The future of nuclear power.
That nuclear power can no longer be regarded as an economically viable alternative to other energy sources can be inferred from the low ratings assigned by Wall Street to nuclear power stocks and bonds. There are a handful of nuclear-free utilities (e.g., Allegheny Power, Utah Power and Light, Potomac Electric) whose stocks have hit all-time highs, while the defaulted bonds of the Washington Public Power Supply System (WPPSS) now sell for 20cent on the dollar, with an implied loss of $2 billion to credulous investors.
A recent Forbes article entitled "Utilities: Are the Good Times Over? (December 5, 1983) features a ranking of utilities with respect to their "quality of earnings" as rated by the investment house of Salomon Brothers. An average rating of B or better was given to a dozen companies whose construction plans for 1983-85 included no nuclear reactors and whose construction budgets constituted less than 25 percent of total capitalization. At the other extreme there were a dozen companies with nuclear reactors in construction and whose construction budgets exceeded 50 percent of their capitalization, whose average rating was below C--.
Nuclear utilities require careful analysis of the quality of earnings because they have continued to make high dividend payments despite poor earnings. Moreover, such dividends are often permitted to qualify as a return on capital in order to attract investors. Even so they are relatively poor investments. Consider for example the case of Commonwealth Edison, which with 15 reactors in operation or under construction is the most heavily nuclear of all investor-owned utilities. A recent study shows that $1,000 invested in Commonwealth stock in 1974 would show no gain by 1982, but that over the eight years an average dividend payment was made 11 percent. A similar investment in the top dozen nuclear utilities would have brought a total return of .124 percent over the eight years, while an investment in a representative group of eight non-nuclear utilities would have brought a total return of 269 percent.
The bleack prospects for nuclear power today stand in sharp contrast to the euphoria of the "Atoms for Peace" program launched by the Eisenhower administration, with its promise of energy too cheap to be metered. A new book by Mark Hertsgaard (Nuclear, Inc.: The Men and Money Behind Nuclear Energy, New York: Pantheon Books, 1983) traces the current crisis of civilian nuclear power to its origins in the postwar nuclear-based U.S. national defense policy. Under conditions of wartime secrecy, huge public and private sums were invested, particularly in the 1950-70 decades, in accelarating the design of an American nuclear reactor that would dominate the non-socialist world. In this period the rated capacity of successive reactor designs rose 50-fold without any operational experience to validate such rapid expansion. As we now know, in the process the safety requirements of a new and dangerous technology were badly served.
The economic death of the nuclear power industry has been definitively foreshadowed in the work of Charles Komanoff, an economist who has demonstrated that the capital costs and operating expenses of nuclear power plants do now, and will increasingly, exceed the corresponding costs of building and operating pollution-free coal-fired plants.
Komanoff's data base contains detailed cost breakdowns for all U.S. nuclear and coal-fired plants now in operation and in construction and indicates that the marked escalation of nuclear costs is due to continuing engineering breakdowns, which in turn reflect the many unresolved safety issues that plague nuclear plant design. This accords with the judgment of David Lilienthal, cited by Hertsgaard, that "a new, different and safer alternative reactor design can hardly be available in less than fifteen years."
Komanoff's data base enables us to quantify the economic consequences of several scenarios. The worst case contingency is that of a core melt-down accident of the kind so narrowly averted at Three Mile Island, an occurrence which some industry observers believe to have a 50 percent probability over the next decade.
Hertsgaard reports general agreement even among members of the elite corps of nuclear executives in government and private industry that such a disaster would result in an immediate shutdown of every nuclear plant, wholly aside from the immediate direct damage estimated by the AEC to be on the average in excess of $7 billion.
A more hopeful scenario is one in which there would be a gradual premature phasing out of the 73 operating reactors over the next two decades as the result of an increasing number of shutdowns required by the costs of increasingly stringent safety regulations. Problems would multiply as the reactors encounter new and unforseen problems of corrosion and embrittlement in the later stages of their 25-year lifespan. In this scenario most of the reactors now in construction would never go into operation.
According to Komanoff, there are some 85 reactors now in various stages of construction, totaling 90,000 megawatts in capacity, whose average capital cost will be on the order of $1,500 per KWH in 1979 prices. If the decision to stop construction came at the point where they were, on the average, roughly half completed, the loss to the utilities would be about $68 billion, far greater than the $47 billion cost of building the reactors now in operation, with a total capacity of 55,000 megawatts.
The key to these estimates lies in the escalation of capital costs per KWH, from under $500 for reactors built prior to 1970 to well over $800 for reactors built later.
The latter estimates make allowance for some $8 billion for the cost of decommissioning operating reactors, estimated at $138 per KWH. At the end of a reactor's useful life the irradiated fuel must be removed and the reactor closed down for 10 to 30 years before it is safe to dismantle. So far, attempts to disassemble dead reactors have proved to be prohibitively expensive, so it is probable that in the future all dead reactors, along with the accumulated low-level waste, will be permanently interred as modern day pyramids, the construction of which by the turn of the century will constitute a high-growth activity.
There are, of course, very heavy additional future costs for the ultimate removal, transportation, and permanent burial of the intensely radioactive used fuel assemblies, now being temporarily stored in on-site pools. These costs cannot be estimated, for we do not yet know how or where such a nuclear cemetery will be built.
Setting these costs aside for the moment as a federal responsibility that cannot by law be charged to the utility industry, we are left with an estimated possible capital loss to private utilities of between $50 and $100 billion, depending on just when nuclear reactors are deemed too expensive or too dangerous to operate. The bulk of this loss will be associated with reactors now in construction. How should such losses be allocated?
Shoreham illustrates the disastrous consequences of passing these costs on directly to the local ratepayers. According to Governor Cuomo's Special Commission, Shoreham's $3.5 billion capital costs would bankrupt LILCO, even if the full costs were passed on to local ratepayers, for the resulting doubling of the rate structure would turn Long Island into an economic wasteland. LILCO would lose all claim to enjoying the economies of scale that warrant regulatory protection.
One can speculate that if the Shoreham costs were to be passed on to local ratepayers, Long Island could become the first area in the country to demonstrate the competitive viability of cogeneration units which convert natural gas into electricity, windmills, and other solar technologies. Photovoltaic cells are expected to become competitive with high-cost centralized power systems within the next decade. In this connection it is interesting to note how much photovoltaic research is now supported by the far-sighted oil companies which are getting out of uranium and other nuclear enterprises, after having heavily invested in coal mines.
It seems that the private utilities with nuclear "white elephants" now in construction would be better advised to adopt Hertsgaard's thesis, i.e., that they were drawn into this mess for reasons of state and are therefore justified in demanding some kind of federal compensation.
Any attempt to project the grim prospects for nuclear power must take into consideration the gigantic, long-deferred problems (mentioned above) of the transportation and disposal of high-level nuclear waste. This is the subject of a truly harrowing study by Marvin Resnikoff entitled The Next Nuclear Gamble: Transportation and Storage of Nuclear Waste, published by the Council on Economic Priorities, NEw York, 1983. The problem centers around the storage and disposal of the irradiated fuel assemblies--the end product of the fission process. A typical pressurized light water reactor uses 60 fuel assemblies, or 30 tons of fuel each year. Backlogs of irradiated fuel assemblies are being temporarily stored in pools of water at the 73 commercial nuclear plants, many of which are now nearing full capacity. Temporary national storage sites have been tentatively authorized, most likely at Savannah River, S.C., or Idaho Falls, Idaho, where federal military nuclear operations have generated huge stockpiles of nuclear waste.
Presently about 360,000 metric tons of commercial and military high-level nuclear waste have been accumulated at some 100 locations, which must be moved to an off-site burial ground. Under the terms of the Nuclear Waste Policy Act, signed by Reagan in January 1983, the Energy Department will by 1985 pick three of nine potential sites in the states of Utah, Washington, Nevada, Louisiana, Mississippi, and Texas. Anticipating furious state-wide opposition, the act provides for a final selection by 1998, after both houses of Congress have had the time to override a state governor's veto.
Resnikoff estimates that when the away-from-reactor-storage sites are ready to operate, the number of such shipments by highway will increase 100-fold in a 15 year period, resulting in 4 nuclear transport accidents per year in the 1990s, and as many as 17 accidents per yer by the turn of the century. The implications of so high a nuclear accident rate are truly staggering. Such scientists as John Gofman, Arthur Tamplin, and Ernest Stenglass (all former members of the nuclear priesthood), have demonstrated that low-level radiation from the fallout from nuclear bomb testing and emissions from reactor accidents have caused and will cause countless numbers of deaths.
Sternglass has been able to measure the sharp gains in fetal deaths and infant mortality in those areas heavily subjected to windborne and radioactive fallout, extending even to the Scholastic Aptitude Test (SAT) scores of surviving babies 18 years later! He greatly embarrassed the Pennsylvania Health Department by correctly predicting the rise in infant mortality in those counties affected by fallout from the Three Mile Island accident. His linkage of the otherwise inexplicable sharp drop in the 1977-78 SAT scores to fallout from the peak levels of bomb testing in the late 1950s was confirmed in a study in 1980 commissioned by the U.S. Navy, worried that its increasingly complex weapons technology was outstripping the abilities of new recruits to manage it.
In his chilling book Secret Fallout, Sternglass describes the enormous difficulties he encountered in securing the technical data on emissions from utility and state health officials, even when the reactor accidents themselves could not be concealed. consider then the impact on the public health (and the public) when the nuclear transport fallout projected from the Resnikoff study is added to reactor emissions over the next 15 years!
It seems clear that the confluence of Wall Street's negative verdict and the underlying public opposition to the dangers posed by nuclear power will make for great changes in the future structure of the public utility industry in the United States.
As the companies operating hopelessly unviable reactors such as those at Three Mile Island, Shoreham, Seabrook, and so on, are forced to levy disasterously high power rates and consequently approach bankruptcy, they will probably be nationalized and possibly merged into the government-owned TVA power system. Those who associate TVA with its New Deal origins when TVA served as a yardstick by which to measure the gap between the costs of public and private power should withhold their cheers. TVA, with 18 reactors having a total capacity of 21,000 megawatts in operation or under construction, is even more heavily committed to nuclear power than Commonwealth Edison, and its rates are advancing correspondingly. TVA has played a sorry role in recent power history, and its early over-commitment to nuclear power is alleged to have helped stampede investor-owned utilities into similar overcommitments.
Nationalization of nuclear power would represent a sharp break with the American tradition of extending large public subsidies to sick major companies, and would be akin to the "lemon nationalism" more characteristic of Western European practice. But it would be a candid acknowledgment that so-called national security considerations outrank economic and public health concerns. Unfortunately most other countries caught in the nuclear trap would fall back on the same rationalization--including France, which hopes some day to achieve 70 percent of its energy needs from nuclear power. And yet in the United States with all the massive investments reviewed here and the dangers to which we are and will be exposed, nuclear energy still ranks on a par with wood-burning, so disappointing has its actual net energy contribution been. Our reliance on nuclear power, as on nuclear weapons, may eventually be seen, if there are any of us left to see, as one of the greatest blunders in human history.
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|Author:||Gould, Jay M.|
|Date:||Feb 1, 1984|
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