AIG UGG
September 17th, 2008
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In general, I’ve always been for free-market capitalism and I do not like “corporate welfare,” as in handouts to companies from the government, especially to compensate for their failure to use good business practices and therefore getting themselves in trouble.
However, the recent US bailout of AIG is something for which… Well, honestly I’m not sure there is a good answer to what to do in this situation and I can’t entirely fault the federal reserve for taking action. For those who don’t know, the insurance giant AIG has been teetering on the edge of bankruptcy because the firm didn’t do what all good insurance companies should do – making sure they had the proper assets, credit lines, reinsurance and contingencies to implement should they end up in a situation where they have to make payouts that are larger than their intake. In the past week AIG has found itself in a position where they simply didn’t have the liquidity to meet obligations and where no creditors were willing to lend it to them, given their amount of accumulated debt.
The Federal Reserve has thus stepped in and basically put togeather an 85 billion dollar fund from which AIG can borrow (no word on whether the US taxpayer will ever see that money again) and as part of this deal the federal government has basically taken over the company’s operations. This is… horrible… and I hate that this would be done with ANY company. As far as I’m concerned they should be allowed to falter and anyone who was dumb enough to invest in them and not diversify their portfolio, like all investors should, should get a stinging lesson in how important that is.
BUT…
The problem is that they’re an insurance company and by definition they’re supposed to “insure” that stuff is secure and will be taken care of. Insurance companies are the foundation of risk management and property protection and allowing one of the biggest to just go belly up and tell anyone hit by a huricane or a major assets loss “sorry, but we don’t have any money” is not an option.
So honestly, I don’t know what the hell the answer to this conundrum is. In all likelihood, what the government did, though expensive, is about the best that could have happened, in order to assure that there is not some kind of massive meltdown in the financial markets and a complete loss of confidence in insurers. Still, heads need to roll over this. In a perfect world, those responsible for this would have to pay everything they have to compensate for this and would then be sold to organ and tissue banks to get any remaining money out of their existence.
Also, this should never have been allowed to happen. I’m not saying we need MORE regulation, but I am saying we need BETTER regulation. Not more laws or government oversight of the dealings of companies, but just assurance that they have the liquidity to meet their commitments. It’s a pretty damn simple thing. Do your holdings meet or exceed your commitments? Yes or No. It needs to be enforced 100%.
I’ve got a secondary point here though. Had this company been held to the standards of nuclear energy producers this would never have happened. Nuclear energy providers actually are in a situation where they have a pool of money that is completely independent of any insurance companies and is by definition always maintained and is greater than the market capital of any of the companies.
The Price-Anderson act came out of the universally high standards nuclear energy is held to. Nuclear generating companies must enter into a shared-risk plan to provide for assured liquidity in the case of any accident. They must also carry as much private insurance on each reactor as they can be reasonably expected to have (generally about $200 million) AND they must pay into a US government backed and administered insurance program. The protection is tipple-redundant.
In the end what this means is that even if all the insurance companies went belly-up and there was a nuclear accident, it’s covered. Company goes bankrupted? it’s covered. Cost exceeds the assets of the company? It’s covered. Come hell or high water, it is covered!
The reason is simple: people demand that nuclear energy be held to the highest standards, and occasionally to ridiculously high standards. But here, the high standard works pretty well and assures that there is always money set aside for any contingency and insurance that is both privately and governmentaly backed.
Perhaps we should start considering whether other vital services and companies should have a “rainy day” plan this comprehensive and thourouigh, because if insurance companies were held to this standard, then AIG would have had a pre-arranged safety fund to fall back on*.
*(If the same standard were applied it would be much larger than the Price-anderson 9.5 billion because insurance companies are more numerous and the industry is bigger than the nuclear sector, so it’s proportional)
So this is basically why we have Price-Anderson.
This entry was posted on Wednesday, September 17th, 2008 at 11:59 pm and is filed under Misc, Nuclear, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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September 18th, 2008 at 12:17 am
That is a great comparison and is a very useful counter argument when faced with antinukes waving Price-Anderson and other State nuclear liability guarantees around as ‘proof’ that nuclear is much too dangerous for the capital market to be interested in.
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September 18th, 2008 at 12:29 am
It is a double edged sword. For all that people complain that its a subsidy, it’s really just a guarantee that as you say, come hell or high water it is covered. I don’t know people would accept nuclear energy without such a comprehensive situation. If something happens the company must pay from insurance, from the shared-risk pool and finally from the government, if the cost is so high ($10 billion) that it just about exceeds what private companies can reasonably cough up and in the end unless all the companies fail and their insurance companies and the government, there is always someone to make sure that anyone who is liabled won’t be left high and dry.
If this were applied to the insurance industry, I’m not sure it would work because then all the companies would be backing each other and therefore it might encourage frivolous expenditures because basically all the companies are acting as reinsurance. That doesn’t apply to nuclear since insurance and risk is not their number 1 concern or business for profit.
But it does insulate them from any collapse of any insurance company or other entity.
Here’s my big question: If nuclear companies are required to have this kind of redundant “come hell or high water” strategy, why not chemical companies? Why not oil companies?
Damn, don’t you wish this existed for oil companies when the Exxon Valdez hit and there was a big slush fund to pay billions for the cleanup from oil company funding?
Why are other companies that also could potentially cause a massive disaster (and actually are much much more likely to) held to this kind of standard???
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September 18th, 2008 at 1:59 am
How on earth is Price-Anderson a high standard? It simply says that the government will bail out nuclear power plants to no limit if they have a massive accident. It means nuclear power companies can pull another three mile island and nothing will happen except taxpayers will pay any of the fees. The nuclear companies do have to pay into it, but it’s the biggest bargain in the world and they still make a killing. It’s basically blood money. A few million dollars a year is the cost of being able to do anything and no liability is ever an issue because they are protected.
It’s estimated that every year thousands die from the emissions of nuclear power plants and this is the true price.
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September 18th, 2008 at 2:03 am
Richard said:
Thank you for adding that. Without that last statement I may have taken your nonsense seriously and felt the need to refute it, but because of that I know that’s not even worth my time.
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September 18th, 2008 at 2:37 am
Definately a no-win situation and it bothers me a lot that a company would just fall back on a government bail-out, but you’re right that it could be much much worse to let an insurance giant default like that. I just hope they are held accountable and made to pay back as much of the borrowed funds as necessary. I hope they won’t need to tap all the $85 billion. Make no mistake that this was their fault because this is exactly what insurance companies are not supposed to do. You’re supposed to be able to trust them to be there when needed and to have the assets and backing to do that.
I hope federal prosecutors investigate this. I really think more than anything the money used to bail them out needs to be recovered aggressively even if it means in the end disbanding the company and auctioning their commitments to others. The executives should be perused for criminal charges.
(NOTE: I’m not anti capitalism at all, but I do think that companies need to play fair and just like anyone else if their board members do something dishonest or do not hold up their company’s commitments then they should be held responsible. Capitalism only can work when everyone is made to play fair and not cheat and steal)
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September 18th, 2008 at 4:39 am
Richard said:
Would you care to justify that allegation?
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September 18th, 2008 at 5:00 am
Richard said:
Go read the Price-Anderson Act instead of spouting absurd falsities about it. And I’d suggest you use those tiny little gray cells and actually learn something worthwile so that your “criticism” has at least a little bit validity.
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September 18th, 2008 at 7:54 am
Steve, your comparison is a very good analysis of why Price-Anderson was passed in the first place (“why we have it”). Of course, we now know that the risk of serious injury to the public, as well as the magnitude of that injury, from even a 50s-era LWR, are orders of magnitude lower than they thought, or were prepared to bet; likewise, the risk to a company of its asset being rendered worthless in an accident–something that obviously gave accountants pause when there was no basis from which to make a good risk assessment, and which seriously hampered early growth in nuclear power–is now recognized to be orders of magnitude lower. People rightly ask why we need it if that’s the case.
The reason is the explosion in frivolous lawsuits (which was unforeseen in 1957). There are several key differences in the legal system and in the approach of today’s plaintiffs:
1. The tort system was set up to allow people with grievances against another person to get compensation. Today, it is largely used to change behavior, compensation per se not being the object except inasmuch as it allows the plaintiffs to continue paying their lawyers and de-funds the opposition.
2. The concept of “standing” was supposed to prevent people with agendas and no personal damage from using the courts as a bludgeon. Unfortunately, that assumes that the plaintiffs are running the show, not the lawyers. Today, lawyers organize themselves or are hired by organizations that have social/economic aims, and seek out plaintiffs, telling them what to say and how to say it in order to get a conviction, while the organization engages in sufficient pre-trial publicity to taint the jury pool. That way, an organization with no standing can find plaintiffs with standing and pay for the legal action, without itself being considered a party to the action. In short, standing is a worthless test today.
3. Juries are selected with the aim of impaneling a group of manipulable idiots with no knowledge of the matter in dispute. Jury selection wasn’t a science in 1957, nor was it used tactically or for that purpose.
4. Juries largely assume that corporate defendants are guilty, and that the trial is a show put on before they decide how much money the plaintiff gets. Lawsuits were not the lottery in 1957.
5. Lawyers were professionals in 1957. “Public interest attorneys”–i.e., people who make a living suing corporations because they believe on principle corporations should be sued–did not exist, at least not at the levels seen today. In setting up the current tort system, it was safe to assume that lawyers did not act of their own accord, which is obviously no longer true.
6. The court system wasn’t as bogged down with cases then as it is now, so corporate defendants didn’t have to retain counsel and suspend capital investments in the area in question for 10 years while everybody and their grandmother sued them, most of the time not being spent in court at all but rather waiting for the cases ahead of them to be heard.
7. PR wasn’t as developed or pervasive as it is now and wasn’t used in coordination with lawsuits, as it is today. It’s fairly straightforward, if you have enough people and the public isn’t paying close attention to your initial steps, and if you have the moral high ground, to make a string of media events around the country look like a snowballing mass movement when it’s really just a few thousand people pulling strings. And, aside from stunts, the most popular type of media event is an announcement of legal action.
8. Lawsuits in 1957 were filed for a reason; a lawsuit at the very least was in itself an attempt to raise an issue. Today, it is not unusual for a group to file a lawsuit that they know is unfounded, simply to buy time and run up costs. Making the loser pay legal costs is supposed to prevent that, but (a) we don’t do that in the US except for frivolous lawsuits and (b) lawyers have a much narrower view of what a frivolous lawsuit is than we do. Costs awards are almost unheard of.
9. Defendants used to settle lawsuits when they could come to an out-of-court agreement with the plaintiff on the issue being disputed, not when they wanted to “end the pain.” Plaintiffs also didn’t use the money to file another lawsuit, or donate it to the organization that’s coordinating the lawsuits (a nifty tax deduction, as most of these groups are charities). Today, corporate defendants will settle or plead guilty if the cost of paying damages is lower than their legal fees, regardless of the strategic implications or, you know, integrity.
10. Speaking of charities, charities aren’t supposed to engage in political activity. Unfortunately, that’s always meant “electoral politics”–participation in electoral politics is useless to an NGO; the real political activity is in propaganda and community organization, which is completely allowable. They also have the moral high ground; attempting to sue to shut down or remove the tax-exempt status of a propaganda outfit with broad public support is pointless, as they’ll simply cry “censorship” to a sympathetic media.
11. The explosion in punitive damages hadn’t happened yet. The idea, in 1957, that a person could sue McDonald’s over a spilled cup of coffee for almost $3 million and win would have been absolutely absurd.
12. Lawyers were not as expensive in 1957. Today, a small or small-margin corporate defendant can be targeted with thousands of lawsuits, win them all, and go bankrupt on the legal fees. Today, instead of being recognized as the inventor of television, Philo T. Farnsworth would have his assets seized and live the rest of his life in a homeless shelter. Remember that judge in DC who sued his cleaners for $54 million over his pants? He “lost”–but the owners of the cleaners had to close one of their two locations and considered moving back to Korea. Isn’t that a perfectly satisfactory result for someone who wants that business closed?
I know I’ve missed some other factors; energy policy is my specialty, not tort reform…
Price-Anderson is the only reason that utilities can continue to operate nuclear power plants. It protects the industry from vigilante action; as such, it is the absolute key and requires all our support. The day it’s repealed, anti-nuclear activists will form an umbrella group to coordinate the coming lawsuits, blitz the media with propaganda (in the literal, combined-arms sense of the term) while finding plaintiffs-for-hire, and file lawsuits against utilities about local health problems, backed by Tooth-Fairy-type evidence, immediately ending any ideas about new build. Those utilities will settle, and the anti-nuclear activists will use the money to file more lawsuits, against utilities, manufacturers, mining companies, the kitchen sink, and anyone else they can get their hands on (example: a bogus safety allegation against a utility with a relatively unique facility so that others don’t intervene, with a request for an injunction to shut down and defuel the plant, “temporarily”–and “temporarily” means 2-3 years, allowing several such suits to be filed and the shut-downs to significantly affect fleet-wide capacity factor, allowing the propaganda arm to claim that nucular parr pants are unreliable and useless, bringing in more money to fund the lawsuits). When they have enough public support, money, and case law behind them, they will then file class-action lawsuits against the EPA and NRC to change regulations in such a way as to make it impossible to operate nuclear power plants. Utilities will see no real problem with it, as gas plants are easier to build and operate anyway and the fuel costs get passed on as a surcharge; manufacturers will be thrilled, seeing billions of dollars worth of gas turbine orders (the biggest financial beneficiary of a nuclear phaseout would be none other than GE); the public will see it as a victory for the good guys. With luck, they might get the Atomic Energy Act of 1954 declared unconstitutional. Under those circumstances, I would not bet on the nuclear industry being around in 10 years.
The Price-Anderson Act is the only thing keeping the nuclear industry from going the way of the asbestos industry, plain and simple. The insurance aspect isn’t as life-and-death vital as the stricter tests required of claims to be made under the Act than your normal personal-injury case–and liability is not the amount of money needed to correct any damage; rather, it is the amount of money that lawyers are able to squeeze out of the defendant. That’s why the woo-woo groups are against it. Go look around Overlawyered.com–the more I learn about the American legal system, the stronger my support for Price-Anderson gets.
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September 18th, 2008 at 8:21 am
Richard said:
Huh?
The total claims paid out after Three Mile Island were $70 million. Cleanup costs ran to about $975 million. (I’m using Wikipedia. You can too.) According to Price-Anderson, every plant must carry $300 million in accident insurance. So already, private insurers took care of all the insurance claims related to TMI. The next step is the Price-Anderson fund itself, and the money for that comes directly from the nuclear companies — not their insurers, themselves. It’s currently about $9.5 billion dollars.
At this rate, there could be roughly twenty TMI-scale accidents per year*** before the government had to pay a dime. And there hasn’t been an incident of that magnitude anywhere in North America since 1979 — which is why everyone refers to Three Mile Island. That’s a pretty damn good safety record, particularly when you look at how many fires, spills, explosions and other serious accidents happen every year at oil, coal, and gas-fired plants. And let’s not even get into the number of people who die in oil rig accidents, coal mine accidents, and so on and so forth.
Oh, but the irredeemable cost in human lives, you say? It would be the same as that of TMI itself: none. Nobody died as a result of the Three Mile Island incident. The average person living within ten miles of Three Mile Island received a mere eight rems of radiation exposure. That’s on par with everyone living within ten miles of Three Mile Island going out to get a chest X-ray.
Fossil fuel production kills far more people in a single year than nuclear power ever has and ever will.
***I did not bother converting between 1979 dollars and today’s dollars. It’s late as hell and I’m at work.
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September 18th, 2008 at 9:10 am
Unforunately, AIG’s woes are part of a larger problem just now manifesting itself. The federal reserve prints money and expands the money supply at a whim. This creates bubbles because the inflated money supply will necessarily cause the borrowing of money to be cheap. When money is cheap, the standards for lending it will drop. This is why it was so damn easy to get a mortgage two years ago, and banks were willing to lend to about anyone. The loans would originate from brokers who made a money on the sale, the banks made money on fees, and then they got the great deal of transferring the debt and risk to Freddie and Fannie, two government-created corporations with an implicit guarantee from the federal treasury. Bingo – we have cheap money and someone to offload the risk to. Both government entities.
So, we currently have a situation where the fed is bailing these companies out when the fed (and congress) created the problem in the first place. They are absolutely DUMPING money into the markets over the last couple of days – further increasing the money supply, and by definition, jacking up inflation. More of the same.
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September 18th, 2008 at 11:05 am
This seems an appropriate point to raise one of my pet ideas.
Ie: top management at publicly traded companies should get much of their pay (eg: everything over $100,000 per year) in the form of stock *which they cannot sell* until 5 to 10 years after the year in which it is ‘earned’.
This would not guarantee competent management, but at least it would remove perverse incentives favoring short term thinking.
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September 18th, 2008 at 12:02 pm
Interesting idea. The insurance companies need to feed a fund every year to cover insurance claims that may exceed their income. In a lot of ways, I like the idea. Give me several good years, with low payouts, and the fund could become well stocked.
Of course, there would have to be some regulations on it, otherwise, the insurance companies would look at it as a slush fund, and stop caring whether they have any money in their coffers. And, who gets access to the money first? Is there any requirement to pay back (at least partially) what was taken out?
There are a lot of variables that need to be considered, including the human one. Any legislation along these lines would be welcome, but enforcement (and the costs associated with enforcement) would not be welcome. Additionally, erosion of the legislation would happen quietly over time, eventually making it just another government hand out. This erosion will happen because there will not be as active of a group as the anti nuke coalition watching everything that has to do with the industry.
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September 18th, 2008 at 12:23 pm
There is already a system in place see Wikipedia/Reinsurance
However unlike Central Banking it is not mandated by law.
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September 18th, 2008 at 3:24 pm
Richard said:
Thousands die from the water released into the air?
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September 18th, 2008 at 8:33 pm
Joe said:
Inflation hasn’t actually been that bad though. Sure, it’s over 3%, but oil and commodities are increasing in price due to China and new demand.
The cheap money did play a role in the over-lending a few years ago. But low interest rates should not lead banks to giving out loans which are essentially money losers. Banks should still have the self control to give out sensible loans. And if they can’t exhibit this self control, then I suppose they need to have some regulated onto them. Laying very poor business decisions by these companies on the federal reserve isn’t fair. What would be fair is putting some blame on politicians which made Fannie May and allowed it to make wild investments and mortgages based on the belief that they had US government backing.
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September 18th, 2008 at 10:33 pm
Andrew said:
I would not mind an economic crisis if it spread world wide (as they do these days) and managed to hit China hard and knock them off of their growth spurt and (hopefully) into a depression. The US and Europe have not done enough to limit their engagement with China. We like their cheap products so we do not limit trade with them or even try to keep it in check and we’re willing to let them do as they please and keep pumping their growth.
My hope is that a worldwide recession will hit China harder than the first world countries, because we have a more mature monetary system, more infrastructure and we can weather recessions. China is in a place where if they do not grow they will fail. We can tolerate a few years of recession but they may not be able to. A global recession could set the US back ten years and set China back forty. More than worth it if you ask me.
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September 18th, 2008 at 11:52 pm
Well I’d also like to see China stop growing so fast. They’re on their way to being a full fledged superpower by 2025. Given their government and all I’m not sure that’s so good. And also they have not been very good about quality control or pollution control. But, I sure don’t want to see that many people sent back to the stone age. I mean, I do think it’s a good thing that they are having better standards of living. I’m just saying, there’s plenty to worry about. I’d rather see them slow down and the US become less dependent than see them take a massive step backward.
But back on topic. I do think there is a fair question here, which is why don’t other industries like chemical manufacture or transport, oil companies and all the other industries that could cause some major problems have similar programs to price anderson? It would help a lot if they had that level of coverage.
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September 22nd, 2008 at 11:59 am
Hi Doc,
I must say I’m surprised to read your endorsement of laissez-faire capitalism and learn that you’re a registered libertarian. From the content of your blog – particularly relating to energy issues – I’d assumed you were a technocrat.
Some have suggested that the combination of the right-wing espousal of laissez-faire and libertarianism is a form of anarchism so far right that it is practically far-left. Just as communism leads to totalitarianism, so unfettered capitalism leads to monopoly. Without some level of state intervention, pretty soon (couple of decades, couple of corporate wars) there’d be just one big company, to which we’d all be indentured, and the revolution would be complete.
This is the lesson of Marxian economics expounded in ‘Capital’ – if you can bear to read as far as volume V. That is ‘Marxian’ as opposed to ‘Marxism’ – an important distinction. Remember Marx himself said “Je ne suis pas Marxiste” upon his visit to the Paris Sorbonne. To be completely fair to the USSR, it (post Stalin) wasn’t nearly as down on enterprise as is generally believed in the Anglosphere. It was a very long way from being the ‘evil empire’ that Reagan painted.
But what’s this got to do with nuclear power? Well, a quick look around the world will show that it is the more interventionist or socialist governments that tend to have maintained their nuclear programmes, whereas those economies more exposed to the rigour of the market have seen the lousy economics behind nuclear power generation and baulked. In the most laissez-faire economy we have, the US, some figures are enlightening. Between 1966 an 1967, reactor costs in the US exceeded estimates by an average 209%. 68-69; 294%, 70-71; 348%, 72-73; 318%, 74-75, 381%. By 1976 the US utilities had given up. They have not ordered a new reactor since 1974. The UK faired little better; the cost of building Sizewell B went up from GBP 1.7bn to 3.7bn during its construction.
Very high, uncertain and rising capital costs on a project that will produce no revenues for a decade or more are not a compelling proposition at the best of times. Add a myriad of hard-to-quantify socio-political risks and it is not difficult to see why nuclear power programmes have always relied on large and sustained public subsidies. Laissez-faire capitalism will not deliver a nuclear future.
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September 22nd, 2008 at 12:22 pm
McGlashan said:
Well I’m not really fixed directly to that agenda to the point of being exclusive of others. If you’re completely hands off with energy policy then coal wins, because we already have coal power and coal is cheap. On the other hand, if you applied regulation to emissions that was across the board, then coal would basically become illegal.
I do approve of government expenditures on programs or subsidies as long as they have a very high return and a specific reason for existing and that they prove to be working in promoting it. (Any subsidies that start off with a goal and then turn out to not be working, but instead are providing a tax shelter or something must be repealed immediately).
Energy policy is something which is always a national issue, a security issue, a stratigic issue, and it’s legitimate for the government to take a roll in that. Nuclear energy is and has always been, by its very nature, something that the government is heavily involved in, both administering and regulation of. That’s almost impossible to avoid.
I believe the government should work to promote nuclear energy, but to do so more through pro-nuclear regulations than through direct hand-outs. I also think it should take an active roll in making it a stratigic and national resource but at the same time allow private enterprise to most of the work in building the plants and infrastructure.
I tend to think of energy as a kind of trickle-down thing where it is legitimate to put government resources into providing an energy supply that will then be provided to the marketplace to facilitate use and commerce.
A good analogy of how I think of the topic would be the monetary supply. The government administers, regulates and generally maintains the monetary supply. They do it from the top and they decide how the monetary supply is provided, how much is lent out, how much is put into bonds, whether the money is backed by precious metals, government guarantees, assets and so on. The job is only to provide a stable monetary supply and they sit on the top of that. From there it goes through private banks, bond investors, holding companies, regional banks, various private and public reserves on the state and local level and finally consumers.
The job of the government is thus simply to assure that there is a secure and stable monetary system and from there it allows for commerce. You could argue that they have not done an especially good job at this recently, although I’d maintain that it’s still preferable to the old system where there were private bank notes, non-standard demonstrations and ingots of gold and silver being shuffled around.
But I don’t know how much I could be considered a ‘libertarian’ to the purist. Like I said, I’m fine with the government spending money IF it has a direct and narrow purpose and the return is high. I also support federally funded science as it is an important national and stratigic resource to keep the scientific pursuits and expertise from falling behind the rest of the world.
That being said, I HATE how the government administers funds inefficiently, is very rigid in micromanaging things that it would be better off not doing so. I HATE corporate welfare. I think subsidies should be a LAST option for encouraging something – especially direct monetary subsidies or tax breaks. I HATE how the government starts an expensive program, invests huge amounts of money in it and then cuts it short and decides its not worth finishing, thus making it a complete loss… or worse, then changing their mind again and restarting it after everything has been closed and the fixtures auctioned off as surplus.
In the case above, where the government has provided a direct subsidy bail-out of a private company/companies that dug themselves into their own hole, I absolutely hate that. It makes me ripping mad and it makes me think this needs to be investigated and people probably need to go to prison. This is exactly what I do not want the government to do. HOWEVER, I also recognize that it was probably the only choice and that had they not been bailed out, it would have caused a crisis that could have lead to an unacceptable wholesale collapse of finance.
Still, it shows that we need better regulation of this industry. (Not more regulation, but better regulation. I see ‘more’ and ‘better’ as completely different things in regulating something like this.) Heads should roll on this one. This should never be allowed to happen again. Legally mandating that private entities keep their commitments and take the steps to assure they can do so is entirely legitimate by a libertarian philosophy, IMHO.
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September 22nd, 2008 at 12:22 pm
Hi McG
I will let Doc answer for his political leanings, I myself tend to be a central-leaning conservative. However I will challenge your remarks on the costs of nuclear power.
The biggest cost of a nuclear build seems to lie in the bureaucratic overhead that have accreted to these projects over time , with layers of regulation, court challenges by antinuclear forces and a stupid financing policy that requires that initial debt be serviced BEFORE the plant is up and running.
Canada is one of the few countries that have built reactors for export since the hiatus, and if you look at the record AECL has brought almost all of those off-shore projects in on time and on or under budget. (I’ll dig up the numbers again if anyone wants, I posted them here in a thread a few months ago) Meanwhile, here in Canada several refurbishments have run late and over budget, largely because of the endless attempts to stop the projects, and the actions of a nuclear safety apparatus that has proven itself to be unprofessional and completely out of touch with reality, which is why its decisions had to be overruled by Parliament, and its director fired last January.
It is this lack of a level playing field that makes new builds so expensive and nothing else. The truth is these are not horribly complex systems, there are no technical reasons they could not be built at competitive cost to any other thermal plant
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