Tuesday, January 15, 2008

Banking Nuclear Power Development: A Reply to Josh

Josh, before we dismiss the idea of US government bonding of private investment in nuclear power plants, I see a couple of possible differences between now and 2003 when the CBO trashed a similar proposal.

First, we are not talking about investment in first generation nuclear facilities. (I worked on rate issues for Illinois Power's Clinton plant when I was a whipper snapper in the 1980's.) I'm obviously not a nuclear engineer but nuclear generation and spent fuel storage technology has evolved considerably since the design process for plants like Clinton and Watts Barr. Now nuclear engineers are working on advanced light water reactor designs and safety backups that rely on natural laws of physics like gravity and capillary action instead of the elaborate pumps and valves used in old systems. (Ok, I might be a nuclear engineer.)

Second, the NRC has decades of experience with regulation. True, the NRC presided over some of the longest, most incomprehensible, most expensive regulatory proceedings known to man. But, it may just be getting the hang of it.

If the engineering is better and the regulatory environment is better, it's just possible that the investment isn't the dog you make it out to be. The use of US guarantees -- assuming the investment is otherwise market-worthy -- makes sense. I'm guessing that the sheer size of the commitment and length of the term narrows the sources of capital down to very big, very diversified private and governmental sources -- like Uncle Sam.

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