Nuclear Energy

plant owners to use much more of this inexpensive debt to finance the plant – up to 80% in the case
of the United States. The impact of loan guarantees on nuclear power generation costs can be
dramatic: UniStar Nuclear Energy, which hopes to build a series of reactors across the USA,
estimates loan guarantees will reduce its levelized costs ccxxii by nearly 40%. ccxxiii In fact, without
loan guarantees, the nuclear industry will not even think of beginning construction of new plants, as
was made very clear by Christopher Crane, President of Exelon Generation, one of the utilities that
has expressed an intention to build new nuclear plants in the US: “If the loan guarantee program is
not in place … we will not go forward”. ccxxiv
Obligingly, the US Congress in 2005 passed the Energy Policy Act (EPACT 2005),
authorizing loan guarantees of $18.5 billion for new nuclear plants of new designs over the next
several years. ccxxv (The 2005 Energy Bill also gave several other financial handouts to the nuclear
industry, including tax credits on electricity generation and additional support in case of delays in
reactor construction. ccxxvi )That would have financed just 3 reactors, so industry has been mounting
pressure on the US Congress to expand that amount. Obligingly, the Obama Administration in its
budget proposal for 2011 has proposed an additional $36 billion in new federal loan guarantees, for
a total of $54.5 billion. ccxxvii
The potential cost of this subsidy to the taxpayers is huge. In 2003, the U.S. Congressional
Budget Office estimated, based on historical data, that the risk of default on guaranteed loans for
nuclear power plants “to be very high — well above 50 percent”. ccxxviii
The US Senate is also considering two new bills – the American Power Act (APA) and the
American Clean Energy Leadership Act (ACELA) – which propose to give another tens of billions
of dollars in subsidies to the nuclear industry, in the form of reduced accelerated depreciation
periods, tax credits for investment and production, and so on. ccxxix These new subsidies are
estimated to be worth at least between $1.3 billion and nearly $3 billion on a net present value basis
per new reactor. ccxxx
Apart from these federal government subsidies, the nuclear industry is also pressurizing the
states to allow utilities to recover construction costs from customers even before the plant has come
online. Thus, Georgia has approved a CWIP or ‘Construction Work in Progress’ law that will allow
Southern Company to recover construction costs of the new nuclear plant that it is proposing to
build in the state from ratepayers during the construction period itself, that is, even before the plant
has generated a single unit of electricity! This effectively shifts the risk of building the plant on the
customers, because in case the company abandons the plant for some reason, it will still be allowed
to recoup “prudent” costs from their customers. Florida also has such a law in place. ccxxxi
2. Government Spending on Nuclear Related R&D
Another government subsidy to nuclear power is in the form of spending huge amounts of
public money into research and development (R&D) related to the nuclear fuel chain. During the
period 1961-2008, the US government invested a gargantuan 172 billion dollars in energy R&D; of
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