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The Opposite Of ‘Too Cheap To Meter’

In 1954, Lewis Strauss, then the chairman of the federal Atomic Energy Commission, famously predicted that electricity from nuclear power plants would become “too cheap to meter.” As it turns out, it may be too expensive to make.

In fairness to Strauss, he was talking about power from hydrogen fusion, not uranium fission. Nearly 60 years later, hydrogen fusion still has no commercial application. On the other hand, the uranium fission plants that were on the drawing boards in Strauss’ day, which have since come to fruition, may soon be obsolete.

The New York Times recently reported that competition, mainly from cheap natural gas, has forced old nuclear plants to close and has prevented new ones from gaining traction. A plant in Wisconsin closed earlier this year, and a Vermont plant is slated to close in 2014.

Plants are closing for the simple reason that they cannot continue to stand against the combination of conservation concerns, flexible energy demand by large industrial customers, and competition from turbines fired by newly cheap and abundant natural gas.

James J. Hoecker, a former chairman of the Federal Energy Regulatory Commission, told The Times that nuclear plants are struggling because natural gas plants can be built more quickly and for less money, and offer flexible output in response to demand, while nuclear plants cannot vary their hourly production. “This is what’s happening in the real world,” Hoecker said. “It’s not something that the Federal Energy Regulatory Commission has made any conscious decision to affect.”

The only reason most nuclear plants were ever economically viable in the first place was a welter of government subsidies and costs that were hidden rather than recognized. Nuclear power producers could never have gotten private insurance to cover the potential costs of a major accident. They did not have to get private insurance, however, because the government capped liability for any nuclear power accident at less than $12 billion, and spread that risk across the entire nuclear power industry. By doing so, the government unyoked financial concerns from safety concerns. Though the Price-Anderson Act, the law that imposed this risk-limiting and risk-spreading structure, was originally intended to get a nascent industry off the ground, continued reauthorization has kept the nuclear power industry going. Without the law, nuclear power stations would be uninsurable.

While $12 billion in liability may sound like a lot of money, estimates of the long-term cleanup costs at Japan’s Fukushima disaster site are all over the map, from $11 billion all the way up to $250 billion. Nobody can be certain, since - more than two years after the accident - plant operator TEPCO has not been able to stabilize the site, which continues to pour radioactive water into the Pacific Ocean. The disaster at Fukushima prompted Japan to shut down its remaining nuclear reactors, leaving its energy prospects uncertain. We would be foolish to assume that such an accident could not happen here.

Besides capping liability, the government also sustained the nuclear power industry in another way: It has not made nuclear plant operators fund a long-term disposal solution for their radioactive waste. The government could not force such a move even if it tried, because we have no long-term solution in place, or even on the drawing board after President Obama canceled the planned Nevada disposal site. There has been no further word from the president about what to do with the stuff left over after nuclear plants exhaust their fuel or when the plants are eventually dismantled into heaps of radioactive rubble.

If investors had been forced to recognize the true costs of safely building, operating and disposing of nuclear power plants and their waste, nobody would ever have built one. The decision to create an atomic energy program was based on a combination of national politics, geopolitcal strategy, naive optimism and self-deception. The search for clean energy should have begun with clean accounting, but it didn’t. Ignoring the debris atomic energy will leave behind is not an option, but that does not mean we have to double down on a program whose economic risks and costs have been swept under the rug for decades.

So it is good news that America’s nuclear energy industry seems to be on a gradual path toward extinction. Market forces may yet prevail where political forces have failed, even in the wake of disasters at Three Mile Island, Chernobyl and Fukushima. We will still be left with a pile of waste and no place to put it, but at least we might stop making the problem worse for the generations that follow us.

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