Nuclear power never was a commercial venture

From Leonard S Hyman, NY, US

Sir, Your editorial “The case for public funding of UK nuclear” (February 14) inches towards but never reaches the obvious conclusion: that nuclear power is not and never was a commercial venture. The withdrawal of Toshiba from the field, after disastrous losses, simply underlines that conclusion. As of now, four state-controlled groups from Russia, China, South Korea and France dominate the nuclear engineering and construction business. Privately owned companies simply do not have the scale, risk-taking ability and financial depth to deal with large nuclear projects. That, in itself, indicates that if the state is at one side of the bargaining table, maybe another state should be at the other.

The erstwhile “competitive” nuclear operators quickly dropped out of the last US nuclear revival, despite promised subsidies, and only regulated utilities went forward. Nuclear power plants, whose costs are largely fixed, require predictable revenue, which means conventional price regulation, or contracts such as that proposed for Hinkley Point. Competitive markets do not provide that.

As it is, the state limits the liabilities of nuclear operators in case of accident (meaning that the state picks up the tab). It may subsidise or guarantee some of the financing. It takes care of nuclear waste. It surely will not leave a half-finished nuclear plant standing if the builder goes bust. It takes on the liabilities but not the assets. If we need nuclear power for national security or environmental reasons, and we do not price these benefits in the market, perhaps the state, with its ability to raise money at a low cost, should take on the project directly. Furthermore, making nuclear a direct responsibility of the government would wonderfully concentrate the minds of the government decision makers, as Samuel Johnson wrote of an analogous situation.

Leonard S Hyman

Sleepy Hollow, NY, US

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.