Joe F. Colvin, Nuclear Energy Institute
Within hours of adjourning for its summer recess, the U.S. Senate passed comprehensive energy policy legislation that includes a number of nuclear energy-related provisions. Among these provisions are funding for the Department of Energy’s (DOE) Nuclear Power 2010 program that sets a goal of constructing and operating a new nuclear power plant by the end of the decade, and authorization of a study to identify DOE nuclear facilities for hydrogen production. The nuclear industry welcomes these provisions that recognize the vital role for nuclear power in the nation’s diverse mix of energy sources. But the basis for this legislation was a Senate-passed version of last year’s energy bill as the Senate could not agree on the this year’s bill proposed by Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) that included a number of financial incentives geared toward new nuclear plant construction.
However, Sen. Domenici has said he will add financial incentives for new nuclear plant construction to the bill before the conference with the House of Representatives this autumn. This could help set the stage for new nuclear power plants and, by doing so, Congress will take an important step forward for America’s energy future. At a time when warnings of a looming natural gas crisis are swirling like hurricanes on the Gulf Coast, the need for the nation to ensure consumers a diversified mix of energy sources could hardly be clearer.
Nuclear power plants, which supply electricity to one of every five homes and businesses nationwide, are essential to drive our economy and support job growth. Because nuclear power plants create energy through the fission process rather than by burning anything, they help keep the air clean. They are, in fact, by far our nation’s largest electricity source that doesn’t pollute the air by providing more than 76 percent of all emission-free electricity in the U.S. And nuclear plants provide the U.S. with a significant source of electricity with a stable and low-cost supply of fuel that helps bolster U.S. energy security making us less reliant on energy supplies from volatile regions of the world.
With these advantages and more, it’s appropriate that Sen. Domenici, with significant bipartisan support, is leading the push for construction of next-generation nuclear plants.
“I promise you we will write many of this year’s energy provisions into the bill at conference,” Sen. Domenici said on the heels of the July 31 Senate vote. “We will do more for production. We will do more for energy diversity. We will do more for research. The final bill will look more like what I produced in committee this spring than it will the bill we are passing tonight. Tonight’s bill is just a vehicle to get to conference.”
Sen. Domenici and many others in Congress all across the political spectrum realize that the U.S. must wisely invest in a diversified energy production portfolio and not rely on any one source. The Senator was quite clear in an earlier statement when he said “we cannot keep building one natural gas plant after another when our demand is already outstripping our supply.”
Indeed, natural gas has accounted for more than 95 percent of new electric generating plants built in the past five years. Consequently, natural gas prices have more than doubled in the past eight years. And the amount of natural gas used to generate electricity has risen 33 percent in the past five years alone. Meanwhile, domestic natural gas production is in decline and imports are at maximum levels.
It is noteworthy that other supporters of the nuclear plant incentives include two top energy officials from the Clinton Administration—former CIA Director John Deutch and former Energy Department Undersecretary Ernest Moniz, who are on faculty at the Massachusetts Institute of Technology and chaired a recently-released MIT study on the future of nuclear power.
Critics of the energy bill’s nuclear provisions misconstrue the nature of its potential financial assistance. They also conveniently ignore the fact that the federal government—as continues to be the case with this bill—long has financially supported a variety of energy technologies.
Sen. Domenici’s original proposal for financial assistance for new nuclear power plants, in the form of loan guarantees and power purchase agreements, would not have exceeded 50 percent of eligible project costs and was limited to the first six to eight plants. The loan guarantees may not be included in the conference with the House, even though they would not have cost the government any money but would have helped in obtaining lower-cost financing from the private sector for the first few new plants. But there will be other financial incentive proposals offered that are not known at this time annd this stimulus is designed to reduce the uncertainties faced by the investing community and builders of the first of the new wave of advanced-design reactors. This stimulus is important as the new rigorous licensing process for the facilities put in place in the 1992 Energy Policy Act has yet to be tested.
As it is, direct taxpayer subsidies already go to other energy sources. For example, wind power projects receive a 1.7 cents per kilowatt-hour tax credit and an accelerated (five-year) depreciation schedule. The Alaska natural gas pipeline would get an 80 percent loan guarantee and accelerated depreciation of seven years. Similarly, the Department of Energy last February announced plans to build a $1 billion prototype of a pollution-free fossil-fueled power plant.
Denying nuclear energy limited financial stimulus while other energy technologies benefit from what currently is an uneven playing field would serve only to hurt American consumers and U.S. energy security for decades to come. The House of Representatives should keep this in mind when it conferences with the Senate on a final energy bill.
Colvin is president and CEO of the Nuclear Energy Institute.
