Nuclear plants will require ever-increasing subsidies

Decades ago, before the Three Mile Island, Chernobyl or Fukushima catastrophes, a major selling point for nuclear energy was proponents said it was “Too Cheap To Meter.” While relatively low priced for the power, the capital cost was high. When the cost of Millstone III got out of hand, the Connecticut legislature capped the cost after which ratepayers would not be responsible. It is also informative that the state provided tax-free bonding for $90 million for pollution control project which could be considered an early subsidy. In the mid-1990’s Millstone had history of safety violations and was temporarily shut down and paid several fines.

There are also very serious questions on how broadly the executive order that came out for further Millstone subsidization may provide alternatives not just on the Millstones but other aspects of our energy policy. Overall, it maintains a highly complex and centralized grid. Storms, possibly enhanced by climate change, and increasing cyber-related challenges, would be better met by a decentralized grid. Nuclear is the opposite in that it is highly centralized and maintains a more vulnerable grid structure.

First and foremost, please consider the very basic fact that we have gone from nuclear technology sold in the 70s on the basis of being “too cheap to meter” to one where they have been begging and receiving for what amounts to yet more subsidies. Even with the “too cheap to meter” claim, in its heyday the nuclear industry was the recipient of huge amounts of subsidy in numerous forms. One U.S. Department of Energy study on energy subsidies from 1978 recounts:

“One of the hallmarks of commercial nuclear power is the high degree of federal participation in its development and regulation… This support has been manifested in a number of ways: subsidies, use of facilities…sponsorship of R&D directly applicable to commercial nuclear power, transfer of technology from weapons, space and military applications, and legislation.”

By its own admission one study went on to say:

“The total amount of incentives to the nuclear industry do not take into account several nonquantifiable incentives. Neither the cost of the Price – Anderson Act (a legislative action which removed the liability insurance roadblock), nor the federal uranium policies are included because no way was found to quantify them.”

Second, let’s look at other “nonquantifiable” incentives for a moment. For those not old enough to remember the name “Admiral Hyman Rickover” he was the person most responsible for the “nuclear” Navy with the submarines built right here in Connecticut; work paid for by taxpayers. Much of that work was crucial to the development of commercial nuclear energy as we know it. Yet, as Rickover later stated, “… that both nuclear weapons and nuclear power should be outlawed. ‘I’m not proud of the part I played,’ he said.” Still, some portion of those government efforts in development of defense-related technologies could be considered a form of “subsidy” to the commercial nuclear industry.

Maybe a more direct form of subsidy that came out of the U.S. Navy nuclear activities was the training of innumerable personnel in the safe operation of nuclear generation related to submarines. A case can be made that certain basic safety and operational knowledge and skills provided by the Navy are transferable to the civilian commercial power industry. Personally, I have known many people who came to the energy world via this route and worked at nuclear plants or other aspects of that industry. They are usually highly professional and competent BUT it was the U.S. taxpayer that paid the bill for that initial Naval training before they became employed in the nuclear industry. Again, it is what might be termed a “non quantifiable” incentive; but also known as, a subsidy.

Lastly, there is a time to retire old technologies. Millstone II went into operation in 1975 and Millstone III in 1986 making the plants currently 42 and 31 years old and with extensions to 2035 and 2045. That would make them both about 60 years old. I am willing to bet none of the DEEP or PURA commissioners drive 60-year-old cars to work (possibly some staff have to). This raises some major concerns where aged equipment, more prone to incidents or accidents, might have cascading failures as well as increasing costs to maintain older equipment.

Each nuclear plant built in the era of the Millstones was very much a one-off proposition with many custom parts. This will probably make it even more expensive going forward over time to keep plants up to specifications and we can only hope no corners are cut. Right now it is primarily cheap natural gas and some renewables taking over greater portions of the generation mix that are said to be the cause of concern over Millstones’ economic viability. I do share concerns over fuel diversity, but keeping these plants running safely will probably require even greater subsidies going forward. While I am skeptical of the accuracy of most predictions beyond five years, this is a prediction I am pretty confident in.

With that, I suggest our leaders and regulators very carefully consider any actions contemplated to further subsidize this technology since that might add to its eventual stranded cost that will hold up newer, lower cost decentralized, modular and more secure options. Even more important is that aging plants may, themselves, present an existential danger to the citizens of the state.

Joel Gordes is an energy and environmental strategist based in West Hartford.

CTViewpoints welcomes rebuttal or opposing views to this and all its commentaries. Read our guidelines and submit your commentary here.