CommunityFDL Action

Nuclear Power’s Existence Dependent on Multiple Forms of Corporate Welfare

While there is rarely a large sector in our economy that doesn’t tend to get some form of corporate welfare, nuclear power is unique in that it benefits from almost every scheme ever designed by the government to directly or indirectly subsidize an industry.

Nuclear power receives direct subsidies, loan guarantees, special tax breaks, government insurance, the government promise to assume the huge potential liability if anything goes wrong, and state-based corporate assistance. From a 2008 CBO study on Nuclear Power’s Role in Generating Electricity:

If just a few nuclear plants qualified for the incentives, the most substantial one—the production tax credit—would lead to sizable reductions in those plants’ corporate income tax liability during the first several years of operation. Nuclear projects eligible for federal loan guarantees, which cover up to 80 percent of construction costs, would benefit from reductions in financing costs. The preferential tax treatment of decommissioning funds—funds that utilities are required to set aside to cover the cost of safely shutting down and securing a nuclear plant at the end of its useful life—would provide far less financial incentive because the discounted present value of the cost of decommissioning is small.


The largest incentives available under EPAct are a production tax credit and a loan guarantee program. The tax credit provides up to $18 in tax relief per megawatt hour of electricity produced at qualifying power plants during the first eight years of operation. (For comparison, the average wholesale price of electricity in 2005 was about $50 per megawatt, on average.)

These loan guarantees are massive subsidies for investors, which turn a bad investment into a “good one” by socializing almost all of the likely losses.

The maximum coverage available under the loan guarantee program—a guarantee on debt covering 80 percent of a plant’s construction costs, which implies that investors’ equity would cover the remaining 20 percent—would most likely reduce the levelized cost of new nuclear capacity by about 10 percent.


The loan guarantee program could encourage investors to choose relatively risky projects over more certain alternatives because they would be responsible for only about 20 percent of a project’s costs but would receive 100 percent of the returns that exceeded costs.

And to make these guarantees to protect the investors, Congress has put the taxpayers at a “very high” risk of losing money. According to a 2003 CBO analysis of a nuclear loan program:

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. In addition, this project would have significant technical risk because it would be the first of a new generation of nuclear plants, as well as project delay and interruption risk due to licensing and regulatory proceedings.

Liability caps

While nuclear accidents are rare, as we see in Japan, the potential damage from an accident could be enormous. However, Congress has made it so power companies can sleep easy knowing that above a certain cost the government will cover their damages for them. From the 2008 CBO report:

In practice, Price-Anderson subsidizes utilities by reducing their cost of carrying liability insurance. Instead of purchasing full coverage, operators of nuclear power plants are required to obtain coverage only up to the liability limit, which is currently set at about $10 billion per accident. The value of the subsidy is the difference between the premium for full coverage and the premium for $10 billion in coverage.

Beyond this, the government has taken ownership of all nuclear waste from the private companies, which in theory are a liability that can cause problems for thousands of years.

State level corporate welfare

In addition to the federal government, many states also provide corporate welfare for nuclear power:

In several of those states, additional incentives that could further reduce the cost of nuclear power are under consideration. Those provisions include allowing higher rates of return for nuclear power than for other technologies, allowing utilities to recover some construction costs before plants begin operations, and tax incentives.

Nuclear power isn’t viable without lemon socialism

The high investment costs, the long building time, the length of time it takes to see a return on investment, the price uncertainty of electricity and the very large potential liability simply don’t make nuclear power anywhere near economically viable. To make it an “investment” that private companies are willing to undertake requires huge government handouts and legislation privatizing the profits while socializing the losses.

Not surprisingly an industry so depending on corporate welfare is such a large political donor to the politicians who provide and can increase the direct/indirect subsidies.

Previous post

Financially strapped Crystal Cathedral asks choir to sign anti-gay covenant

Next post

GOP’s Political Warfare: Long-Term and Virtually Unopposed

Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at