Could new nukes spell financial downfall?

Those of you who remember the 1993 Michael Douglas movie “Falling Down” might recall a particular line that was repeated again and again throughout: “not economically viable.” Well, an analysis by a US CPA concludes that a nuclear power renaissance — viewed by some as our only hope for averting catastrophic climate change — might be deserving of the same description.

“Business Risks and Costs of New Nuclear Power,” (PDF) a study by Colorado-based CPA Craig A. Severance, finds that the nuclear industry’s consistent history of cost overruns, coupled with a new focus on as-yet unproven (in real life) next-generation plant designs, indicates the eventual cost of nuclear-generated electricity would be, compared to today’s prices, beyond prohibitive:

“Generation costs/kWh (kilowatt-hour) for new nuclear (including fuel & O&M (operations and maintenance) but not distribution to customers) are likely to be from 25 – 30 cents/kWh,” writes Severance, co-author of the 1976 book The Economics of Nuclear and Coal Power and former assistant to the chairman of the Iowa Commerce Commission. “This high cost may destroy the very demand the plant was built to serve.”

By contrast, the average US residential electricity cost in 2008 was 11.29 cents per kilowatt-hour, according to the Energy Information Administration.

“It seems to have been forgotten that the reason U.S. utilities stopped ordering nuclear power plants was their conclusion that nuclear power’s business risks and costs proved excessive,” Severance writes.

The current economic downturn won’t help, either, he adds:

“Given nuclear’s long lead time and the fact most nuclear costs occur after year 5, construction of a nuclear power plant will outlast any normal length recession. If other countries suffer less than the US, cost escalations may actually return even before the US economy recovers.”

A recent report in Time magazine reached similar conclusions:

“The math gets ugly in a hurry,” writes Michael Grunwald in a piece titled, “Nuclear’s Comeback: Still No Energy Panacea.” (Former Republican presidential candidate John) McCain called for 45 new plants by 2030; given the nuclear industry’s history of 250% cost overruns, that could rise to well over $1 trillion. Ratepayers would take the main hit, but taxpayers could be on the hook for billions in loan guarantees, tax breaks, insurance benefits and direct subsidies — not to mention the problem of storing radioactive waste, if Congress can ever figure out where to put it. And those 45 new plants would barely replace the existing plants scheduled for decommissioning before 2030.”

Not economically viable? Sure sounds like it.