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Just how affordable is nuclear power?

Massively expensive at $1.8 billion, the ongoing restart of Browns Ferry Unit 1 still appears to be a good financial investment for TVA and its ratepayers. New reactors, however, may be a different story.

TVA expects Unit 1 to break even in as little as four years as it pumps out enough electricity to power 650,000 homes.

Dave Lochbaum is director of the nuclear safety program at Washington, D.C.-based watchdog Union of Concerned Scientists. He was a reactor engineer at Unit 1 in the early 1980s.

Despite his title, he does not expect safety issues to provide the answer to the simmering debate about the viability of a large-scale shift to nuclear power for U.S. energy production.

“We can argue about Yucca Mountain (a proposed repository for spent nuclear fuel) as a negative and global warming as a positive, but the bottom line is cost,” Lochbaum said. “Right now, absent huge subsidies, nuclear power is just too costly.”

Applications

He may be right. The Nuclear Regulatory Commission has not granted a new-reactor license since 1978.

That said, in the next three years, the NRC expects to receive 19 new-reactor applications. Does that disprove Lochbaum’s point?

Not necessarily.

The Energy Policy Act of 2005 will pump up to $13 billion of subsidies into the nuclear power industry, including a tax credit of 1.8 cents per kilowatt hour during the first six years of a new plant’s life. It also includes “risk insurance” for six new reactors and government-backed loans.

Lochbaum’s point: If the only way to make nuclear power competitive is with subsidies, then nuclear power is not competitive.

But nuclear power plants are not quite the widgets used in Econ 101 supply-and-demand textbooks.

For one thing, nuclear power plants require enormous capital investments. They cost more than $2 billion, and much of that money is tied up during the 12-year construction process.

Regulations

The industry also is regulated heavily.

Over 12 years those regulations can change, and almost certainly would in the event of a terrorist attack aimed at a nuclear plant or an accidental meltdown.

That means investors have to weigh the possibility that their money is being poured into a plant that will never see a fuel rod, much less receive a ratepayer’s monthly utility check.

So many of the costs (including safety risks) and benefits (including reduced air pollution) of nuclear power accrue not to the purchaser but to the public that the free market may not be the best measure of its viability.

Arguably, subsidies are the public’s payment for costs designed to benefit the public.

A heavy user of nuclear-produced electricity benefits no more than the public from the reduction of greenhouse gases, but absent subsidies he pays more for that benefit.

He also has no more exposure to the inherent risk of a meltdown, but in a subsidy-free environment he pays a disproportionate amount to limit that risk.

Will our grandchildren have an air conditioner powered by nuclear energy? Solar or wind power? Coal? Natural gas? Decades after the debate began, we still cannot answer the question.

Contact Eric Fleischauer at eric@decaturdaily.com.

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