The nuclear power industry is facing a period of extreme uncertainty. No nuclear plant now operating or still under active construction has been ordered since 1974, and every year since then has seen a decrease in the total utility commitment to nuclear power. By the end of this decade, almost all the projects still under construction will have been completed or canceled. Prospects for new domestic orders during the next few years are dim.

Such a bleak set of conditions has led some observers to conclude that the industry has no future aside from operating the existing plants. Some conclude further that such an end is entirely appropriate because they believe that nuclear reactors will not be needed due to the low growth in demand for electricity, and that the present problems are largely a result of the industry's own mistakes.

If nuclear power were irrelevant to future energy needs, it would not be of great interest to policymakers. However, several other factors must be taken into account. While electric growth has been very low over the last decade (in fact, it was negative in 1982), there is no assurance that this trend will continue. Even growth that is quite modest by historical standards would mandate new plants-that have not been ordered yet-coming online in the 1990's. Replacement of aging plants will call for still more new generating capacity. The industrial capability already exits to meet new demand with nuclear reactors even if high electric growth resumes. In addition, reactors use an abundant resource. Oil is not a realistic option for new electric-generating plants because of already high costs and vulnerability to import disruptions which are likely to increase by the end of the century. Natural gas. may also be too costly or unavailable for generating large quantities of electricity.

The use of coal can and will be expanded considerably. All the plausible growth projections considered in this study could be met entirely by

coal. Such a dependence, however, would leave the Nation's electric system vulnerable to price increases and disruptions of supply. Furthermore, coal carries significant liabilities. The continued combustion of fossil fuels, especially coal, has the potential to release enough carbon dioxide to cause serious climatic changes. We do not know enough about this problem yet to say when it could happen or how severe it might be, but the possibility exists that even in the early 21st century it may become essential to reduce sharply the use of fossil fuels especially coal. Another potentially serious problem with coal is pollution in the form of acid rain, which already is causing considerable concern. Even with the strictest current control technology, a coal plant emits large quantities of the oxides of sulfur and nitrogen that are believed to be the primary source of the problem. There are great uncertainties in our understanding of this problem also, but the potential exists for large-scale coal combustion to become unacceptable or much more expensive due to tighter restrictions on emissions.

There are other possible alternatives to coal, of course. Improving the performance of existing powerplants would make more electricity available without building new capacity. Cogeneration and improved efficiency in the use of electricity also are equivalent to adding new supply. These approaches are likely to be the biggest contributors to meeting new electric service requirements over the next few decades. Various forms of solar and geothermal energy also appear promising. Uncertainties of economics and applicability of these technologies, however, are too great to demonstrate that they will obviate the need for nuclear power over the next several decades.

Therefore, there may be good national-policy reasons for wanting to see the nuclear option preserved. However, the purpose of the preceding discussion is not to show that nuclear power necessarily is vital to this Nation's well-being. It is, rather, to suggest that there are conditions

under which nuclear power would be the preferred choice, and that these conditions might not be recognized before the industry has lost its ability to supply reactors efficiently and expeditiously. If the nuclear option is foreclosed, it should at least happen with foresight, not by

accident or neglect. This report analyzes the technical and institutional prospects for the future of nuclear power and addresses the question of what Congress could do to revitalize the nuclear option if that should prove necessary as a national policy objective.

No efforts-whether by Government or the industry itself to restore the vitality of the industry will succeed without addressing the very real problems now facing the technology. To illustrate this, consider a utility whose projections show a need for new generating capacity by the mid1990's. In comparing coal and nuclear plants, current estimates of the cost of power over the plant's lifetime give a small advantage-perhaps 10 percent-to nuclear. Fifteen years ago, that advantage would have been decisive. Now, however, the utility managers can see difficulties at some current nuclear projects which, if repeated at a new plant, would eliminate any projected cost advantage and seriously strain the utility: • The cost projections may be inaccurate. Some plants are being finished at many times their originally estimated cost. Major portions of a plant may have to be rebuilt because of design inadequacy, sloppy workmanship, or regulatory changes. Construction leadtimes can approach 15 years, leaving the utility dangerously exposed financially. The severe cash flow shortages of the Washington Public Power Supply System (WPPSS) are an extreme example of this problem. • Demand growth may continue to fall below projections. A utility may commit large sums of capital to a plant only to find part way through construction that it is not needed. If the plant has to be canceled, the utility and its shareholders must absorb all the losses even though it looked like a reasonable investment at the beginning. The long construction schedules and great capital demands of nuclear plants make them especially risky in the light of such uncertainty. • The Nuclear Regulatory Commission (NRC) continues to tighten restrictions and mandate

major changes in plant designs. Although the reasons for these changes often are valid, they lead to increases in costs and schedules that are unpredictable when the plant is ordered. In addition, the paperwork and time demands on utility management are much greater burdens than for other generating options.

• Once a plant is completed, the high capital

costs often lead to rate increases to utility customers, at least until the plant has been partially amortized. This can cause considerable difficulty with both the customers and the public utility commission (PUC). If rate increases are delayed to ease the shock, net payback to the utility is postponed further. • Most of the money to pay for a plant has to be raised from the financial market, where nuclear reactors increasingly are viewed as risky investments. The huge demands for capital to pay construction costs (and the high interest costs on this capital) make unprecedented financial demands on utilities at a time when capital is costly.

• There are many opportunities for opponents of a plant to voice their concerns. Some plants have been the focus of suits over specific environmental or safety issues. In the licensing process, critics may raise a wide variety of issues to which the utility has to be prepared to respond. These responses call for a significant legal and technical effort as well as long delays, regardless of the ultimate disposition of the issue.

• Plant operation may not meet expectations. Some reactors have suffered chronic reliability problems, operating less than 50 percent of the time. Others have had to replace major components, such as steam generators,

at a cost of tens of millions of dollars because of unexpectedly rapid deterioration. While there is no specific reason to think a new plant would not operate its full life expectancy without major repairs, no reactor is yet old enough to have demonstrated it. There also is the possibility of long-term shutdowns because of accidents such as Three Mile Island. Furthermore, a nuclear utility is vulnerable to shutdowns and major modifications not only from accidents at its own facility, but also from accidents at any other

reactor.

• Public support for nuclear power has been slipping, largely due to concerns about safety and costs. Public concerns can manifest themselves in political opposition. Several states have held referenda banning nuclear power or restricting future construction. None has passed that would mandate shutting down operating reactors, but some have come close. Furthermore, State and local governments have considerable control over the plant through rate regulation, permitting, transportation of waste, and approval of emergency plans. If the public does not want the plant, all these levers are likely to be used against it.

Given all these uncertainties and risks, few utilities would now consider nuclear reactors to be a reasonable choice. Moreover, the pressures arising from virtually continuous interactions with contractors, NRC, the PUCs, financial institutions, and perhaps lawsuits by opponents, make nuclear power far more burdensome to a utility than

any other choice. The future of nuclear power would appear to be bleak.

Yet there is more to nuclear power than the well-publicized problems affecting some reactors. In fact, many have been constructed expeditiously, and are operating with acceptable reliability. Some have enjoyed spectacular success. For instance, the McGuire unit 2 of Duke Power in North Carolina was completed in 1982 at a cost of $900/kW, less than a third of the cost of the Shoreham plant in New York. The Vermont Yankee plant operated in 1982 at 93 percent availability, one of the best records in the world for any kind of generating plant. Calvert Cliffs supplies electricity to Baltimore Gas & Electric customers at 1.7¢/kWh. Finally, safety analyses are improving steadily, and none has indicated that nuclear plants pose a level of risk to the public as high as that accepted readily from other technologies. These well-managed plants have operated safely while providing substantial economic benefits for their customers.

Such examples, however, are insufficient to counterbalance the problems others have encountered. Nuclear power has become entangled in a complex web of such conflicting interests and emotions that matters are at an impasse. The utility viewpoint discussed above shows that there is little advantage and a great many disadvantages to the selection of a nuclear plant when new capacity is needed. Therefore, there will be fewif any more orders for reactors in this century without significant changes in the way the industry and the Government handle nuclear power.