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New nuclear reactors – an economic meltdown waiting to happen

Time and again, Buffett’s corporation MidAmerican has recognized the risks of investing in new nuclear power……i’ts not only Warren Buffet & CBO that have rejected new nuclear power as an economic non starter…….New nuclear reactors are an economic meltdown waiting to happen and sadly President Obama has put the American taxpayer on the hook for the financial fall out.

Obama, the Oracle of Omaha & Nuclear Power | Greenpeace USA, 24 Feb 2011, Last week, President Obama lauded those who have made an especially meritorious contribution to the United States, world peace and culture by bestowing upon them the Presidential Medal of Freedom. Among this years recipients was the “World’s Greatest Investor,” also one of the world’s greatest philanthropists Warren Buffett. Instead of merely lauding the Oracle of Omaha, President Obama should follow his lead and stop pursuing costly new nuclear power plants. Time and again, Buffett’s corporation MidAmerican has recognized the risks of investing in new nuclear power.
In 2007, MidAmerican, a subsidiary of Buffett’s Berkshire Hathaway conducted their economic due diligence on the prospects of building a new nuclear reactor; the numbers just didn’t add up.  According to MidAmerican’s president, “Consumers  expect reasonably priced energy, and the company’s due diligence process has led to the conclusion that it does not make economic sense to pursue the project at this time.” In January 2008, MidAmerican scrapped its plans for a new nuclear reactor in Idaho…….

Unfortunately the President has not emulated the Oracle of Omaha and recognized the abysmal economics of nuclear power.  Buried in President Obama’s multi-trillion-dollar budget is a $38 billion dollar giveaway to Fortune 500 nuclear corporations in the form of loan guarantees. But the non-partisan Congressional Budget Office (CBO) has already cautioned against making these guarantees for new nuclear plants stating that:

CBO considers the risk of default on such a loan guarantee to be very
high—well above 50 percent. The key factor accounting for this risk is
that we expect that the plant would be uneconomic to operate because of
its high construction costs, relative to other electricity generation sources.

But its not only Warren Buffet & CBO that have rejected new nuclear power as an economic non starter:

• In June 2009, Moody’s Investment Services determined that new nuclear investments were a “bet the farm” risk. According to Moody’s “(w)e view new nuclear plans as a ‘bet the farm’ endeavor for most companies, due to the size of the investment and length of time to build a nuclear power facility.”

• In November 2009, Citi’s review of new nuclear power determined that the risks “are so large and variable that individually they could each bring even the largest utility company to its knees financially.” Citi concluded that, “(t)hese risks can be classed as Corporate Killers.”

• In August 2010, Standard & Poor’s stated that, “(g)iven the significant capital costs, even modest overruns or schedule delays can impair the balance sheets of even the largest U.S. Utility companies engaged in nuclear power plant construction. Furthermore the recent decline in natural gas prices also raises the question of the longer term competitive viability of nuclear power as a base load energy source.”

Rather than merely wrapping a medal around Warren Buffet’s neck and lauding the Oracle of Omaha, President Obama should follow his lead. New nuclear reactors are an economic meltdown waiting to happen and sadly President Obama has put the American taxpayer on the hook for the financial fall out.

Obama, the Oracle of Omaha & Nuclear Power | Greenpeace USA

February 24, 2011 - Posted by Christina Macpherson | business and costs, USA