Bataan Nuclear Power Plant

[OPINION] Without taxpayer subsidy, nuclear power is absolutely impossible

Kelvin S. Rodolfo
[OPINION] Without taxpayer subsidy, nuclear power is absolutely impossible

Illustration by Janina Malinis

'[Ten] centavos more per kilowatt-hour is not small for poor people, who would have to pay this monthly nuclear tax for at least five years'

The following is the 11th in a series of excerpts from Kelvin Rodolfo’s ongoing book project “Tilting at the Monster of Morong: Forays Against the Bataan Nuclear Power Plant and Global Nuclear Energy.

In 1954, General Electric advertised: “In five years — certainly within 10 — civilian reactors would be privately financed, built without government subsidy.” 

More than six decades later, that has not happened. It never will.

Referring to that quote in 2011, Doug Koplow, a long-time, well-respected economic analyst who is widely quoted across the political spectrum, published a report entitled “Nuclear Power: Still not viable without subsidies.” That is still true today, and always will be.

Koplow explains how the nuclear industry can boast that its power is cheap.  Hidden behind the low monthly electric bills are prices its consumers have already paid, and will continue to pay, in the taxes the government takes from them so it can give huge subsidies and write-offs to the industry. 

Nuclear construction, fuel, waste management, and insurance have always been heavily subsidized by taxpayers. When the industry was constructing its first reactors in the 1950s, it incurred tens of billions of dollars in large overruns, canceled contracts, and abandoned plants. Eventually governments forgave those huge industry debts. And so who really paid the bills? Why, taxpayers, of course. 

Is not the Philippine’s BNPP experience an extreme case in point?  Westinghouse proposed to build it for $500 million; the final costs, grossly inflated by unbridled Marcos corruption, were over $2.3 billion.  Filipino taxpayers shouldered the bill, of course, and never received even a single watt-second in return. If BNPP is ever activated, God forbid, the true costs of each kilowatt-hour will include a hidden fraction of the $2.3 billion.

Koplow: “Without these subsidies…many reactors would never have been built, and utilities that did build reactors would have been forced to charge consumers even higher rates…

“…[T]he industry continues to benefit from subsidies that offset the costs of uranium, insurance and liability, plant security, cooling water, waste disposal, and plant decommissioning. The value of these subsidies is harder to pin down…estimates ranging from a low of 13% of the value of the power produced to a high of 98%…”

Insuring NPPs is an especially critical issue: what commercial insurer would be insane enough to agree to cover damages and costs from a potential Chernobyl or Fukushima? And so the Soviet and Japanese governments had to force their taxpayers to absorb the costs of those calamities, whether they wanted to or not. Would any Philippine company insure BNPP?

How else do these concerns apply to the Philippines? In 2009 Giovanni Tapang, a physicist, environmental activist, and now Dean of the College of Science at the University of the Philippines in Diliman, assailed Congressman Mark Cojuangco’s proposal to charge all electricity consumers 10 centavos per kilowatt-hour (kWh), regardless of how it was generated, to raise half of the $1 billion needed to activate the BNPP.

As Tapang said, 10 centavos more per kilowatt-hour is not small for poor people, who would have to pay this monthly nuclear tax for at least five years. Furthermore, the Department of Energy had already raised the price of any electricity the government’s National Power Corporation sells to the privately-owned Manila Electric Company. That would include BNPP electricity, if it is ever produced. Meralco itself would not pay this added cost; it would simply pass it on to its consumers. 

Tapang also pointed out that Cojuangco failed to mention the additional costs of nuclear waste disposal, and for the decommissioning of the BNPP after its 30- to 50-year lifetime. To pay those costs, the government would need to collect an additional 14.1 centavos per kWh from consumers.  All these concerns have also been well expressed by the Philippine Freedom From Debt Coalition.

Filipinos need to realize that BNPP will be activated through a universal pattern of financial tactics the global nuclear industry uses to gouge consumers and taxpayers. Eerily, while Cojuangco was introducing his BNPP House Bill in 2009, the General Assembly of the southern American state of Georgia was already enacting similar legislation.

Georgia Power runs two pressurized-water nuclear reactors at Plant Vogtle. It wanted to build two Westinghouse AP1000 reactors there. Those are newer, more powerful versions of the one at BNPP.  To finance them, the state legislature passed the Georgia Nuclear Energy Financing Act of 2009. It was jauntily nicknamed “CWIP” (“Construction Work In Progress”). The Act authorized Georgia Power and other privately-owned utilities to surcharge ratepayers, in advance, an extra 10% a month.  Like Cojuangco’s proposal to allow the private Meralco to impose taxes, CWIP is a corporate welfare tax that bypasses the government; the money goes straight to wealthy private corporations.  

Grassroots opposition has been very strong and enduring. But on February 9, 2012, the US Nuclear Regulatory Commission approved the construction of the two new Vogtle reactors anyway.  

What then happened is a cautionary tale that should remind Filipinos of Marcos’ BNPP debacle, and warn them of what might lie ahead. It did not go well. 

The reactors were supposed to cost $14 billion, and to go online in 2017. By 2018, completion of each unit was being optimistically projected for 2021 and 2022 instead. Their price had ballooned to about $25 billion because of cost overruns and construction delays. 

On March 29, 2017, Westinghouse had to file for bankruptcy because it had incurred $9 billion in losses from constructing the Vogtle reactors and two others in neighboring South Carolina. Knowing how Westinghouse colluded in Marcos’ BNPP corruption, it is impossible not to feel grim, vengeful satisfaction: “Mabuti nga sa kanila,” as Filipinos say. “Serves them right.”

Georgia Power had previously secured US government loan guarantees of $3.46 billion for the construction of the new units. In March 2019 the government guaranteed another $1.67 billion.  

And who continues to pick up the bloating tab? Why, the Georgia taxpayers, of course; who else?

Our next foray will examine where the fuel for BNPP would come from.  Certainly not from local sources; the Philippines has none. And how reliable might those sources be? We shall see. – Rappler.com

Keep posted on Rappler for the next installment of Rodolfo’s series.

Born in Manila and educated at UP Diliman and the University of Southern California, Dr. Kelvin Rodolfo taught geology and environmental science at the University of Illinois at Chicago since 1966. He specialized in Philippine natural hazards since the 1980s.

Previous pieces from Tilting at the Monster of Morong: