Just as Americans are being asked to back the biggest bailout in U.S. history, Senator McCain would again put the American taxpayer on the hook for yet another corporate giveaway.

Senator McCain wants to build 100 more nuclear reactors in the U.S., 45 by 2030. But there’s an important detail that the Senator and his campaign fail to mention.  The economics of nuclear power are so abysmal that many nuclear CEO’s will not construct reactors unless the American taxpayer guarantees they wont lose money.

But the good senator and his campaign should know better.  Senator McCain has been around long enough to actually remember the implosion of the nuclear industry.  If his recollection has failed, his economic advisor Douglas Holtz-Eakin could refresh his memory. When the notion that the American taxpayer should guarantee loans to nuclear corporations was introduced in the Senate, the non-partisan Congressional Budget Office (CBO) then headed by Senator McCain’s economic advisor Holtz-Eakin found that:

CBO considers the risk of default on such a loan guarantee to be very high—well above 50 percent. The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources.  http://www.cbo.gov/ftpdocs/42xx/doc4206/s14.pdf

Senator McCain’s support for nuclear loan guarantees can not be justified by the nuclear industry’s past performance.  According to the Department of Energy, the first 75 reactors built in the U.S. experienced cost overruns totaling over $100 billion and that was before the meltdown at Three Mile Island sent the nuclear industry even further into a tailspin.   

U.S. Nuclear Power Plant Construction Cost Overruns

Construction Started	Estimated Overnight Costs	Actual Overnight Costs	Percent Overrun
1966-67	$ 560/kWe	$1,170/kWe	209%
1968-69	$ 679	$2,000	294%
1970-71	$ 760	$2,650	348%
1972-73	$1,117	$3,555	318%
1974-75	$1,156	$4,410	381%
1976-77	$1,493	$4,008	269%

                                                                                                                                              (Joskow, Massachusetts Institute of Technology, The Economics of Investment in New Nuclear Power Plants in the U.S, EIA Midterm Energy Outlook Conference, April 12, 2005. Note: Figures are in 2002$/kWe )

It was this economic track record that doomed nuclear power in the U.S. and led Forbes magazine to declare that the "failure of the U.S. nuclear power program ranks as the largest managerial disaster in business history, a disaster of monumental scale." Really, who in their right mind would guarantee loans to an industry with this track record?  Obviously, not Wall Street!

Last July, six major U.S. Banking institutions (some of which have been bought or are now bankrupt) including Citigroup, Credit Suisse, Lehman Brothers, Goldman Sachs, Merrill Lynch & Morgan Stanley sent a letter to the Department of Energy (DOE).  The bankers told DOE that unless the U.S. Taxpayer backed 100% of the debt incurred by nuclear corporations that they would have difficulty “accessing capital markets.”

We believe many new nuclear construction projects will have difficulty accessing the capital markets during construction and initial operation without the support of a federal government loan guarantee.  Lenders and investors in the fixed income markets will be acutely concerned about a number of political, regulatory and litigation-related risks that are unique to nuclear power, including the possibility of delays in commercial operation of a completed plant or “another Shoreham”. We believe these risks, combined with the higher capital costs and longer construction schedules of nuclear plants as compared to other generation facilities, will make lenders unwilling at present to extend long-term credit to such projects in a form that would be commercially viable.  http://www.lgprogram.energy.gov/nopr-comments/comment29.pdf

 
The U.S. General Accounting Office (GAO) has also weighed in on these loan guarantees to the nuclear industry. The GAO recently found that the Bush Administration’s DOE does not have the oversight in place to adequately manage the loan guarantee program.  But rather than address the inadequacies identified by the GAO, the Bush administration has accelerated the loan guarantee program.  http://www.gao.gov/new.items/d08750.pdf

Senator McCain has already been warned by the CBO, the GAO and Wall Street that building new nuclear power plants is an economic meltdown waiting to happen. Even a subsidiary of Warren Buffet’s corporation Berkshire Hathaway has rejected a new nuclear reactor as economically unsound.  

Senator McCain has abandoned his straight talk when it comes to nuclear power.  The Senator needs to  explain why the American taxpayer should be put on the hook for new nuclear plants that the industry would never build if they and their stockholders had to bear the risk.

--Jim Riccio

Seven years have past since the attacks on the World trade Center and the Pentagon and now a little more than four months remain in the Bush Presidency. The American homeland hasn’t been attacked again since that horrific day, but if terrorists were to target a nuclear power plant would the nuclear industry be ready?  

The Bush administration’s nuclear regulators have forced the industry’s 104 nuclear reactors to add more guards and guns on the ground at nuclear plant sites. However, the Nuclear Regulatory Commission (NRC) has failed to adequately address the threat to both new and existing nuclear power plants and the radioactive wastes they produce.  

After September 11th, the NRC revisited the level of protection afforded nuclear plants. The nuclear industry opposed changes that would have placed nuclear security guards under federal authority and lobbied the NRC to set the security standard, known as the design basis threat, as low as possible.

Even after the 9-11 attacks, the nuclear industry argued that it shouldn’t be required to defend against terrorists since they were “enemies of the state.” And unfortunately the Bush Administration’s NRC agreed with the industry. As a result, the NRC didn’t set the new security standard based upon the actual threat to nuclear plants. Instead, then NRC Chairman Diaz, who had claimed that nuclear plants were best defended from an airliner attack at the airport, based the new security standard on what a private security force could be expected to defend against.
 
Unfortunately, the Bush administration’s NRC did not base the new security standard upon on the force, size and capabilities of the terrorists that have threatened U.S. reactors.  It based the new security standard upon the capabilities of nuclear industry’s guard force! If this nonsensical approach to defending nuclear power plants wasn’t bad enough, recent revelations of nuclear plant guards sleeping on the job and the lack of NRC oversight only serve to heighten concerns about security.

Last September, CBS News broke a story about sleeping guards at the Peach Bottom nuclear plant in Pennsylvania.  A worker at the plant had informed the NRC Region I office that security guards were sleeping on the job. However, the NRC failed to act on the information when the nuclear plant owner, Exelon, said it found no evidence. So CBS News aired videotape of the guards sleeping.  You can view the CBS story here:

http://wcbstv.com/politics/peach.bottom.nuclear.2.291442.html

The NRC has since scrambled and has tried to repair the damage to its reputation by fining the nuclear corporation; but it has also threatened the whistleblower who filmed the sleeping guards with a violation of the Patriot Act for taking pictures inside a nuclear plant!

Congressman John Dingle (D- MI) who oversees the NRC said that, "(t)he NRC's stunning failure to act on credible allegations of sleeping security guards, coupled with its unwillingness to protect the whistleblower who uncovered the problem, raises troubling questions." It should, when it comes to nuclear whistleblowers the NRC has had a long history of shooting the messenger.

Congressman Dingle isn’t the only one to take issue with the NRC’s handling of the sleeping security guards.  The NRC’s Inspector General also found fault with the agency’s handling of the allegations.  The IG found that NRC Region I failed to follow proper procedures dealing with allegations by whistleblowers and merely called Exelon to see if security guards were sleeping at the Peach Bottom nuclear plant.  The NRC IG report can be found here:

http://www.nrc.gov/reading-rm/doc-collections/insp-gen/2008/ei-07-65.pdf

Security guards have also been caught sleeping at Entergy’s Indian Point Nuclear Power Plant, 24 miles north of New York City and at the FPL’s Turkey Point nuclear plant 25 miles South of Miami, FL.  

So, how many terrorists can sleeping guards defend against?

Unfortunately, this amazing lack of regulatory rigor is emblematic of the Bush administration’s NRC since 9-11.  In order to force nuclear regulators to better defend nuclear reactors and their wastes, Senator Hillary Rodham Clinton (D-NY) and Congressman Edward J. Markey (D-MA) introduced legislation last month to correct the most glaring inadequacies.

In the House of Representatives, the legislation has been introduced as H.R. 6816, "The Nuclear Facility and Materials Security Act of 2008."

The proposed legislation would address many of the gaps in the nuclear security left by the Bush Administration’s unwillingness to regulate the nuclear industry.  If enacted H.R. 6818 would:

• Require that any new reactor built in the U.S.- be designed to withstand the impact of a large commercial aircraft;

 

• Require that spent fuel from nuclear reactors be stored in the safest manner possible while in the spent fuel pool, for the fuel to be moved to dry storage as soon as possible, and upgrading the security requirements for spent fuel storage facilities;

 

• Require the distribution of anti-radiation pills (potassium iodide or KI pills) to communities within 20 miles of our nation's nuclear power plants;

 

• Require that the Nuclear Regulatory Commission abide by a recent court decision that directed that before new or revised licenses for nuclear reactors are granted, that the potential consequences of an act of terrorism be considered; and

 

• that the highest-risk radiation sources that could be used to make a dirty bomb be equipped with location tracking technology and requiring less dangerous technologies to be used where possible.

What is truly disheartening is that this legislation is even necessary seven years after 9-11.  You’d have thought that a responsible regulator would have already addressed these threats, especially after being warned that terrorists wanted to turn reactors into pre positioned weapons of mass destruction.  Unfortunately, since 9-11, we’ve had a President and an administration that would rather lie about threats to and posed by nuclear power plants than actually defend the public health and safety.  

Hopefully the next president and new leadership at the NRC will be more responsible.

-- Jim