FOR IMMEDIATE RELEASE
CONTACT: Union of Concerned Scientists (UCS)
Why is a Mature, 50-year-old Industry Still Asking for Massive Taxpayer Handouts?, Science Groups Asks
WASHINGTON - October 29 - 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.