Wednesday, February 26, 2014

Two Georgia Nukes Prove Building Nuclear Plants Requires These 6 Conditions, Including $8.3 Billion Of Federal Loan Guarantees

What does it take to build a new nuclear power plant?  Massive government interventions, huge subsidies, and a utility management ready to bet its customers' wallets that it can avoid disastrous cost overruns are all required. Here are the big 6 requirements needed to build a nuke:

First, building a new nuke requires a utility to have an ironclad monopoly that makes its customers captives of the utility and the state regulators so that Wall Street is confident that the huge, costly investment made will be paid back by customers who cannot walk away from the debts incurred.

Second, and related to the first requirement, competition laws must not exist in a state for a nuclear plant to be built. Retail electricity generation competition or laws allowing customers to choose their electricity generation competition kill new nuclear plants, because Wall Street will not make capital available for nuclear construction if a utility must compete to keep customers.

Third, a law limiting liability of the plant's owners in the event of a nuclear meltdown or catastrophic accident is needed.  The federal government obliged by passing such a law

Fourth, subsidies and tax breaks of all kinds that add up to billions of dollars must be paid. Again, the federal government obliged.

Fifth, the federal government must offer massive guarantees of loans made. In the case of two new nuclear units in Georgia, the federal government is offering as much as $8.3 billion in guarantees.

Sixth, building a new nuclear plant requires a utility management willing to put at risk the utility's financial health and regulators who still underestimate the financial risks to customers.  Construction and budget overruns always happen with nuclear plants, and they can be financially disastrous for customers who get stuck with the bill or for utility shareholders or both.

One thing not required to build a new nuclear plant is a permanent place to store the highly toxic nuclear waste that plants generate throughout their operations.

These 6 requirements to build a new nuclear plant are all in place in Georgia, where the utility is building two new nuclear units that will each have a capacity of 1,100 megawatts.  But Georgia and the Southern Company are proving to be the only place in the America, where all 6 requirements needed to build a nuclear plant do exist.

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