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How Much Will Obama's Nuclear Blind Spot Cost America?

Is the administration ignoring the potential financial fallout of its plans for a nuclear expansion?

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It’s true that the CBO study is several years old. But critics of the administration’s nuclear policy say that no one has yet offered a better analysis of the risks. "Nothing has happened in the nuclear industry since 2003 that has proved that study to be incorrect," says Peter Bradford, a Nuclear Regulatory Commissioner from 1977 to 1982 and now a professor at the Vermont School of Law. "The Obama administration hasn’t a clue what the current realities are, and neither does anybody else, because nobody [in the US] has built these plants in three decades."

The administration also dismisses concerns about the rising price estimates for nuclear reactors. "I don’t think there’s that much uncertainty about what it’s going to cost to build," says the senior administration official. Yet the red flags surrounding nuclear construction are numerous.

No one has broken ground on a new reactor in the US for thirty years, because costs for the first generation of nuclear plants spiraled out of control. The industry claims it has fixed the problems that led to those massive cost blowouts. Areva, the French nuclear giant, is building what it calls the flagship of a new generation of reactors in Finland. That project hit a wall last year after the anticipated price tag leapt by more 50 percent. Areva now refuses to even give an estimate of when the plant will be completed.

In the US, several proposed plants have run into trouble before they’ve even made it off the drawing board. Of the 26 applications for new reactors submitted to the Nuclear Regulatory Commission for approval in the past three years, nine have been canceled and 10 have been significantly delayed. Last month, one of the top candidates for a loan guarantee—a proposed plant in San Antonio—stalled after skyrocketing cost projections prompted one investor to bail on the venture. (This happened even after the project already had agreements in place to sell power to customers.) The Tennessee Valley Authority cut their plans for four new reactors down to one, due to financial concerns. The utility AmerenUE pulled the plug on a proposed reactor in Calloway, Missouri, after it failed in a bid to bill utility customers for the plant before construction had even started. Pending reactor projects in Florida have either been scrapped or thrown into question after the state public service commission rejected a request to raise rates in order to subsidize the construction.

Meanwhile, the first recipient of a DOE-backed loan, the Vogtle project in Georgia, hasn't even been able to obtain a permit from the Nuclear Regulatory Commission due to safety shortcomings with its shield design. A spokesman for Georgia Power says it doesn't expect final approval until the end of 2011.

And what has the administration received in return for its big nuclear push? So far, not much. After the DOE announced its plan to triple the loan guarantee program, the House GOP accused the Obama administration of being " anti-nuclear." Longtime nuclear booster John McCain called the administration’s plan a " non-starter." "You shouldn’t have to waste $54.5 billion in order to buy a few Republican votes," says Jim Riccio, a nuclear policy analyst for Greenpeace USA. "They’re not going to play anyway."

Bradford, the former nuclear regulator, observes that if the Georgia reactors alone defaulted, taxpayers would be left with a bill of at least $14 billion. "If the Tea Party folks ever figure that out, the [DOE] building is going to be three floors deep in tea bags," he says. "This administration desperately needs someone to point out that this emperor isn’t wearing any clothes."

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