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States Shouldn’t Bail Out Nuclear Plants



David Williams on 2017-09-21 07:14:00


This article appeared in Inside Sources on September 19, 2017. 

In a September 12 opinion piece supporting the bailout of nuclear power plants, John Hangar and Marc Spitzer argued that “federal courts in New York and Illinois ruled that states have the authority to place an economic value on the zero-emission production of electricity. More important, these rulings establish a precedent for other states to achieve their own goals to use clean energy credits for sources of electricity that don’t emit carbon dioxide into the atmosphere.”

In fact, these two nuclear bailouts will cost taxpayers and ratepayers billions of dollars and establish an expensive and misguided precedent.

There is no denying that more than half of America’s nuclear power plants face a financial crisis. Collectively, these plants lose nearly $3 billion a year. They simply haven’t been able to compete with power plants that run on cheap natural gas.

In desperation, nuclear operators are begging state legislatures for subsidies to keep their plants running. They’re hoping to lure lawmakers into bailing them out by promising zero-emissions energy production.

State legislators should reject their requests. Nuclear subsidies cost taxpayers and consumers billions of dollars and offer little to no economic or environmental benefits.

Nuclear plants in several states already receive taxpayer-funded subsidies. In July, an Illinois federal judge upheld state legislation that funnels $230 million per year to Chicago-based Exelon to keep its nuclear facilities operating. The same month in New York, a federal judge dismissed a consumer lawsuit against a $480 million annual handout to three nuclear plants.

Subsidy proponents say additional bailouts are needed to prevent plant closures. They claim that if plants go offline, utilities will have to raise electricity rates. They’re wrong.

Nuclear bailouts don’t protect consumers from energy price increases; they facilitate them. Nuclear subsidies are expected to raise New Yorkers’ electric bills by $3.4 billion within the first five years. The Illinois program constitutes the biggest energy rate hike in U.S. history — projected to cost residents and businesses $16.4 billion.

The same goes for other states. Under a proposed subsidy in Ohio, consumers would see their electric bills climb 5 percent per year. Consumers in the mid-Atlantic and the Northeast would have to pay $3.9 billion more per year if nuclear plants in the area received similar backing.

Bailout proponents also raise the specter of job losses. While nuclear facilities do provide local jobs — Exelon employs 5,900 people at its plants in Illinois —subsidy programs just rob Peter to pay Paul. The downsides of propping up an inefficient sector outweigh any economic benefits. An analysis of the Illinois subsidies found they would cost the state 43,000 jobs by 2030 and $14.7 billion in economic output.

Natural gas firms create jobs and grow the economy without picking taxpayers’ pockets. According to theAmerican Petroleum Institute, in Illinois the natural gas industry supported nearly 150,000 jobs and contributed $18 billion to the state economy in 2015. The numbers are higher still for New York, where natural gas is responsible for 152,000 jobs and more than $20 billion in economic output.

Unlike nuclear subsidies that jack up monthly energy bills, natural gas saves consumers billions. And, also according to the aforementioned API report, electricity prices in Ohio have dropped 50 percent since 2008 thanks to affordable natural gas. Last year, thanks to the continued natural gas boom, Americans spent just 4 percent of their household budgets on energy costs — the lowest share ever.

Some supporters of nuclear energy claim that the economic inefficiencies are worthwhile, since nuclear power helps reduce U.S. carbon emissions. The United States has indeed made significant progress on curbing emissions. According to the U.S. Energy Information Administration, energy-related U.S. carbon output has declined nearly 14 percent since 2005. The EIA also noted that emissions are now at a 25-year low.

But nuclear plants don’t deserve the credit — natural gas-fired plants do. Almost 70 percent of the reduction in energy-related carbon emissions between 2005 and 2015 is due to the shift from coal to natural gas for electricity generation, according to the EIA.

Natural gas is abundant and affordable — and that won’t change anytime soon. The United States is a global leader in producing oil and natural gas, and the latter now generates one-third of the nation’s electricity.

New York and Illinois officials are harming consumers and taxpayers by propping up failing nuclear plants. Policymakers nationwide should reject corporate welfare and allow unsubsidized market competition to determine which energy sources work best for their constituents.


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