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Look out for the nuclear bomb coming with your electric bill

Written by Atheo | Aletho News | February 25, 2010

Obama’s provision of $54 billion in loan guarantees to the nuclear industry will cost Americans much more than the probable 50% default rate that the Congressional Budget Office anticipates. While the federal government will guarantee the profits of investors, rate payers will suffer the inevitable rate hikes.

Higher electric rates will appear, not when plants begin operating, but years, if not decades, before they come on line. Several states allow customers to be billed for expensive new nuclear plants in advance. Naturally, these are the states where the initial, new, entirely untested, plants are proposed for construction. This arrangement further reduces investor exposure to cost over-runs or rising interest rates that are imposed due to the downgrading of credit ratings for facilities with deteriorating economic prospects.

It should be noted, that relieving investors of exposure to risk results in the elimination of incentives for sound management.

Although ‘prudence’ on the part of utility managers is a legal requirement, once sunk costs are waiting to be recovered it becomes quite elastic. Good money is thrown after bad. Rate payers, whose dollars are committed, will have little to no oversight, or input, into the administration of their investment dollars.

The interest burden of the staggering sums of capital that are tied up for years, or decades, while problems arise with the ‘new generation plants’ will ultimately be borne by the rate payers.

Initial rate hikes to cover ‘advance costs’ were to have gone into effect in Florida by January 1st, but Harvey Wasserman reports that:

Two Florida Public Service commissioners, recently appointed by Republican Governor Charlie Crist (now a candidate for the US Senate), helped reject over a billion dollars in rate hikes demanded by Florida Power & Light and Progress Energy, both of which want to build double-reactors at ratepayer expense. The utilities now say they’ll postpone the projects proposed for Turkey Point and Levy County.

The Associated Press reports that Georgia Power customers will see $9/month billing increases for nuclear power plants that many of them won’t live to see completed. Once the utility is committed, costs escalate, doubling or tripling original projections.

A recent study by Craig A. Severance* puts the generation costs for nuclear power generation (based on the higher cost of current plant designs) at 25 to 30 cents per kilowatt-hour—more than triple present U.S. electricity rates. The study details the ruses that the nuclear industry employs in presenting fraudulent assertions of competitive pricing.

Public Citizen has collected state-by-state data from the U.S. Department of Energy. Using this data they find:

States that rely on nuclear power have significantly higher electricity rates than states that do not. In fact, our research shows that the higher the reliance on nuclear power, the higher the electric rates will be. That’s because nuclear power is significantly more expensive than coal or natural gas due to the higher capital, operation and maintenance costs necessary to protect Americans from radiation releases.

In the 20 non-nuclear states, the 1999 average cost of electricity was 5.52 cents per kilowatt/hour. The average cost of electricity in the 31 states that use nuclear power was 6.88 cents per kilowatt/hour. In other words, consumers in states that use nuclear power pay 25% more for their electricity than consumers in states that do not use nuclear power.

Furthermore, electricity rates increase in proportion to the states reliance on nuclear power. In the five states that get more than half of their electricity from nuclear power, electricity prices were 37% higher than in non-nuclear states.

Higher electric rates are a factor in the selection of business sites. Once the full costs of the new plants are realized, higher rates will drive some existing industries to less expensive locations, exacerbating the de-industrialization of the US. Lost jobs will be another hidden cost experienced by communities that allow new nuclear plants.

The possibility that higher rates could destroy the projected future increase in demand that the new power plants are intended to serve is very real. This is the very scenario that unfolded in India where Enron was provided with subsidies to build power generation capacity that turned out to be too expensive to sell. In fact, US demand for electricity is currently declining as it is, even without rate hikes. Whether or not the new generation of nuclear plants are needed by future consumers, utilities will recover the open-ended costs of their construction from rate payers.

Of course, some of the costs are entirely beyond estimation. For example the burden on future generations for plant decommissioning and waste ‘disposal’. There is always the possibility of an accident resulting in widespread, immediate exposure  to radioactive material as well as long term contamination.

The obvious question is: why is Obama inducing investors and utilities to take risks that the market won’t embrace on its own?

One answer would be that the same motive applies for the new generation of nuclear facilities as for the first. Nuclear power plants are part of the fabric of the larger nuclear industry which is a key element of the military industrial complex.

While it is theorized that the reliable lifespan of today’s nuclear weapons might be extended for decades there is no existing back up if the theories fail. Obama does not appear to foresee a future that includes a reduced number of nuclear warheads. An examination of the US Department of Energy fiscal year 2011 budget shows that funds earmarked for nuclear weapons production are increasing at an alarming pace over the fiscal year 2010 budget while funding for dismantling warheads retired from the current stockpile is being cut by 40%. Energy supply takes only a 15% priority:

Graph by Robert Alvarez, Senior Scholar at Institute for Policy Studies, where he is currently focused on nuclear disarmament, environmental, and energy policies.

The greatest cost of the $54 billion in loan guarantees that Obama is putting forward may very well be that our children will live in a world teeming with nuclear warheads. Obama is aggressively developing missile ‘defense’ systems, and he is also initiating a new arms race that will require a vibrant nuclear industry composed of all aspects of uranium exploration and mining, processing, enrichment, and weapons production along with the pool of expert technicians that will form the basis of US military dominance (at least in raw destructive power) for the rest of the 21rst century.

*A practicing CPA, Craig A. Severance is co-author of The Economics of Nuclear and Coal Power (Praeger 1976), and former assistant to the chairman and to commerce counsel, Iowa State Commerce Commission.

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January 9, 2012

Three Mile Island, Global Warming and the CIA

November 13, 2011

US forces to fight Boko Haram in Nigeria

September 19, 2011

Bush regime retread, Philip Zelikow, appointed to Obama’s Intelligence Advisory Board

March 8, 2011

Investment bankers salivate over North Africa

January 2, 2011

Top Israel Lobby Senator Proposes Permanent US Air Bases For Afghanistan

October 10, 2010

A huge setback for, if not the end of, the American nuclear renaissance

July 5, 2010

Progressive ‘Green’ Counterinsurgency

February 7, 2010

The saturated fat scam: What’s the real story?

January 5, 2010 – Updated February 16, 2010:

Biodiesel flickers out leaving investors burned

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December 19, 2009

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December 4, 2009

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February 25, 2010 - Posted by | Author: Atheo, Economics, Militarism, Nuclear Power

9 Comments »

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  4. [...] The interest burden of the staggering sums of capital that are tied up for years, or decades, while problems arise with the ‘new generation plants’ will ultimately be borne by the rate payers. Read it all here [...]

    Pingback by Another Corporate Energy Ripoff | For the Defense…..A Lawyer's View | June 30, 2010 | Reply

  5. “Obama’s provision of $54 billion in loan guarantees to the nuclear industry . . .”

    Just where in Hell does this F***head Zionist-in-Chief get the authority to provide or guarantee loans to anybody, unless it comes out of his own bank account? Is he telling his bankster buddies to pony up the money? After all, he and his Congress-critters gave them plenty. If they’re not going to loan any of it to taxpayers (what a f***ing joke — they’re going to get their own money loaned back to them at interest? Where can I sign up to be a bankster?), then give it to the nuclear hucksters.

    Bottom line, states need to create their own money and their own banks, and kick these f***ers in DC, along with the Fed, into the storm drain. Every legislature needs to recall every single “representative” and Senate crapweasel, abolish federal elections in their states, and shut down DC forever.

    And speaking of the traitors in DC, somewhat off the subject, every single military action taken by these criminal murderers in DC could be shut down today, if the people with the purse strings would tell Osama Blackbush and his pals to go pound sand, and not appropriate a cent for any of this. Yeah, like that’ll happen. They’re scared to death of being accused of not supporting the murdering troops, and the Zionists have stamped UPC bars on all of their Hell-bound asses. God Bless America? Please. Reverend Jeremiah Wright had it spot-on.

    Comment by Big M | March 19, 2011 | Reply

  6. I look to that giant nuclear reactor in the sky. My household gets 95% of its electricity from pv panels. The system cost less to set up than a good used 4wd pickup, and except for the batteries the components will last 20 years on average. My wife and I stay up untill 3 in the morning, have an electric refrigerator, plenty of light, and run our laptops at least 10 hours a day. Solar is not too expensive, take control of your energy situation and stop your dependence on grid power and the greed which drives it.

    Comment by Thebes | March 19, 2011 | Reply

  7. Damn it!!
    We are the Saudia Arabia of NATURAL GAS so WHY is not EVERY electrical plant run on it??
    Nuclear plants are a boondoggle that are being run to support the nuclear industry!
    The Public’s electrical bills could be cut 25% if Natural Gas was used so WHY NOT?
    The Powers that be want nuclear… so it is!

    Comment by BJ | October 29, 2011 | Reply

    • BJ,

      Notice that the nations that don’t have nuclear weapons programs have almost entirely backed away from nuclear power since Fukushima (Germany, Italy, Switzerland, Japan etc…) leaving the militarist, first strike threatening, aggressor states (France, UK, US) as the principle proponents of nuclear power.

      Comment by aletho | October 29, 2011 | Reply

  8. nuclear power plants will be used as nuclear weapons against any people who want out of the central banking scam. ask yourself ‘ is nuclear power consumer driven?’
    or course not, so ‘who’s driving it?’

    Comment by Duck and Cover | October 15, 2012 | Reply


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