TVA’s New Nukes — Just a $2 Billion Overrrun

Here’s a recent story from the Chattanooga Times Free Press about cost overruns with the construction of TVA’s new nuclear reactors:

TVA, under fire for nuclear construction overruns, is on a road to having its first ever net loss year, its board was told Thursday.

“TVA expects to end fiscal year 2012 with revenues between $500 million and $600 million below plan,” Chief Financial Officer John Thomas said, blaming unusually mild weather and a slowly recovering economy for sluggish power sales.

In addition, the board of the Tennessee Valley Authority and the utility’s president and CEO were put on the defensive by public criticism of its $2 billion cost overrun on the Watts Bar Unit 2 reactor and its “nuclear addicted” management.

S. David Freeman, a former TVA board chairman, implored the agency “to just stop” its nuclear building program because it is too costly ….

“[A TVA manager] told me that plant was 92 percent completed back in 1979,” said Freeman, “Nuclear power is not a religion, it’s a business. … It’s time for this board to take a look at your load growth … and really just recognize there is an influence here that is not businesslike.”

I love that Freeman bolsters his position by making a common-sense business argument when nuclear energy has never seemed to work by normal business-like rules, unless normal business-like rules involve getting Congress to intervene in the market to create conditions to allow your business to prevail.  I think I just defeated my own position.

Nevertheless, I love to take any opportunity to point out that the sainted free market rejected nuclear energy from the get go.  Insurers thought the risk involved was too great.  No single insurer could underwrite the potential liability from a nuclear catastrophe, and so no level-headed utility would get in the nuclear power business.  Congress then stepped in to give us the Price-Anderson Act, which required utilities to buy the maximum insurance that they could ($60 million at the time), and then the government would cover another $500 million of liability.  Anything above that we’d just forget about.

I think it’s worth pointing out that a nuclear plant has yet to decimate an American city, so maybe nuclear energy is not outrageously dangerous.  It helps that we’ve never had a plant swamped by a tsunami or controlled by the Soviet Union.

Chernobyl just marked another anniversary, by the way.

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