Taxpayers are about to take another huge hit. President Obama’s announcement Tuesday of a “conditional” loan guarantee for corporate utility Southern Company to build two new nuclear reactors at its Vogtle site in Georgia will once again put taxpayers on the hook when they can least afford it. In addition, it takes us entirely in the wrong direction. Proven efficiency and renewable energy technologies that can benefit millions of households are more cost-effective public investments than financially risky and uncertified nuclear technology.
Initially authorized by the Energy Policy Act of 2005, the loan guarantee program was designed to back “innovative” energy technologies such as renewable wind and solar power, as well as new commercial nuclear reactors. While the program has finalized one $525 million loan guarantee for a solar power facility in California, the size and scope of proposed new nuclear reactors – with a price tag of roughly $10 billion per reactor – will overwhelm the public’s bank account. In fact, nuclear power cannot be financially viable without taxpayer support, which includes not only federal loan guarantees but also risk insurance and production tax credits that manipulate the cost of nuclear generated energy. Since 2005, Southern Company has spent nearly $70 million lobbying the federal government, including to ensure these industry-friendly subsidies.
In 2005, the nuclear industry estimated that building a new reactor would cost $2 billion. In the five years since nuclear power was included as a recipient of federal loans, costs have ballooned fourfold. To date, the cost estimates submitted to the U.S. Department of Energy by Southern Company have not been disclosed to the public. In fact, the project evaluation and selection standards used to determine Southern Company’s eligibility for loan guarantees have not seen the light of day. There has been no public review or inclusion in the due diligence process, so taxpayers have been shut out of the decisionmaking process for this grand giveaway of taxpayer money.
Further underscoring the risk to taxpayers is the fact that the Congressional Budget Office estimated that nuclear utility companies will default on loans for new reactors 50 percent of the time.
This, combined with the fact that nuclear utilities have no way to safely store or dispose of the hundreds of tons of highly radioactive waste generated by reactors, makes nuclear power simply too risky to pursue.
The Department of Energy maintains that the “conditionality” of the loans will mitigate the risk to taxpayers. Loans would not be granted until applicants receive a construction and operating license from the Nuclear Regulatory Commission (NRC). But a license does not ensure the success of a nuclear project. On the contrary, in the 1970s and 1980s, the nuclear industry promised to free us from foreign oil and provide energy so inexpensive it would be “too cheap to meter.” But years of construction delays saddled ratepayers with billions of dollars in cost overruns, making nuclear power the biggest energy boondoggle in history. Half of all nuclear projects that were on the drawing board during that first wave of nuclear development were scrapped; 21 of those reactors were cancelled during construction, 22 were cancelled after licensing but before construction, and one plant was fully built but never operated.
The inability to project true construction costs and timelines coupled with regulatory issues that plagued the nuclear industry in the past have not been resolved. Not only is the final price tag for Southern Company’s two new reactors unknown, but the reactor design that has been tapped for federal backing, the Westinghouse AP1000, has yet to receive design certification from the NRC. In fact, the latest delay in the AP1000 certification process is due to the reactor’s inability to meet critical safety requirements. The NRC has grave doubts as to whether the protective structure of the APt000 nuclear reactor can withstand hurricanes, earthquakes, tornadoes and the impact of a commercial airliner, as required by the NRC’s regulations.
Rather than hand over scarce public resources to Southern Company so it can pursue a proven financial failure like nuclear power, the government should scrap the loan guarantee program and instead develop and deploy small-scale renewable energy sources such as rooftop solar, wind and geothermal. The government also should offer incentives for people to retrofit homes and small businesses with energy-efficiency technologies. Such investments would not only eliminate the security and safety risks posed by nuclear power but would allow investment to flow directly to families and small businesses, instead of only big, politically connected corporations.
Tyson Slocum is the director of Public Citizen’s Energy Program.