Three Strikes and Out? Nuclear Energy in the United States in the Wake of Three Mile Island, Chernobyl and Fukishima

November 1, 2011

Since President Eisenhower’s “Atoms for Peace” speech before the United Nations in December 1953 nuclear energy in the United States has been seen in the 1954 words of Levi Strauss either as a vital source of electricity that within fifteen years would be “too cheap to meter” or as a Faustian bargain with the devil that has no place in the world’s future energy mix. Coming out of the U.S. Navy’s atomic submarine programme, commercial nuclear power for civilian use received a major boost in 1963 when a New Jersey public utility ordered the first commercial-scale plant from General Electric. Over the next decade nearly 50 reactors were ordered either from General Electric, which initially sponsored a BWR (Boiling Water Design), or Westinghouse which supported a PWR (Pressurized Water Reactor). While other vendors in the United States and abroad experimented with modifications of these designs or their own technologies, the use of commercial nuclear power sky rocketed with projections that nuclear energy might provide up to 50% of U.S. electricity by 2000.

Ironically it was this hubris, with each vendor or utility wanting its own unique design, that came to haunt the industry in the following decades, since this approach led to a plethora of different issues for regulators at both the state and federal level to address. This diverse set of designs, rather than the industry agreeing on one or two more “standardised designs,” meant that each licensing hearing occurred in a vacuum with little ability to draw lessons learned from previous decisions and, as reactors moved from the design stage to construction and operation, problems began to arise. The fact that all these technologies were new and had no experience on which to draw meant that regulators in the early days were often deciding issues by the seat of their pants with no firm knowledge of all the issues that would inevitably arise.

The fact that siting, construction and operational licenses were often bifurcated with state and federal regulators each doing their independent reviews rather than acting in concert, also added to the time required to build a nuclear plant. Since at the time these capital intensive plants were not allowed to recover any of their costs from ratepayers until the plants commenced operation led to an escalation in costs that during a high inflation era such as the Carter administration led plants that had been forecast to cost $200-300 million dollars to rise to more than ten times that cost and, in the case of the Nine Mile 2 plant outside Syracuse, to hit over $9 billion dollars. The problem was further exacerbated by environmentalists opposed to nuclear power who used this rate base procedure to delay plants in court, or in regulatory procedures based on a host of questions such as the adequacy of evacuation plans, etc until which time the plants, because of cost escalation, could no longer be justified in the marketplace. While many other factors by the 1970s and 1980s were also responsible, ultimately more than $100 billion dollars of nuclear power plants became stranded assets.