The Future of Nuclear Power
Gould, Jay M., Monthly Review
Economic forecasts can generally at best merely emphasize significant tendencies. Attempts to account for turning points or other specifics, even (or perhaps especially) when they emerge from computer models, are usually foolhardy endeavors. But the future decline of nuclear power, which is projected here, is supported by evidence that peak levels have been reached in the past, and that the next 15 years will witness an inexorable working out of a chain of dismal events embodied in three decades of massive commitments to a flawed technology.
That nuclear power can no longer be regarded as an economically viable alternative to other energy sources can be inferred from the low ratings assigned by Wall Street to nuclear power stocks and bonds. There are a handful of nuclear-free utilities (e.g., Allegheny Power, Utah Power and Light, Potomac Electric) whose stocks have hit all-time highs, while the defaulted bonds of the Washington Public Power Supply System (WPPSS) now sell for 20cent on the dollar, with an implied loss of $2 billion to credulous investors.
A recent Forbes article entitled "Utilities: Are the Good Times Over? (December 5, 1983) features a ranking of utilities with respect to their "quality of earnings" as rated by the investment house of Salomon Brothers. An average rating of B or better was given to a dozen companies whose construction plans for 1983-85 included no nuclear reactors and whose construction budgets constituted less than 25 percent of total capitalization. At the other extreme there were a dozen companies with nuclear reactors in construction and whose construction budgets exceeded 50 percent of their capitalization, whose average rating was below C--.
Nuclear utilities require careful analysis of the quality of earnings because they have continued to make high dividend payments despite poor earnings. Moreover, such dividends are often permitted to qualify as a return on capital in order to attract investors. Even so they are relatively poor investments. Consider for example the case of Commonwealth Edison, which with 15 reactors in operation or under construction is the most heavily nuclear of all investor-owned utilities. A recent study shows that $1,000 invested in Commonwealth stock in 1974 would show no gain by 1982, but that over the eight years an average dividend payment was made 11 percent. A similar investment in the top dozen nuclear utilities would have brought a total return of .124 percent over the eight years, while an investment in a representative group of eight non-nuclear utilities would have brought a total return of 269 percent.
The bleack prospects for nuclear power today stand in sharp contrast to the euphoria of the "Atoms for Peace" program launched by the Eisenhower administration, with its promise of energy too cheap to be metered. A new book by Mark Hertsgaard (Nuclear, Inc.: The Men and Money Behind Nuclear Energy, New York: Pantheon Books, 1983) traces the current crisis of civilian nuclear power to its origins in the postwar nuclear-based U.S. national defense policy. Under conditions of wartime secrecy, huge public and private sums were invested, particularly in the 1950-70 decades, in accelarating the design of an American nuclear reactor that would dominate the non-socialist world. In this period the rated capacity of successive reactor designs rose 50-fold without any operational experience to validate such rapid expansion. As we now know, in the process the safety requirements of a new and dangerous technology were badly served.
The economic death of the nuclear power industry has been definitively foreshadowed in the work of Charles Komanoff, an economist who has demonstrated that the capital costs and operating expenses of nuclear power plants do now, and will increasingly, exceed the corresponding costs of building and operating pollution-free coal-fired plants.
Komanoff's data base contains detailed cost breakdowns for all U. …