Why did nuclear plant construction costs quadruple from 1972 to 1988?

The short answer is Greenpeace and their cronies such as Friends of the Earth (FOE):

A major source of cost escalation in some plants was delays caused by opposition from well-organized “intervenor” groups that took advantage of hearings and legal strategies to delay construction. The Shoreham plant on Long Island was delayed for 3 years by intervenors who turned the hearings for a construction permit into a circus. The intervenors included a total imposter claiming to be an expert with a Ph.D. and an M.D. There were endless days of reading aloud from newspaper and magazine articles, interminable “cross examination” with no relevance to the issuance of a construction permit, and an imaginative variety of other devices to delay the proceedings and attract media attention.

That quote is from Chapter 9 COSTS OF NUCLEAR POWER PLANTS — WHAT WENT WRONG? of the online version of the book The Nuclear Energy Option by physicist Bernard L. Cohen, University of Pittsburgh. The book was published by Plenum Press, 1990, so it is slightly dated with respect to recent developments in modular mass-manufactured reactors (SMR), etc. Other than that it is a terrific resource — a concise handbook that covers all the high priority questions about nuclear power [risk/safety, radiation, costs, nuclear “waste”, proliferation].

Prof. Cohen was there, on the scene so to speak, during the period of the 1970’s, 1980’s when Regulatory Turbulence, Regulatory Ratcheting and Intervenors quadrupled the cost of a nuclear power plant. Here’s an excerpt from Chapter 9 covering Regulatory Ratcheting and Regulatory Turbulence:

The Nuclear Regulatory Commission (NRC) and its predecessor, the Atomic Energy Commission Office of Regulation, as parts of the United States Government, must be responsive to public concern. Starting in the early 1970s, the public grew concerned about the safety of nuclear power plants: the NRC therefore responded in the only way it could, by tightening regulations and requirements for safety equipment.

Make no mistake about it, you can always improve safety by spending more money. Even with our personal automobiles, there is no end to what we can spend for safety — larger and heavier cars, blowout-proof tires, air bags, passive safety restraints, rear window wipers and defrosters, fog lights, more shock-absorbent bumpers, antilock brakes, and so on. In our homes we can spend large sums on fireproofing, sprinkler systems, and smoke alarms, to cite only the fire protection aspect of household safety. Nuclear power plants are much more complex than homes or automobiles, leaving innumerable options for spending money to improve safety. In response to escalating public concern, the NRC began implementing some of these options in the early 1970s, and quickened the pace after the Three Mile Island accident.

This process came to be known as “ratcheting.” Like a ratchet wrench which is moved back and forth but always tightens and never loosens a bolt, the regulatory requirements were constantly tightened, requiring additional equipment and construction labor and materials. According to one study,4 between the early and late 1970s, regulatory requirements increased the quantity of steel needed in a power plant of equivalent electrical output by 41%, the amount of concrete by 27%, the lineal footage of piping by 50%, and the length of electrical cable by 36%. The NRC did not withdraw requirements made in the early days on the basis of minimal experience when later experience demonstrated that they were unnecessarily stringent. Regulations were only tightened, never loosened. The ratcheting policy was consistently followed.

In its regulatory ratcheting activities, the NRC paid some attention to cost effectiveness, attempting to balance safety benefits against cost increases. However, NRC personnel privately concede that their cost estimates were very crude, and more often than not unrealistically low. Estimating costs of tasks never before undertaken is, at best, a difficult and inexact art.

(…)

Clearly, the regulatory ratcheting was driven not by new scientific or technological information, but by public concern and the political pressure it generated. Changing regulations as new information becomes available is a normal process, but it would normally work both ways. The ratcheting effect, only making changes in one direction, was an abnormal aspect of regulatory practice unjustified from a scientific point of view. It was a strictly political phenomenon that quadrupled the cost of nuclear power plants, and thereby caused no new plants to be ordered and dozens of partially constructed plants to be abandoned.

Regulatory Turbulence

We now return to the question of wildly escalating labor costs for construction of nuclear plants. They were not all directly the result of regulatory ratcheting, as may be seen from the fact that they did not occur in the “best experience” projects. Regulatory ratcheting applied to new plants about to be designed is one thing, but this ratcheting applied to plants under construction caused much more serious problems. As new regulations were issued, designs had to be modified to incorporate them. We refer to effects of these regulatory changes made during the course of construction as “regulatory turbulence,” and the reason for that name will soon become evident.

As anyone who has tried to make major alterations in the design of his house while it was under construction can testify, making these changes is a very time-consuming and expensive practice, much more expensive than if they had been incorporated in the original design. In nuclear power plant construction, there were situations where the walls of a building were already in place when new regulations appeared requiring substantial amounts of new equipment to be included inside them. In some cases this proved to be nearly impossible, and in most cases it required a great deal of extra expense for engineering and repositioning of equipment, piping, and cables that had already been installed. In some cases it even required chipping out concrete that had already been poured, which is an extremely expensive proposition.

Constructors, in attempting to avoid such situations, often included features that were not required in an effort to anticipate rule changes that never materialized. This also added to the cost. There has always been a time-honored tradition in the construction industry of on-the-spot innovation to solve unanticipated problems; the object is to get things done. The supercharged regulatory environment squelched this completely, seriously hurting the morale of construction crews. For example, in the course of many design changes, miscalculations might cause two pipes to interfere with one another, or a pipe might interfere with a valve. Normally a construction supervisor would move the pipe or valve a few inches, but that became a serious rule violation. He now had to check with the engineering group at the home office, and they must feed the change into their computer programs for analyzing vibrations and resistance to earthquakes. It might take many hours for approval, and in the meanwhile, pipefitters and welders had to stand around with nothing to do.

Requiring elaborate inspections and quality control checks on every operation frequently held up progress. If an inspector needed extra time on one job, he was delayed in getting to another. Again, craft labor was forced to stand around waiting. In such situations, it sometimes pays to hire extra inspectors, who then have nothing to do most of the time. I cannot judge whether all of these new safety procedures were justifiable as safety improvements, but there was a widespread feeling among those involved in implementing them that they were not. Cynicism became rampant and morale sagged

Prof. Cohen goes on to document the history of how Greenpeace and friends managed to destroy the Shoreham, Long Island plant — which was eventually sold to NY state for $1.

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But the worst delay came after the Shoreham plant was completed. The NRC requires emergency planning exercises for evacuation of the nearby population in the event of certain types of accidents. The utility provides a system of warning horns and generally plans the logistics, but it is necessary to obtain cooperation from the local police and other civil authorities. Officials in Suffolk County, where Shoreham is located, refused to cooperate in these exercises, making it impossible to fulfill the NRC requirement. After years of delay, the NRC changed its position and ruled that in the event of an actual accident, the police and civil authorities would surely cooperate. It therefore finally issued an operating license. By this time the situation had become a political football, with the governor of New York deeply involved. He apparently decided that it was politically expedient to give in to the opponents of the plant. The state of New York therefore offered to “buy” the plant from the utility for $1 and dismantle it, with the utility receiving enough money from various tax savings to compensate for its construction expenditures. This means that the bill would effectively be footed by U.S. taxpayers. As of this writing, there are moves in Congress to prevent this. The ironic part of the story is that Long Island very badly needs the electricity the Shoreham plant can produce.

4 thoughts on “Why did nuclear plant construction costs quadruple from 1972 to 1988?

  1. Never heard of this plant at all until I read the book “Greenjacked”. Also interesting that nuclear plant in Tennessee (Watts Bar?) in which construction was halted in the late 80’s is now carrying on with the build and should come online some time late 2015. Also, a great read referenced in “Greenjacked” is “Radiation: What it is, What you need to know” radiationbook.com

  2. “Regulatory Turbulence”
    This is a very easy understand explanation of why costs went up. So, why have the costs never come back down?

    It would seem the budgeted 14 billion for Votgle is a continuation of the the high cost. Yet, regulatory turbulence does not seem to be the major reason for this high cost. So, what is the reason the same plant costs twice as much to build here than in China? and twice as much as Japanese recent builds?

  3. My understanding is the “Regulatory Ratcheting” was the primary regulatory cost driver. And I wouldn’t expect the “turbulence” factor to explain why a new design like AP1000 costs more per MW overnight cost than the last Gen II plants. Twenty more years of regulatory ratcheting might explain that.

    So, what is the reason the same plant costs twice as much to build here than in China? and twice as much as Japanese recent builds?

    I was hoping you would explain that 🙂 I can think of only these possibilities:

    1. USA uncertainties of legal actions (Greenpeace tactics, …) makes vendor extremely conservative on completion schedule; which increases financing costs.
    2. Westinghouse cut their China bids to the bone. I reckon they reasoned that winning China was a make or break for their nuclear program. Literally “the last chance”. Even though the deal involves a lot if IP transfer to China, it gets Westinghouse on the inside track for playing in the biggest nuclear program on the planet. And the possibility of being part of China’s export business – which will be by far the biggest national nuclear export program.
    3. There is a lot of local content besides labor in the China AP1000s. Should be cheaper?
    4. Local labor.
    5. No union labor?

    Surely Westinghouse knows the answer to your question. If the true reasons are similar to my list, then I understand why they won’t discuss it. 

    I would also like to know what the longer term China-Westinghouse deal is. Take the Chinese efforts on the fluoride-cooled high temp reactor FHR, or PB-AHTR as Berkeley calls it. If that design goes into manufacturing, is there a place for Westinghouse? What about international distribution?

    For a deep dive into why the MIT Future of Nuclear costs doubled between 2003 and 2009, see Update on the Cost of Nuclear Power.

    For what the French experience tells us see Revisiting the cost escalation curse of nuclear power New lessons from the French experience (2012). Note that there’s quite a bit of scatter in the French data – showing that factors like project management can be significant.

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