the Nuclear Regulatory Commission (NRC) plan, the only possible option, to evacuate the city in case of an accident. Imagine all of New York City's residents trying to escape through the Long Island Expressway, the only escape route, in an emergency. The debacle of the Shoreham Station was not unique. Some nuclear plants were completed with as much as 700% cost overruns; others were abandoned because they were too expensive.
Because the Shoreham facility irradiated the reactor core in a test, the decommissioning will cost an extra $400 million. Decommissioning, where the nuclear power plant itself is treated as nuclear waste, is another staggering expense of nuclear power. The decommissioning of Connecticut Yankee nuclear power plant is estimated to cost $427 million (in 1997 dollars). The plants that are currently decommissioning are Connecticut Yankee, Connecticut; Yankee Rowe, Massachusetts; Maine Yankee, Maine; Big Rock, Michigan. Trojan is decommissioning in Oregon after local citizens blockaded the plant to draw attention to a safety crisis in the cooling system. Charges against the protesters were dropped and they won a countersuit against the plant.
General Electric was unable to obtain accident insurance for their reactors. Congress responded with the Price-Anderson Indemnity Act, which limited the liability of the nuclear industry in case of a major nuclear accident. The law also indemnifies the nuclear corporations, even if an accident is because of their negligence. The nuclear industry maintains only $7 billion of insurance under the act. The General Accounting Office estimated in 1987 that a major nuclear accident could cost as much as $15 billion. Sandia National Laboratory, working for the NRC, estimated that a meltdown would cost $56-314 billion, not including the cost of losing the facility. The NRC estimated a 45% chance of having a meltdown by 2013.
A legal crisis is developing for the federal government over nuclear waste. Their repository at Hanford, Washington, is already leaking; a third of its 177 underground storage tanks are leaking a toxic brew of chemical and radioactive waste. People downwind of the Hanford repository have filed lawsuits. The Nuclear Waste Policy Act of 1982 legislated that the nuclear corporations are only required to pay .1 cents per kilowatt hour for the cost of waste disposal; nuclear power plant owners have given the federal government $13.5 billion of the ratepayers' money. This made the government legally responsible for the waste, even if the cost runs over what the fund provides. This was their side of a contract in which the federal government agreed to take the waste by February 1, 1998. Steven Rosenthal, who has won several breech-of-contract lawsuits against the federal government, is working with potential litigants from the utilities on a $100 billion lawsuit, the amount needed to pay a private contractor to do the job.
The electricity utilities began deregulating because it became technologically possible, politically fashionable and because many analysts believed that the increased competition would lower prices. Central to the deregulation debate is the problem of the nuclear utilities' "stranded assets." Nuclear plant construction, completed with up to 700% cost overruns, were underwritten on the assumption of a guaranteed income from a known number of ratepayers. A study by the Safe Energy Communication Council found that 11 states have a total of $112 billion in stranded assets. Estimates for the entire nation's utility stranded assets are as high as $300 billion. Utilities say they will litigate unless the deregulation plan pays for 100% of their stranded assets. A bailout of the nuclear power industry would cost twice as much as the savings and loan bailout.
In April 1999, a study by the Environmental Working Group and the World Wildlife Fund found that since the Energy Policy Act of 1992 started the deregulation process, investments in energy efficiency programs dropped from $1.7 billion to $900 million. In 1997, the President's Committee of Advisors on Science and Technology reported, "Research and development investments in energy efficiency are the most cost effective way to simultaneously reduce the risks of climate change, oil import interruption, and local air pollution, and to improve the productivity of the economy."
The U.S. currently spends 11.2% of its GNP on energy; Japan spends only 5%. This is due to inefficiency, according to Arthur H. Rosenfield, director of Center for Building Science at Lawrence Berkeley Laboratory. He estimates that this costs the U.S. $220 billion per year and gives a 5% advantage to Japan on everything they sell. According to a May, 1998 Fortune magazine article, "Only a third of U.S. manufacturers are seriously scrutinizing energy usage." Analyst David Blackburn, Professor Emeritus of Economics at Duke University, believes inefficiency accounts for 50% of the energy used in the U.S.
Since 1995, appropriations for energy efficiency programs have been as low as $538 million and as high as $717 million. In 1999, the federal government appropriated $692 million for energy efficiency. The GAO confirmed DOE findings that savings of $27.5 billion resulted from just five DOE programs in the 1970s and 80s. Mandates and incentives for energy efficiency alone would make our 104 U.S. nuclear power plants unnecessary.
Nuclear power is an expensive gamble in which taxpayers have to pick up the tab. U.S. taxpayers have already spent over $100 billion for our nuclear subsidies of the past. Utilities are obligated to pay only a fraction of the $100 billion cost of disposing of their high-level nuclear waste; these costs will be mostly paid for by tax- and ratepayers. Bailing out the nuclear utilities will cost taxpayers another $300 billion, and the industry plans to sue if we do not. Despite these enormous taxpayer subsidies, nuclear power is still by far the most expensive type of electricity. Electricity ratepayers are paying not only for nuclear power's higher rates, but also for nuclear power plant cost overruns, premature decommissioning and financial disasters like New York City's Shoreham nuclear plant fiasco. The nuclear industry has profoundly insufficient accident insurance.
Yet another externalized cost of nuclear power is the cost to our health. Uranium mining, enrichment, and nuclear accidents affect our health by contaminating our environment with cancer-causing radioactive particles. All this nuclear expense and risk is unnecessary. DOE investments of mere hundreds of millions of dollars in research and development in energy efficiency are reaping tens of billions of dollars in energy savings. Mandating energy efficiency in homes and industry can cut energy demand by the 22% that the nuclear power plants provide and the switch will pay for itself. We have the option to conserve our valuable electricity or we can continue to squander it, but with nuclear consequences.
Copyright Mendocino Environmental Center 2001
Permission granted to excerpt or use this article if source is cited