All Risk, No Reward for Taxpayers and Ratepayers: The Economics of Subsidizing the 'Nuclear Renaissance' with LGs and CWIP

As the projected costs of nuclear reactor construction have escalated, demand forelectricity has declined as result of the recession, and the cost of alternatives has plummeted, the nuclear industry has recognized that new nuclear reactors are simply uneconomic and impossible to fund in the capital markets. Seeking to override the verdict of the marketplace, the industry’s lobbying arm has demanded massive increases in subsidies from taxpayers and ratepayers to underwrite the industry. It demands:

• A huge increase in loan guarantees and new rules that would allow the nuclear industry to gobble up all funds earmarked for clean technologies;
• Elimination of conditions that would protect taxpayers in the event of loan defaults;
• Dramatic increases in tax and insurance subsidies; and
• Accelerated and assured recovery of construction costs from ratepayers authorized by state regulators (via “construction work in progress”).

These direct subsidies total to hundreds of billions of dollars, but the stakes for consumers could be much higher. Even with subsidies, the cost of nuclear power would be significantly higher than available alternatives. Nuclear subsidies would induce utilities to forego lower-cost alternatives, imposing excessive costs on consumers that could run into the trillions of dollars. This report explains why capital markets will not underwrite nuclear construction at rates that utilities can afford and why taxpayers and ratepayers will bear a heavyburden if they are forced to subsidize the construction of a new generation of nuclear reactors.