A Nuclear Giant Stumbles
There has been a long history of state and rate payer handouts which have built the nuclear industry in the US. By one analysis, the total value of the nuclear subsidies is in excess of the wholesale value of the all the electricity which these reactors have produced. When states deregulated electricity production and distribution, the utilities requested and mostly received many billions in bail outs from rate payers or tax payers to pay for what were called its stranded assets. Nuclear subsides started much earlier than this with the Price Anderson act which requires mostly the state or rate payers to pay for insurance claims in the event of a serious nuclear accident.
With the recent decommissioning of Vermont Yankee (which ran for more than 40 years, and thus its full design life) we discovered the decommissioning funds collected from the sale of electricity do not cover the decommissioning bill. They actually don’t even come close to covering them. The current estimated cost of decommission performed by the operating utility for this closed reactor is US$ 1.24 billion. The problem is the amount raised is only US$665 million.
This problem is not unique to Vermont. When the US Nuclear Regulatory Commission (NRC) looked at decommissioning funds in 2009, it found that 27 of the nations reactors did not have sufficient funding for decommissioning (this is about 1/4 of the entire US reactor fleet). Then when the Government Accountability Office (GAO) reviewed the NRC’s work in 2012, it found the NRC’s decommissioning formulas were 30 years old and underestimated decommissioning costs in 3/4ths of the reactors studied.
The latest proposed boondoggle bailout comes from deep in the heart of reactor country. Exelon is the largest nuclear utility in the country, with 22 reactors – almost 1/4 of the total US fleet. With increased renewables investment, declining solar panel costs and cheap natural gas from fracking, nuclear economics are looking pretty grim. When Exelon’s home state of Illinois announced last year what it was willing to pay for electricity, Exelon panicked because a number of their reactors can’t operate profitably at anything like these low costs per kWh.
Large utilities are powerful political players. Exelon pushed on the state government to investigate how to keep these uneconomic reactors open, claiming that they were needed for reliability, tax revenue, local jobs and climate friendliness. The Illinois state legislature sent instructions to 4 state agencies to investigate these claims and they have just reported back. Exelon was very unhappy with their report. What they found was:
- Illinois does not need these reactors for grid reliability
- Providing huge bail outs in the name of increasing tax revenue is silly
- Closing the reactors would cost 2,500 jobs and it would likely create 10K new jobs in renewables and efficiency
- Less expensive wind power is better for the climate than these reactors
The reason this is so important is that if Exelon with it’s tremendous political power can not get Illinois to bailout reactors, it might well be the case that no one can, with the likely exception of Virginia, where the legislature does everything Dominion wants, even when it makes no economic sense.