How to Build a Nuclear Power Plant Without Captive Ratepayers

Michael Giberson

Jonathon Fahey, at Forbes.com, explains “How NRG Energy Wants to Revive Nuclear Industry.”

In the early part of the decade proponents talked breathlessly of a nuclear renaissance in the U.S. Natural gas prices were high, electricity demand was rising, and it seemed that carbon emissions would soon be either taxed or limited. In 2005 Congress passed an energy bill that provided loan guarantees for construction of new nukes on top of tax credits for power produced by the first few new reactors. Utilities fell over themselves planning new nuclear plants– nearly 40 proposals were drawn up.

Four years later the country is where it was a decade ago, at 104 operating nuclear plants (producing 20% of its electric energy). Natural gas prices crashed, making nukes look comparatively more expensive. Carbon remains untaxed and uncapped, and the recession ate into electricity demand, pushing the need for new plants further into the future. Credit markets also dried up, while the pool of government loan guarantees, $18.5 billion, was smaller than the industry hoped for, enough probably for only three plants.

Now, while 17 nuclear projects are still active, only a half-dozen plant proposals are moving at full speed, led by the four projects that are finalists for federal loan guarantees….

The story notes that NRG is an independent power producer, not a regulated utility, and so “doesn’t have a pool of captive ratepayers (as Southern and Scana do) who will pay for construction or cost overruns.”  But that isn’t to say that NRG isn’t looking for help whereever they hope to find it.  The NRG plant is among the finalists for federal load guarantees and, if built, may qualify for up to $125 million a year in tax credits during each of the first eight years of production.  NRG is partnering with the municipal utility in San Antonio for the nuclear plant expansion, and has lined up (or is looking for) additional financial partners.

The NRG strategy is either “how to build a nuclear plant in this day and age” (in the words of the director of NRG’s nuclear ventures) or just a matter of “finding a series of suckers to take the risk off his hands” (in the words of a nuclear power critic).