June 12, 2001
Consumers in Nuclear States Pay 25 Percent More for Electricity, Analysis Shows
Expensive Nuclear Power Calls Into Questions Key Component of Cheney’s Energy Plan
WASHINGTON, D.C. – States that use nuclear power to generate electricity have significantly higher electricity rates – on average 25 percent higher – than states that do not, a Public Citizen analysis shows.
In the District of Columbia and the 19 states without nuclear power plants, electricity cost an average of 5.52 cents per kilowatt/hour in 1999, the latest date for which data was available for all states. The average cost of electricity in the 31 states that use nuclear power was 6.88 cents per kilowatt/hour in 1999. The trend holds true despite recent fluctuations in deregulated electricity markets.
In fact, the higher a state’s reliance on nuclear power, the higher electricity rates will be, Public Citizen concluded. This is because nuclear plants are more costly to build, operate and maintain.
The findings call into question the viability of a key component of Vice President Dick Cheney’s energy plan. Cheney’s May report called for the president to “support the expansion of nuclear energy in the United States as a major component of our national energy policy.”
“The administration is living in a dream world if it thinks that nuclear energy will be a panacea to our current and future energy woes,” said Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and Environment Program. “Aside from the critical questions of safety and waste disposal, these plants are prohibitively expensive to build and maintain.”
Capital costs represent between 60 and 75 percent of the cost of a nuclear plant, compared to 25 percent of the cost of a coal plant and 50 percent of the cost of a natural gas plant. When capital costs are included with operation, maintenance and fuel costs, nuclear power costs $2,080 per kilowatt/hour compared to $1,200 per kilowatt/hour for coal and $500 per kilowatt/hour for natural gas.
For the analysis, Public Citizen used data from the U.S. Department of Energy’s Energy Information Administration concerning electricity sales and revenues for the calendar year of 1999, the latest available. Since then, deregulation has increased prices in many areas.
One of the driving forces behind deregulation was the high cost of power in states with nuclear power plants, many of which had high cost overruns. Nuclear power plant construction projects in the late 1970s and 1980s experienced cost overruns of as much as 700 percent, which represented the majority of the debt incurred by major utilities.
In the 1990s, as state legislatures debated deregulation plans, utilities were able to convince state lawmakers to have consumers pay 100 percent of these nuclear-related debts, estimated to total $86 billion. In exchange, the utilities agreed to allow electricity rates charged to consumers to be frozen until these so-called “stranded costs” were paid off.
This bailout of the utilities’ nuclear capital costs in part has allowed for the recent fall in electricity prices in the western United States. (The drop can also be attributed to reductions in consumer demand and increased federal policing of the markets.)
Increasing reliance on nuclear power involves not only building new plants but relicensing existing ones – a practice that raises a host of concerns about the safety of plants that are decades old.
“Nuclear power is not the energy of the future,” Hauter said. “Increasing our reliance on it will only worsen conditions for consumers in years to come.”