An effort to stop “nuclear socialism” emerges in wake of promised loan guarantees

“Nuclear socialism” is what Michael Mariotte, Executive Director of the Nuclear Information Resource Service (NIRS) calls efforts by the nuclear industry to finance its expansion with federal taxpayer money.

Mr. Mariotte today told Etopia News that instead of pooling its money and building new nuclear reactors on its own, as it did with almost all of the existing 103 reactors now in operation, the industry has chosen to spend “600 million dollars over 10 years” on lobbying to get taxpayers to pre-emotively bail-out “wealthy utilities” and “wealthy reactor makers.” He criticized arrangements that would give profits, if there were any, to private companies, while saddling taxpayers with the losses, which he deemed more likely.

He also discussed the “credit subsidy cost” associated with the recently-offered 8 billion dollar loan guarantee to Southern Company, saying that this “down payment” to the federal government to cover the risk of failure ought to reflect the Congressional Budget Office’s calculation of that risk at 50% or the Government Accountability Office’s estimate of “above 25% for a loss of money,” rather than the 1% or less rate favored by the industry.

If the size of the credit subsidy payment were to reflect the actual risk of failure, he said, then it was likely that the project to build two new nuclear reactors in Georgia would not proceed.

He also criticized the lack of transparency regarding this credit subsidy cost, saying that the process surrounding its determination, and even its final level, was “non-transparent,” with the Department of Energy, which will recommend the proper cost, and the Office of Management and Budget, which will approve it, saying that they won’t reveal their final decision even after they’ve made it.

With an original appropriation of 18.5 billion dollars in 2007 for these nuclear guarantees, the 8.3 billion collars in guarantees being offered to Southern Company and its partners leaves 10.2 billion dollars for additional such projects. President Obama’s proposed 2011 budget provides for the expansion of this amount to 54 billion dollars.

Mr. Mariotte believes that the “pro-nuclear majority in the Senate” means that any effort to stop further support for nuclear development will focus on the House of Representatives, specifically the House Appropriations Committee chaired by Rep. David Obey of Wisconsin. He expects hearings on this measure to begin in “three or four weeks.”

He listed Physicians for Social Responsibility, Friends of the Earth, the Natural Resources Defense Council, and the Union of Concerned Scientists as groups opposing the expansion of the nuclear loan guarantee program.

On the technical side, Mr. Mariotte pointed to on-going design problems, not yet resolved, that nuclear reactor maker Westinghouse was having with the “shield building” component of the proposed nuclear plant. In order to save money, he said, the company wanted to build this structure off-site and construct it in a modular fashion, but there were problems with whether or not that approach would result in a structure capable of withstanding weather-related stress.

“In a practical sense,” he said, the offer of a loan guarantee was “meaningless, since the design of the reactor was not yet approved” by the Nuclear Regulatory Commission.

On the political side, he characterized the Obama administration as divided on the issue of support for nuclear expansion, with Secretary of Energy Steven Chu being the “most ardent pro-nuclear” person involved in the discussions.

He said that U.S. Senator John Kerry, who “has the ear of the President,” had told Mr. Obama that with some Democratic senators opposing the Administrations overall climate change agenda, it would be necessary to cultivate the support of some Republicans, who might be won over if the President supported nuclear expansion, in order to pass a climate change bill.

But, as reported on March 5th by Etopia News in an article entitled “Obama‘s pro-nuke move has no effect on Republican opposition to cap-and-trade,” this approach is not likely to work. According to Mr. Mariotte, “it’s as likely to lose votes” for the President’s plans, citing the failure of a climate change bill put forward in 2005, with lesser nuclear subsidies, by Senators John McCain and Joseph Lieberman.

The big question that needs to be addressed, Mr. Mariotte said, was “Should taxpayers be subsidizing the industry” at a time when public opinion seems to have had enough of government bail-outs to wealthy corporations.