Cost savings from nuclear regulatory reform: An econometric model

The nuclear-generated power touted in the 1950s as someday being open-quotes too cheap to meterclose quotes got dismissed in the 1980s as incapable of being both safe and cost effective. Today, less than 20 percent of American's electricity is nuclear-generated, no new plants are planned or on order, and some of the earliest units are scheduled for decommissioning within the next decade. Even so, interest in nuclear power has been revived by increasing energy demands, concerns about global warming, and the uncertainty surrounding oil resources in the Persian Gulf. As a long-term alternative to fossil fuels, atomic energy offers the important advantages of clean air and domestic availability of fuel. But these advantages will count for little unless and until the costs of nuclear power can be seen as reasonable. The authors premise is that the relevant costs are those of providing safe and environmentally clean electric energy. To the extent that increased costs have resulted from increasingly stringent regulations, they reflect the internalization of external costs. Indeed, the external costs of nuclear power (particularly safety and environmental protection) have been internalized to a greater degree than with most alternative fuel sources used by electric utilities. Nuclear construction costs are properly compared with those of alternative sources only after the latter are adjusted for environmental damage and endangerment, including, as examples, the costs of oil spills, of building double-hulled tankers, and of building off-shore offloading facilities. A shift to nuclear sources could reduce these costs whereas it would increase disposal costs for radioactive materials. The authors contend that a better understanding of nuclear plant construction costs is pivotal to a balanced evaluation of the merits of uranium relative to other fuel choices. 12 refs., 2 figs., 5 tabs