Category: Yucca Mountian Nuclear Waste Facility

Don’t bet your portfolio on nuclear investments


With oil prices down significantly from the time when they topped $100 a barrel it is easy to forget the atmosphere in 2005. That year, high energy prices led Congress to add $18.5 billion in loan guarantees for nuclear construction to the 2005 energy law.

 There are 104 nuclear reactors operating in the United States. All were ordered before the 1979 Three Mile Island accident. Since that time not a single U.S. nuclear reactor has been built.

Because the lower cost of generating nuclear electricity seems economically advantageous, some investment newsletters, such as Roger Conrad’s  Utility Forecaster,  urge investment in nuclear related stocks. In offering such advice, proponents of nuclear investing have often been negligent in failing to warn investors of potential problems.

In 2005 the business section of the NY Times cautioned “…investors should understand that betting on nuclear entails risk beyond the stock market’s usual shimmies and shakes. Domestic [nuclear] plants have operated without a major incident since Three Mile Island, but another big stumble, in the United States or abroad, could hobble the industry.”

After Three Mile Island, nuclear stocks plunged; it took years for many to recover. Several utilities were not permitted to open and operate completed nuclear plants, meaning the entire cost of construction was lost. The fact that serious talk of building additional nuclear plants was not raised for over 30 years speaks volumes.

Investment newsletters promoting nuclear do a disservice to investors who need to understand the potential risk, along with the potential upside. This article examines several recent developments investors should consider before contaminating their portfolio with stocks in nuclear companies.


The nuclear industry relies heavily on government subsidies to be profitable, and it is becoming abundantly clear that government support for the nuclear industry is fading fast, with federal support evaporating on everything from loan guarantees, to design approvals, to nuclear waste disposal.

  • President Obama’s removal of $50 billion in further loan guarantees from his stimulus bill signals the new administration may be having second thoughts on nuclear expansion.
  • Funding to open the Yucca Mountain Nuclear Waste facility has been cut to a level that assures it will not be opening in the foreseeable future.
  • Industry hopes that approval of standardized designs to speed up construction and result in significant cost savings have been disappointed, with the Nuclear Regulator Commission yet to approve two design proposals. (An advanced design submitted by Westinghouse, and another design by Areva).
  • At the state government level, the industry succeeded in having regulators in the states of Georgia and Florida raise electric rates so consumers pay for construction before it begins, but when Missouri refused a pre-construction rate increase, Ameren UE abandoned plans to build a new nuclear plant
  • In Maryland, Constellation Energy may be facing a 10% rate cut to compensate consumers for the Utilities proposed nuclear power venture.


Nor is lack of government support the only problem. Cost overruns and construction delays continue to plague the industry.

  • Exelon canceled plans to build a new nuclear plant in Texas.
  • Ontario Providence in Canada has suspended plans to build new nuclear reactors
  • Ameren UE suspended plans to build a plant in Missouri.

Indeed, of 45 nuclear plants being built around the world, 22 have encountered construction delays.

Recently Areva learned how damaging nuclear development projects could be, when construction problems with a Finland nuclear reactor not only caused a steep drop in company earnings, but had a cascading effect, both undermining Areva’s efforts to get Nuclear Regulatory Commission approval for the reactor design in the U.S., and in leading to the cancellation of a nuclear reactor of the same design in France.

Cancellations can be worse than delays, especially if construction has begun or been completed. In such cases regulators may not allow investors to recover the cost of a project that does not go on-line. In this regard it is important to remember that although it is extremely rare for a regulated utility to undergo bankruptcy, one of the few such bankruptcies on record is that of WHOOPS, a Washington State utility that went out of business because of the high cost of nuclear power. The high cost of construction, operation, caring for the nuclear reactor once it ceases to operate, and on-site storage of nuclear waste can all negatively impact profitability.


The U.S. Department of Energy was to begin accepting spent fuel at the Yucca Mountain repository in January, 1998. Now, after over a decade of delay, it appears the Obama administration is getting ready to kill the project . In March the Obama Administration fulfilled a campaign promise by proposing to cut most funds for the Yucca Mountain nuclear waste project. In July, the U.S. Senate went even further, reducing Obama’s proposed $56 million in funding for a Yucca Mountain study to $29 million, sapping the Nuclear Regulatory Commission of funds needed for review of the application to approve the waste repository.

Energy Department officials have confirmed it’s the administration’s policy that Yucca Mountain never be used. “I’m convinced that for the foreseeable future, for the next 50 to 100 years, we’ll simply store the spent fuel rods on site,”  Senator Reid told reporters. That would pose a severe problem for the nuclear industry, which must bear the cost of monitoring, maintenance and operation of the steel-lined pools and steel concrete casks near the reactors, where the waste has been accumulating for decades.

Considering that there are so many other good investment ideas, is it really wise to contaminate your portfolio with nuclear?

 Below is a partial list of companies that build nuclear reactors:

  • Areva
  • General Electric
  • Toshiba (through it’s Westinghouse division)

The following utilities use nuclear power to generate electricity:

  • Ameren (AEE)
  • CEG
  • CenterPoint Energy (CNP)
  • Central Vt. Pub Service (CV)
  • Dominion (D)
  • Duke (DUK)
  • Entergy (ETR)
  • Exelon (EXC)
  • FirstEnergy (FE)
  • FPL
  • Progress Energy (PGN)
  • Public Service Enterprise Group (PEG)
  • Pinnacle West (PNW)
  • Southern Company ((SO)
  • Westar Energy (WO)
  • Xcel (XEL)
  • Elec de France (ECIFF)
  • ENEL (Italy)
  • RWE (Bulgaria)

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