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Nuclear power industry – a sober warning to investors

“New nuclear generation is already more expensive to build than most other sources of electricity,” it continues, “its liability insurance is effectively socialized and material questions are being raised regarding its waste products.”

Investors Warned: Fukushima Could Ignite Backlash Against U.S. Nuclear Power Industry, Forbes, – Osha Gray Davidson -Apr. 8 2011 A new report by Moody’s Investors Service has a title guaranteed to send chills through the nuclear power industry: “Re-evaluating Creditworthiness for Global Nuclear Generators.”

The report warns that “All nuclear operators…will suffer the consequences that emerge from a post Fukushima environment.”

Moody’s characterizes these consequences as “contagion risks” caused by the ongoing crisis at Fukushima Daiichi nuclear power plant (FDI). These risks include:

• increased political intervention;
• an expectation for increased regulatory scrutiny;
• potential delays…associated with established licensing and permitting protocols; and
• emboldened opposition groups….

They worn, “We believe Fukushima
could ignite a popular backlash against nuclear generation.”

The report also points to problems that pre-date the crisis at FDI. “New nuclear generation is already more expensive to build than most other sources of electricity,” it continues, “its liability insurance is effectively socialized and material questions are being raised regarding its waste products.”

Although liability insurance is socialized (U.S. taxpayers pick up the cost of a catastrophic event beyond a certain point), Moody’s points to a potential problem at FDI, which has a similar indemnity agreement with the Japanese government. FDI’s owner is the Tokyo Electric Power Company (TEPCO)…..

The increased scrutiny of the nuclear power industry has already begun in the U.S., with some unsettling discoveries.

For example, the inspector general of the Nuclear Regulatory Commission (NRC) recently found that 28% of U.S. commercial nuclear power plants did not report equipment defects that could pose “substantial” safety risks. The report concluded that unless action is taken to correct the situation, “the margin of safety for operating reactors could be reduced.”

Investors Warned: Fukushima Could Ignite Backlash Against U.S. Nuclear Power Industry – Osha Gray Davidson – Edison 2.0 – Forbes

April 9, 2011 - Posted by Christina Macpherson | business and costs, USA