Reply #5: Well, here are 4 paragraphs showing the problem as late as 2009

[kristopher]

"MIT" is on 30 of the 33 pages of the study.

...Despite these strengths, however, the industry-funded, 2009 MIT authors ignore problem (a), the high costs of nuclear energy calculated by credit-rating companies— and the challenges that (a) provides to their conclusions. Instead they follow overly optimistic, nuclear-industry assumptions that lead to low-nuclear-energy-cost conclusions, as will be shown below.

Regarding problem (b), excluding taxpayer-subsidy data from their nuclear-cost analyses, the 2009 MIT authors fail to take account of the many taxpayer subsidies that significantly reduce nuclear costs. They say (p. 9) their analysis ‘‘does not include any of the benefits from the production tax credits or loan guarantees...of 2005,’’ that is, a specific class of 2005 US taxpayer subsidies (Du and Parsons 2009). Yet, they ignore the fact that their analysis incorporates many other cost subsidies which artificially lower their calculated nuclear-electricity costs. If the late MIT physicist Henry Kendall is correct (p. 131), US nuclear-power subsidies amount to about $20 billion annually (Shrader-Frechette 2002)—all of which are ignored by the MIT authors in their cost analysis. For instance, they ignore the billions of dollars in taxpayer subsidies needed for nuclear-waste storage, perhaps because these are not market costs. Instead the 2009 MIT authors assume (p. 21) that the total costs of spent fuel and waste disposal will be only ‘‘the statutory fee of 1 mil/kWh currently charged’’ by government to the utility (Du and Parsons 2009), which, over the last 10 years, amounts to only $5 billion total (Shrader-Frechette 2002). Given the average, 22-year lifetime of nuclear plants (see above), this statutory fee means the total collected from current US nuclear plants amounts to roughly $11 billion. Yet this is only a tiny portion of permanent waste-storage costs, most of which will be borne by taxpayers, per government agreement (Shrader- Frechette 2002; Congress 1999). While the nuclear industry would pay this $11 billion (which MIT authors have assumed are total US nuclear-waste costs), government and US National Academy of Sciences studies in 1996 placed the real US nuclear-waste-management costs at roughly $350 billion (US National Research Council 1996), and these costs have now risen to $1 trillion (Shrader-Frechette 2002; Congress 1999), most of which will be paid by taxpayers. Thus the MIT authors may be counting, as total nuclear-waste costs, only between 1% (assuming $1 trillion is needed) and 3% (assuming $350 billion is needed) of the total monies needed for US nuclear-waste management, because they ignore taxpayer nuclear- waste-management subsidies. More generally, the MIT authors (Du and Parsons 2009) assume that nuclear electricity includes no taxpayer-subsidized costs, although ‘‘federal subsidies cover 60–90% of the generation cost for new nuclear plants’’ (Lovins et al. 2008). As already documented, US federal nuclear subsidies have already amounted to about $150 billion. The MIT failure to take account of nuclear subsidies in nuclear costs is especially troublesome because utility executives say (p. 17) that because nuclear plants are so uneconomical, ‘‘without loan guarantees, we will not build nuclear plants’’ (Madsen et al. 2009).

Regarding problem (c), the 2009 MIT authors also use mainly uncorrected nuclear-industry data, and they make many counterfactual nuclear-cost assump- tions, the effect of which is to lower nuclear-cost estimates. They assume, for instance, that ‘‘the total cost’’ of a nuclear plant does not include financing or interest charges on construction capital, although they admit that utilities are allowed to recover these costs from ratepayers (pp. 4–6), and although they and earlier paragraphs (of this paper) showed that financing costs at least double nuclear-construction costs (Du and Parsons 2009). They also assume (p. 4) that nuclear-plant construction takes only 5 years (Du and Parsons 2009), although earlier paragraphs show historical-average nuclear-plant-construction time is 10–23 years. Likewise, the MIT authors assume (p. 18) that a nuclear-load or ‘‘capacity factor of 85%’’ is reasonable (Du and Parsons 2009), although earlier paragraphs showed that historical-average capacity factors are 71%. Likewise, the 2009 MIT authors assume (pp. 16, 19) that the annual inflation rate for future nuclear construction will be 3%, although they admit that, over the last 5 years, annual nuclear costs have increased by 23% per year (Du and Parsons 2009). They also assume (p. 22) that for nuclear energy, ‘‘the costs of capital equal to those for coal.’’ Yet this assumption appears wholly unrealistic, given that market-interest rates for nuclear loans, as already mentioned, are 15%, whereas coal loans are only about 25% of that figure. Moreover, as already noted, nuclear interest can add 250% to overnight reactor costs whereas, on the admission of the 2009 MIT authors, coal- plant interest charges add only roughly 17–21% to coal-plant overnight costs (Du and Parsons 2009). The MIT authors likewise assume (p. iii) that it is rational for them to claim to ‘‘update the cost of nuclear power,’’ when their calculations of nuclear-electricity costs are only roughly half of those calculated by credit-rating firms like Standard and Poor’s and Moody’s (Du and Parsons 2009; Mariotte et al. 2008; Finance 2008). Moody’s says that, even from 2008 to 2009, it has taken ‘‘a more negative view for those issuers seeking to build new nuclear power plants’’ because of ‘‘the substantial execution risks involved’’ (Moody’s Corporate Finance 2009). The discrepancy between MIT and credit-rating-company figures arguably should have caused the 2009 MIT authors to question their industry-friendly economic assumptions that contributed to their low-nuclear-cost conclusions.

The earlier 2003 MIT nuclear-cost analysis (Ansolabehere et al. 2003) likewise was at least partly funded by the nuclear industry and perhaps, as a consequence, fell into similar counterfactual assumptions about nuclear costs. This study claims (p. vii) to be funded by the ‘‘Alfred P. Sloan Foundation,...MITs Office of the Provost, and Laboratory for Energy and the Environment’’ (Ansolabehere et al. 2003). However, ‘‘funding for this work comes from a variety of sources, including DOE, EPRI....INEEL’’ (MIT Laboratory for Energy and the Environment (LEE) 2003). Like the 2009 MIT studies, this one (a) appears to include no nuclear-cost data from credit-rating agencies, (b) appears to include no nuclear-cost data that include taxpayer-provided subsidies, and (c) appears to use uncorrected, nuclear-industry-supplied cost data. Regarding (b), this 2003 MIT report criticizes (p. 43) nuclear subsidies, yet proposes (p. 8) additional ‘‘modest’’ US subsidies for nuclear power, but then excludes (p. 82) the value of taxpayer subsidies from its cost accounting of nuclear power (Ansolabehere et al. 2003). Likewise, regarding (c), the MIT analysis assumes that nuclear-plant construction takes only 5 years (Ansolabehere et al. 2003), although earlier paragraphs showed historical-average nuclear-plant-construction time is 10–23 years. It assumes a nuclear-load-factor of 85% (Ansolabehere et al. 2003), although earlier paragraphs showed that historical-average load factors of 71%. Likewise, the 2003 MIT study assumes an 11.5 interest rate, although earlier paragraphs showed that 15% is the market rate. It assumes a 40-year lifetime for nuclear plants, although (as noted earlier) the historical-average lifetime is 22 years. Thus, these implausible and counterfactual nuclear-industry assumptions appear to have compromised the MIT nuclear-energy-cost analyses. ...

p 18-19
Sci Eng Ethics DOI 10.1007/s11948-009-9181-y
Climate Change, Nuclear Economics, and Conflicts of Interest
Kristin Shrader-Frechette

You have been diligent in denying that MIT is examined in this study. Are you Barry Brook the nuke blogger mentioned at the link in the OP or are you from MIT?