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The Nuclear Industry’s Answer to Its Marketplace Woes
The Nuclear Industry’s Answer to Its Marketplace Woes
Construction Work in Progress (CWIP) financing shifts the risks of nuclear energy to utility ratepayers.
Herman K. Trabish: February 22, 2012
A sign of the nuclear industry’s difficult situation in the aftermath of Fukushima is a proposal before the Iowa legislature that would allow utility MidAmerican Energy Holdings, a subsidiary of Warren Buffett’s Berkshire Hathaway, to build a new nuclear facility in the state using Construction Work in Progress (CWIP) financing (also called advanced cost recovery).
“Investment in nuclear power is the antithesis of the kind of investments you would want to make under the current uncertain conditions,” explained nuclear industry authority Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment. “They cannot raise the capital to build these plants in normal markets under the normal regulatory structures.”
CWIP would allow the utility to raise the money necessary to build a nuclear power plant by billing ratepayers in advance of and during construction.
“Construction Work in Progress was intended to circumvent the core consumer protection of the regulatory decision-making process,” Cooper explained. “It exposes ratepayers to all the risk.” The nuclear industry’s answer to its post-Fukushima challenges, he said, “is to simply rip out the heart of consumer protection and turn the logic of capital markets on their head.”
The Staff of the Iowa Utilities Board concurred with Cooper...
Construction Work in Progress (CWIP) financing shifts the risks of nuclear energy to utility ratepayers.
Herman K. Trabish: February 22, 2012
A sign of the nuclear industry’s difficult situation in the aftermath of Fukushima is a proposal before the Iowa legislature that would allow utility MidAmerican Energy Holdings, a subsidiary of Warren Buffett’s Berkshire Hathaway, to build a new nuclear facility in the state using Construction Work in Progress (CWIP) financing (also called advanced cost recovery).
“Investment in nuclear power is the antithesis of the kind of investments you would want to make under the current uncertain conditions,” explained nuclear industry authority Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment. “They cannot raise the capital to build these plants in normal markets under the normal regulatory structures.”
CWIP would allow the utility to raise the money necessary to build a nuclear power plant by billing ratepayers in advance of and during construction.
“Construction Work in Progress was intended to circumvent the core consumer protection of the regulatory decision-making process,” Cooper explained. “It exposes ratepayers to all the risk.” The nuclear industry’s answer to its post-Fukushima challenges, he said, “is to simply rip out the heart of consumer protection and turn the logic of capital markets on their head.”
The Staff of the Iowa Utilities Board concurred with Cooper...
http://www.greentechmedia.com/articles/read/the-nuclear-industrys-answer-to-its-marketplace-woes/
See also by Cooper:
The Economics of Nuclear Reactors (html)
http://www.olino.org/us/articles/2009/11/26/the-economics-of-nuclear-reactors-renaissance-or-relapse
and
Policy Challenges of Nuclear Reactor Construction, Cost Escalation and Crowding Out Alternatives:
Lessons from the US and France for the Effort to Revive the US Industry with Loan Guarantees and Tax Subsidies (pdf)
http://www.vermontlaw.edu/Documents/IEE/20100909_cooperStudy.pdf
