Why Is Obama Trying to Prop Up a Doomed 'Nuclear Renaissance'?

Amidst utter chaos in the atomic reactor industry, Team Obama is poised to vastly expand a bitterly contested loan guarantee program that may cost far more than expected, both financially and politically.

The long-stalled, much-hyped "Renaissance" in atomic power has failed to find private financing. New construction projects are opposed for financial reasons by fiscal conservatives such as the Heritage Foundation and National Taxpayers Union, and by a national grassroots safe energy campaign that has already beaten such loan guarantees three times.

New reactor designs are being challenged by regulators in both the US and Europe. Key projects, new and old, are engulfed in political/financial uproars in Florida, Texas, Maryland, Vermont, New Jersey and elsewhere.

And 53 years after the opening of the first commercial reactor at Shippingport, Pennsylvania, Department of Energy Secretary Steven Chu is now convening a "Blue Ribbon" commission on managing radioactive waste, for which the industry still has no solution. Though stacked with reactor advocates, the commission may certify the death certificate for Nevada's failed Yucca Mountain dump.

In 2005 George W. Bush's Energy Bill embraced appropriations for an $18.5 billion loan guarantee program, which the Obama administration now may want to triple. But the DOE has been unable to minister to a chaotic industry in no shape to proceed with new reactor construction. As many as five government agencies are negotiating over interest rates, accountability, capital sourcing, scoring, potential default and accident liability, design flaws and other fiscal, procedural and regulatory issues, any or all of which could wind up in the courts.

In 2007 a national grassroots uprising helped kill a proposed addition of $50 billion in guarantees, then beat them twice again.

When Obama endorsed "safe, clean nuclear power plants" and "clean coal" in this year's State of the Union, more than 10,000 MoveOn.org members slammed that as the worst moment of the speech.

The first designated recipient of the residual Bush guarantees may be at the Vogtle site in Waynesboro, Georgia, where two reactors now operate. Georgia regulators have ruled that consumers must pay for two proposed new reactors even as they are being built.

But initial estimates of $2-3 billion per unit have soared to $8 billion and more, even long before construction begins. Standardized designs have not been certified. On-going technical challenges remind potential investors that the first generation of reactors cost an average of more than double their original estimates.

The Westinghouse AP-1000 model, currently slated for Vogtle---and for another site in South Carolina---has become an unwanted front runner.

Owned by Japan's Toshiba, Westinghouse has been warned by the Nuclear Regulatory Commission of serious design problems relating to hurricanes, tornadoes and earthquakes.

The issues are not abstract. Florida's Turkey Point plant took a direct hit from Hurricane Andrew in 1991, sustaining more than $100 million in damage while dangerously losing off-site communication and power, desperately relying on what Mary Olson of NIRS terms "shaky back-up power." Ohio's Perry reactor was damaged by a 1986 earthquake that knocked out surrounding roads and bridges. A state commission later warned that evacuation under such conditions could be impossible.

Long considered a loyal industry lap-dog, the NRC's willingness to send Westinghouse back to the drawing board indicates the AP-1000's problems are serious. That they could be expensive and time-consuming to correct means the Vogtle project may prove a losing choice for the first loan guarantees.

South Texas is also high among candidates for loan money. But San Antonio, a primary partner in a two-reactor project there, has been rocked by political fallout from soaring cost estimates. As the San Antonio city council recently prepared to approve financing, it learned the price had jumped by $4 billion, to a staggering $17-18 billion. Angry debate over who-knew-what-when has led to the possibility that the city could pull out altogether.