Nuclear - Energy Policy Analysis: A Conceptual Framework - page 64

Alvarez 2009). Consequently, the U.S. Government Accountability Office estimates the average risk
of default for DOE loan guarantees is about 50 percent (USGAO 2008). Government subsidies and
limitations on liability insurance required for nuclear generating stations are evidence of the high
risk of reactor safety and potentially high financial costs of a nuclear reactor accident.
Since enactment of the Atomic Energy Act of 1954, many of the costs of research, development,
and uranium enrichment have been borne by the national government, not utilities or consumers.
It has been estimated that these costs were worth $100 billion over the past half-century and that
federal subsidies were worth up to $13 billion per plant in 2008 (Lovins and Sheikh 2008; Walsh
2008). In addition to insurance guarantees, federal subsidies and tax expenditures supporting
nuclear electricity generation were estimated at almost $2.5 billion for FY2010 (USEIA 2011b,
xi). No other energy fuel or technology has received comparable subsidies in the United States.
Historically, planning lead times for development and construction of nuclear generating
plants have been much longer than for other energy technologies. The lack of construction starts
on new nuclear generating units since the late 1970s provides little recent experience, but a 1980
study of new power-generating stations found planning lead times reported by electric utilities
then typically ran ten to fourteen years for nuclear units, as compared to six to eleven years for
coal-fired plants, three to six years for natural gas combustion turbines, and three to seven years
for combined cycle units (Hamilton and Wengert 1980, 69). Long lead times to construct nuclear
plants increase the financial costs of borrowing capital in the form of interest paid before revenues
are generated, as compared to shorter lead times.
Evidence that the electric utility industry considers nuclear generating units too expensive to build
without government subsidy is found in the fact that U.S. utilities have ordered no new nuclear units
since 1978 and canceled all units they had ordered after 1973 (UCS 2009b, 1). In 2008 the Tennessee
Valley Authority resumed work on a generating unit at Watts Bar 2, where construction had been
stopped in 1988. The unit is now expected to be completed in 2013. The NRC reports that since 2007,
seventeen companies have submitted applications to build thirty new units at twenty sites (USNRC
2011b). Two new pressurized water reactors totaling approximately 2,300 MWe generating capacity
received combined construction and operating permits from the U.S. Nuclear Regulatory Commis-
sion in February 2012, for location at the existing Plant Vogtle south of Augusta, near Waynesboro,
Georgia, on the border with South Carolina (Vartabedian and Duncan 2012). The Southern Company
secured $8.3 billion in conditional loan guarantees from the U.S. Department of Energy toward
the expected $14 billion price tag for the project ( Piore 2011) . Considering that Plant Vogtle's two
existing nuclear reactors of 2,430 MWe generating capacity ran over budget by $8 billion and took
sixteen years to build (Swartz 2012), it seems unlikely the new units will be completed on budget
and on schedule to start producing electricity in 2016 and 2017. Serious questions have been raised
about the durability of the containment structure steel liner of the new AP1000 Westinghouse design,
which has not yet been built anywhere (Piore 2011; Gunderson 2010).
National Security Costs of Utilizing Nuclear Energy
The principal costs to national security from using nuclear electric power are nuclear proliferation,
the risk of terrorist action, and overdependence on foreign sources of nuclear fuel.
Proliferation
Nonproliferation policies of the United States have long been based on control of access to fissile
materials more than on control of knowledge about nuclear technologies. Education in nuclear