Senate Boosts Nuclear Power

WASHINGTON -- The U.S. nuclear power industry, virtually moribund for decades, won a significant victory Tuesday as the Senate voted its support for federal loan guarantees to help build as many as six privately owned reactors.

The provision’s supporters touted it as crucial to aiding an industry they say has been unfairly stymied and is integral to reducing America’s dependence on foreign oil.

“It’s time for us ... to break away from this national attitude that since the 1970s has kept us from starting a new nuclear power plant,” said Sen. Lamar Alexander (R-Tenn.).

A bipartisan group of senators -- backed by environmentalists concerned about the safety of nuclear power plants and taxpayer groups opposed to subsidies for the industry -- sought to strip the loan guarantees from a sweeping energy bill the Senate is debating. They contended that the subsidies could cost taxpayers as much as $16 billion if the projects fail.

But their effort was defeated, 50 to 48.

The guarantees stand a good chance of becoming law because their chief proponent is Sen. Pete V. Domenici (R-N.M.), a passionate supporter of nuclear power and who, as chairman of the Senate Energy and Natural Resources Committee, will play a leading role in negotiating a final bill with the House. The House energy bill does not include a similar provision. President Bush has expressed support for expanding nuclear power, although the White House has yet to take a position on the loan guarantees.

“The time has come to give a rebirth to this alternative source,” Domenici said, adding that a small group of nuclear opponents has “scared us to death about nuclear power.” Meanwhile, he said, other countries have continued to build nuclear power plants.

The loan guarantees are among several provisions of the energy bill designed to promote the expansion of nuclear power, which has been at a virtual standstill for decades. Other provisions in the legislation would extend a cap on the nuclear industry’s liability in accidents and authorize $1 billion for building an advanced nuclear reactor in Idaho that would produce hydrogen, a fuel Bush has championed for cars.

Whether the provisions will be enough to spur construction of more nuclear power plants is unclear. That decision, experts said, will rest with Wall Street.

“The revival of the industry isn’t contingent on any one factor,” said Mitch Singer, a spokesman for the Nuclear Energy Institute, the industry’s trade group. But he said the loan guarantees are “definitely another step ... in providing the favorable industry and economic conditions for building new reactors.”

“Ultimately, new plant construction is a matter of the economics of operating new nuclear plants, but we will never get to the economics without the stability provided by sensible licensing, good designs, and the loan guarantees,” said Jay E. Silberg, a lawyer for nuclear utilities.

Under the measure, the federal government would guarantee loans or commit to buy electricity from nuclear plants that generate as much as 8,400 megawatts -- the capacity of about six or seven large reactors.

Currently, 103 nuclear power plants generate one-fifth of the nation’s electricity.

But many orders for new nuclear power plants have been canceled. A variety of factors contributed to the cancellations, among them the high construction costs, regulatory uncertainties and public protest after the 1979 accident at the Three Mile Island reactor in Harrisburg, Pa.

Tuesday’s vote removed a major hurdle to Senate approval of the overall energy bill, which is designed to reduce U.S. dependence on foreign oil.

The measure would double the amount of ethanol that would have to be added to the nation’s gasoline supply, promote the construction of a pipeline to bring natural gas from Alaska to the lower 48 states and authorize Bush’s call for developing hydrogen-powered fuel-cell vehicles.

Separately, senators overwhelmingly voted to add a measure to the bill that calls on the president to develop a plan for conserving 1 million barrels of oil a day by 2013, drawing praise from environmentalists. The country uses about 19 million barrels of oil a day.

Opponents of the nuclear industry assistance provision cited an analysis by the Congressional Budget Office that calculated the risk of utilities defaulting on the loan guarantees as “very high” because of the higher cost of building nuclear power plants compared with electricity-generating facilities using coal and natural gas.

“We are setting a bad precedent in public policy when we offer this kind of tax subsidy,” Sen. John E. Sununu (R-N.H.) said.

Sen. Ron Wyden (D-Ore.) told colleagues the issue was “not about your position with respect to nuclear power -- pro or con. This is about whether or not you’re going to be pro-taxpayer.”

Wyden reminded his fellow senators about the Washington Public Power Supply System’s 1983 default on $2.25 billion in bonds after cost overruns and construction problems forced the cancellation of four of five planned nuclear plants in the Pacific Northwest.

Sen. Dianne Feinstein, who was joined by her California Democratic colleague Barbara Boxer in opposing the loan guarantees, called nuclear power expensive and risky.

“Of six nuclear power plants built in California, four have been decommissioned due to high operating costs and excessive risk,” Feinstein said. “If private investors are not willing to put their own money on the line to support new nuclear plants, then the federal government should not put taxpayers’ money at risk either.”

A 1976 California law bans licensing of new nuclear power plants in the state unless the state Energy Commission finds that there is a safe way to dispose of the waste.

Congress last year approved Nevada’s Yucca Mountain for a nuclear waste repository, but use of the proposed site faces legal challenges.

The Congressional Budget Office predicted that the first new nuclear power plant would cost between $2.1 billion and $3 billion to build. “We expect that the plant would be uneconomic to operate because of its high construction costs,” the analysis said.

Industry supporters challenged the analysis as flawed and argued that more nuclear power plants are needed to prevent the supply shortages and price spikes that can occur from relying too heavily on one energy source, such as natural gas. Domenici said more nuclear power plants could help avert what he termed a looming natural gas crisis.