The Nuclear Industry Makes Its Christmas Wish List, and It's a Long One

Earlier this week the Nuclear Energy Institute (NEI), the nuclear
power industry's principal trade organization, released a proposal
asking for billions of dollars in taxpayer subsidies and radical
changes to the federal regulatory process that would shift even more
risks and costs from the industry to the public.

The industry's first priority is to get a minimum of $100 billion in
new federal loan guarantees on top of the $110 billion in loan
guarantees already authorized by Congress. That would total nearly one
third of the taxpayer bailout money the government gave Wall Street a
little more than a year ago. At the heart of NEI's proposal is the
implicit admission that the industry cannot compete in the private
sector market without massive financial support from taxpayers and
reduced liability for cost overruns and safety hazards.

"NEI essentially is saying the industry can't be competitive without
massive new federal subsidies and tax breaks," said Ellen Vancko, UCS
nuclear energy and climate change project manager. "It is truly
staggering that an industry this big and this mature can claim to need
so much government help to survive and thrive in a world in which
technologies that don't emit global warming pollution will benefit."

One of the nuclear industry's top priorities is the establishment of
a federal clean energy "bank," called the Clean Energy Deployment
Administration (CEDA), which NEI considers to be a "permanent financing
platform" for nuclear reactor construction.

Both the House and Senate versions of energy and climate legislation
include a CEDA provision. NEI favors the Senate version because it
would: exempt CEDA from the Federal Credit Reform Act (FCRA), removing
any limits on the amount of federal loan guarantees that could be
issued for new nuclear reactors by bypassing the congressional
appropriations process; not restrict the amount of financial assistance
that could be given to any one technology; and not require applicants
to compete on the basis of reducing carbon at the lowest cost. These
three key provisions in the House version of CEDA-which are missing
from the Senate version-would allow most of the financial assistance to
go to the nuclear industry instead of to a diverse portfolio of
least-cost clean energy investments such as renewable resources and
energy efficiency.

A recent report by the Congressional Budget Office
(pdf) (CBO) found that without adequate taxpayer protections and strict
government oversight, CEDA could allow a few risky, capital intensive
industries such as nuclear power and coal-to-liquids run away with the
bank. The CBO estimated that, "in the absence of any statutory limits,
[the Department of Energy] would guarantee an additional $100 billion
in loans for nuclear power projects over the next 10 years and close to
another $30 billion in loans for fossil and other large capital
projects." The CBO's analysis focused on pending loan applications and
did not attempt to estimate the number of additional applications that
would be filed if the program is modified and expanded.

The nuclear energy industry sees CEDA as its own personal federal
financing mechanism, which is at odds with the expressed intent of the
program. The bank is supposed to promote domestic development and
deployment of a range of "innovative" clean energy technologies that
would otherwise not have access to low-cost financing.

"This program was designed to spur innovation so we can benefit from
the next big breakthrough in clean energy technologies," Vancko said.
"There is nothing innovative about 50-year-old industry with a long
record of massive cost overruns and plant cancellations."

In addition to virtually unlimited federal loan guarantees, NEI is
asking for $3 billion to cover cost overruns and construction delays
and an extension of the production tax credit through the end of 2024
(compared with 2012 for wind energy and 2013 for other renewable
technologies), which could give the industry as much as $10 billion in
new tax breaks. NEI alternately proposes to convert the production tax
credit to an up-front investment tax credit of 30 percent for
investments in new nuclear reactors or upgrades to existing reactors
that could provide the industry with a $20 billion windfall. NEI
further proposes expanding the manufacturing investment tax credit from
$2.3 billion to $5 billion to benefit nuclear component manufacturers.
And the trade association wants to see changes to the IRS tax code to
help some companies write off payments to nuclear decommissioning funds
more quickly.

"If the nuclear industry gets its way, Christmas will come early this year-thanks to U.S. taxpayers," Vancko said.

As alarming are NEI's proposed shortcuts to the Nuclear Regulatory
Commission's (NRC) new reactor licensing process. The industry, for
example, wants to limit the NRC's ability to verify that a new reactor
was built in strict accordance with its license before it starts
operating. NEI also proposes restricting the public's right to raise
reactor construction safety issues by requiring the NRC to use
"informal" procedures in public hearings on such issues.

"Before the NRC gives the green light to a new nuclear plant to
start up, it needs the authority to ensure that each and every part of
the plant will function exactly as it was intended to function," said
UCS Senior Staff Scientist Edwin Lyman. "NEI's proposal could
jeopardize public safety by barring the NRC from double-checking
earlier findings, which could prove crucial with such a large, complex
construction project as a nuclear power plant."

Dr. Lyman acknowledged that NEI offered a positive suggestion
regarding nuclear security, specifically its request that Congress
clarify the respective roles of the NRC and the U.S. Department of
Homeland Security regarding protecting commercial nuclear plants from
terrorist attacks. However, UCS maintains that private industry should
assume far more responsibility for defending nuclear plants than NRC
currently requires, while NEI recommends that federal, state and local
law enforcement agencies take on a greater burden, which would
represent yet another substantial taxpayer subsidy.