History of Nuclear Power Costs

Several large nuclear power plants were completed in the early 1970s at a typical cost of $170 million, whereas plants of the same size completed in 1983 cost an average of $1.7 billion, a 10-fold increase. Some plants completed in the late 1980s have cost as much as $5 billion, 30 times what they cost 15 years earlier.

Inflation, played a role, but the consumer price index increased only by a factor of 2.2 between 1973 and 1983, and by just 18% from 1983 to 1988.

Inflation explains a bit more than doubling but does not explain why prices went up 4-5 times more.

What caused the remaining large increase? Ask the opponents of nuclear power and they will recite a succession of horror stories, many of them true, about mistakes, inefficiency, sloppiness, and ineptitude. They will create the impression that people who build nuclear plants are a bunch of bungling incompetents. The only thing they won’t explain is how these same “bungling incompetents” managed to build nuclear power plants so efficiently, so rapidly, and so inexpensively in the early 1970s.

Regulatory Ratcheting

According to one study, between the early and late 1970s, regulatory requirements increased the quantity of steel needed in a power plant of equivalent electrical output by 41%, the amount of concrete by 27%, the lineal footage of piping by 50%, and the length of electrical cable by 36%. The NRC did not withdraw requirements made in the early days on the basis of minimal experience when later experience demonstrated that they were unnecessarily stringent. Regulations were only tightened, never loosened. The ratcheting policy was consistently followed.

In its regulatory ratcheting activities, the NRC paid some attention to cost effectiveness, attempting to balance safety benefits against cost increases. However, NRC personnel privately concede that their cost estimates were very crude, and more often than not unrealistically low. Estimating costs of tasks never before undertaken is, at best, a difficult and inexact art.

In addition to increasing the quantity of materials and labor going into a plant, regulatory ratcheting increased costs by extending the time required for construction. According to the United Engineers estimates, the time from project initiation to ground breaking was 16 months in 1967, 32 months in 1972, and 54 months in 1980. These are the periods needed to do initial engineering and design; to develop a safety analysis and an environmental impact analysis supported by field data; to have these analyses reviewed by the NRC staff and its Advisory Committee on Reactor Safeguards and to work out conflicts with these groups; to subject the analyzed to criticism in public hearings and to respond to that criticism (sometimes with design changes); and finally, to receive a construction permit. The time from ground breaking to operation testing was increased from 42 months in 1967, to 54 months in 1972, to 70 months in 1980.

The increase in total construction time from 7 years in 1971 to 12 years in 1980 roughly doubled the final cost of plants. In addition, the EEDB, corrected for inflation, approximately doubled during that time period. Thus, regulatory ratcheting, quite aside from the effects of inflation, quadrupled the cost of a nuclear power plant.

Did regulations increase overall safety ?

What has all this bought in the way of safety? One point of view often expressed privately by those involved in design and construction is that it has bought nothing. A nuclear power plant is a very complex system, and adding to its complexity involves a risk in its own right. If there are more pipes, there are more ways to have pipe breaks, which are one of the most dangerous failures in reactors. With more complexity in electrical wiring, the chance for a short circuit or for an error in hook-ups increases, and there is less chance for such an error to be discovered. On the other hand, each new safety measure is aimed at reducing a particular safety shortcoming and undoubtedly does achieve that limited objective. It is difficult to determine whether or not reducing a particular safety problem improves safety more than the added complexity reduces safety.

The nuclear regulators of 1967 to 1973 were quite satisfied that plants completed and licensed at that time were adequately safe, and the great majority of knowledgeable scientists agreed with them. With the exception of improvements instigated by lessons learned in the Three Mile Island accident, which increased the cost by only a few percent, there were no new technical developments indicating that more expenditures for safety were needed. In fact, the more recent developments suggested the contrary. Perhaps the most significant result of safety research in the late 1970s was finding that the emergency core cooling system works better than expected and far better than indicated by the pessimistic estimates of nuclear power opponents. Another important result was finding that radioactive iodine and other elements in a water environment behave much more favorably than had been assumed.

The regulatory ratcheting, of course, has not been reversed. But new reactor designs avoid most of the problems this regulatory ratcheting has brought. It is relatively easy to accommodate regulations in the initial design stages. Moreover, the new designs go far beyond the safety goals that drove the regulatory ratcheting. The nuclear industry absorbed the message that the public wants super-super safety, and they are prepared to provide it

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