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MSNBC Story on the Economics of New Nuclear Build

By Eric McErlain
After four days of looking at the nuclear energy industry through the prism of Washington lobbying, MSNBC's last piece of reporting on the nuclear energy industry turns to the challenge of financing new nuclear build. It's easily the best piece in the entire series:
The economics of building nuclear power plants began to short-circuit in the 1970s, after a building boom that lasted more than a decade. Part of the problem was the widespread use of so-called “cost-plus” contracts, in which the companies building plants were not held to a fixed price, according to Dan Keuter, head of nuclear business development for Entergy, which has applied for a site permit to build a new nuclear unit.

“You had multiple subcontractors working on cost plus basis,” he said. “So they were actually motivated not to get it done early. ... And (they) were definitely not motivated to do it within budget because the more they spent, the more they got.

Most plants were designed one at a time from the ground up; in some cases, engineers and designers were still working on plans as construction was under way, said Keuter. Changing regulatory requirements created further delays.

As a result, construction schedules began to double and triple, costs skyrocketed and projects in the pipeline were canceled. For those projects that continued, rising carrying costs as interest rates hit double-digits added to already huge cost overruns. By the end of the decade, the nuclear power industry was buried under a pile of debt.
All very true, though MSNBC's John Schoen does a very good job of updating just what's changed since the last major build cycle in the U.S. For more hard data on finanical issues in the nuclear energy industry, visit NEI's Financial Center on our Web site. And again, I suggest anyone wanting to examine the challenges facing the industry to review the presentation our CEO Skip Bowman gave to the National Academy of Engineering last Fall.

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