Politics of Power: Following the Nuclear Money Trail

The 9.0-magnitude Tōhoku earthquake that struck Japan on March 11 released enough energy to shift the planet 10 inches off its axis and, along with the accompanying tsunami, was responsible for the meltdowns at three reactors in the Fukushima Daiichi Nuclear Power Station. This catastrophe sent shockwaves through the nuclear industry worldwide. As a result of this disaster, the nuclear industry in the United States was thrust into 24/7 crisis mode, employing every ounce of its considerable financial and political clout to survive. 

"The Monday after Fukushima, the Nuclear Energy Institute flooded Capitol Hill with every lobbyist they could get their hands on, and they were all screaming the same thing — that U.S. reactors are safe," said Dan Hirsch, president of the Los Angeles–based nuclear-watchdog group Committee to Bridge the Gap. Alex Flint, NEI's senior vp for governmental affairs, orchestrated an army of lobbyists that Hirsch estimates numbered well over 100, to brief dozens of members of Congress and hundreds of their staffers within the week. 

Their mission: damage control. 

"The whole industry was freaking out," said Tyson Slocum, director of Public Citizen's Energy Program. "Alex Flint and his team hosted a series of meetings on the Hill, telling them … why it couldn't happen here." Although Slocum couldn't put an exact dollar amount on how much the nuclear industry has spent on its response to Fukushima, an article released by the energy information company Platts estimates the figure could be as high as $13 million. Even this is only a drop in the vast sea of money that the nuclear industry has spent to remain afloat for decades.

Before Fukushima, the nuclear industry was largely content to operate as a sort of "silent service," as Hirsch called it. Until a decade ago, the agenda of the nuclear lobby had been primarily a modest one of survival, not expansion. After the 1979 Three Mile Island catastrophe, there was no national appetite for any new nuclear plants in the U.S. The Chernobyl meltdown seven years later seemed like the death knell of nuclear power expansion.  

The nuclear lobby's push to survive into the next century didn't come to an end, it merely shifted strategy. As private financing for such risky and discredited nuclear projects completely dried up, the industry turned to its energy-friendly allies in the Bush administration and secured billions of dollars in loan guarantees that would use taxpayer dollars to finance new reactors. 

 

AN INFUSION OF PUBLIC MONEY

"The industry has only survived, and can only survive, if they transfer 100 percent of their financial risk to rate payers and taxpayers through the loan guarantee program," said David A. Kraft, director of the Nuclear Energy Information Service of Illinois, an anti-nuclear organization. 

Even with this promise of public funding, the industry's hoped-for nuclear resurgence still sputtered, and no new reactors were built. But the industry and its legislative friends didn't give up. 

"From 2001 to 2005 there was a campaign led by Sen. Pete Domenici (R-N.M.) to re-engineer the way that nuclear power was paid for," Slocum said. "The industry and Domenici said, 'Hey, let's federalize this,' so that the costs went to the taxpayers, not the utilities, in the form of loan guarantees … guarantees that 80 percent of the cost will be paid by the federal government in the event of default. It is the bedrock of the nuclear power resurgence." Domenici, who during his career as a senator received more than half a million dollars in contributions from electric utilities, became known as the "Father of the Nuclear Renaissance.

The 2005 Energy Policy Act was profound in its impact. Signed into law by President George W. Bush, it authorized an initial $18 billion in loan guarantees toward the construction of nuclear plants, as well as tax credits for anyone able to bring a new reactor online. When nobody stepped up to build a new plant, Congress offered further incentives to the industry in 2007 by agreeing to reduce the private share of the risk to 20 percent, meaning that if a plant under construction defaults on a loan, the federal government will pick up 80 percent of the cost.  

The infusion of public funding worked, sparking proposals for a massive expansion (at least until the Fukushima debacle). Between 2007 and 2009, the Nuclear Regulatory Commission received applications for combined Construction and Operating Licenses (COLs) for 30 new reactors to be built at 19 different locations. Most of those applications were submitted in 2008, during which NEI spent $2,360,000 on lobbying expenses, their most expensive year on record.  

"There are applications pending for about 20 reactors that would be built in the next 15 to 20 years," said Steve Kerekes, senior director of media relations for NEI.  "Of that group, there are four that are beyond the planning stage, and into the project phase in South Carolina and Georgia. We expect these to begin construction over the next 10 to 14 months, and begin to produce electricity around 2017."

Nuclear power's emergence from the ashes of disasters like Three Mile Island is the result of decades of expensive lobbying efforts, clever marketing, powerful and savvy political campaigns and finely targeted and generous campaign donations. Since 1998, the industry has reported spending $47,224,747 on lobbying. 

 

THE NUCLEAR LOBBY'S CHAMPIONS 

 The rise of global warming as a hot-button political issue allowed the nuclear power lobby, spearheaded by NEI, to give nuclear power a green public image. 

"Our language then, and now, is simple; nuclear power is proven technology, and it emits no greenhouse gases," Kerekes said. "Nuclear plants in the U.S. displace almost as much carbon dioxide as is released from all the passenger cars in the country. It is by far the largest source of emissions-free energy in the U.S."

The 104 nuclear power plants currently operating in the U.S. provide nearly 70 percent of the carbon-emission-free electricity in the country, providing a strong selling point for the industry as environmentally conscious. 

Nuclear power had almost magically risen from the mat. This resurgence was driven in large part by NEI, the industry's main trade organization. To make sure that their voice is heard, NEI employs a cadre of more than 20 lobbyists. Chief lobbyist Flint once sat as the staff director of the Senate Committee on Energy and Natural Resources and was also the chief of staff for Pete Domenici. NEI's ranks also include lobbyist Robert Walker, former Republican congressman from Pennsylvania who served as the chairman of the House Science Committee. His role as a voice extolling the safety and efficiency of nuclear power should feel familiar; as a congressman during the 1979 Three Mile Island accident, he argued that nuclear power was safe and that technology spared people from radiation poisoning during the meltdown.

NEI is only the tip of the iceberg that is the nuclear power lobby, which gave  $4,893,435 in campaign contributions alone from 1989 to 2010. The American Nuclear Society, a nonprofit whose "core purpose is to promote the awareness and understanding of the application of nuclear science and technology" spent $160,000 on lobbying efforts in 2010, and other giants in the lobby dwarf these contributions. Southern Company is the operator of the Vogtle Electric Generating Plant in Georgia, which is slated to be the first U.S. nuclear facility in decades to undergo major expansion. Southern Co. employs former Sen. Don Nickles (R-Okla.) as a lobbyist, has spent at least $10 million every year from 2004 to 2010 on lobbying and is on track to match or exceed this in 2011. The company has already been granted $8 billion in loan guarantees by the Obama administration for the Vogtle project, despite the fact that the reactor that is proposed to be used in the expansion has not been approved by the Nuclear Regulatory Commission. Exelon, the largest operator of nuclear reactors in the country, reports Barack Obama as its top recipient of campaign contributions, totaling $333,441 as of 2010. Other heavy hitters include Peabody Energy and Duke Energy, along with General Electric, which is a major contractor for reactor construction and servicing. 

"The name of the game is access, and access costs a great deal of money," Slocum said. "When you have a highly organized industry focused on one goal, which is to secure interests in nuclear power, you hire former staff of top politicians or the politicians themselves. When you're giving them money, it produces results. It's a great business to be in if you can afford it."

There are more than 240 lobbyists who went from working for the government to working for the industry, including nine Congress members, according to a Greenwire report. These include such big names as former Senate Majority Leader Trent Lott (R-Miss). Lott, alongside former Senantor John Breaux (D-La.), lead the Breaux Lott Leadership Group, a lobbying firm whose clients include General Electric and Entergy Corp and whose lobbying income totals nearly $3 million. General Electric also retains as lobbyists former House Minority Leader and Democratic presidential contender Dick Gephardt of Missouri, and former Reps. Jim McCrery (R-La.) and Henry Bonilla (D-Texas). Entergy Corp also retains the services of former Rep. Bill Brewster (D-Okla.), while Jim Turner, a retired Democratic Rep. from Texas, represents Energy Future Holdings. Jeffrey Merrifield served as a two-term presidential appointee to the U.S. Nuclear Regulatory Commission from 1998 to 2007, and since then has served as senior vice president of the Shaw Group's Power Group. The Shaw Group has contracts with 95 percent of all U.S. nuclear plants and is currently providing services on the only two active restarts in North America.

  

FRIENDS IN HIGH PLACES

In 2010 alone, the top nuclear industry donors to federal candidates, party committees and leadership totaled more than $1,300,000, according to the Center for Responsive Politics. And those are just the big fish; all told, 1,614 different companies and special interest groups lobbied the federal government on energy issues, according to Opensecrets.org. As a result of that money, the nuclear industry has been able to secure many friends in high places, chief among them Rep. Fred Upton (R-Mich.), who currently sits as the chairman of the House Energy Committee. Among his latest drives for the nuclear industry are efforts to reopen Yucca Mountain, an uncompleted nuclear waste repository in Nevada that to date has cost $15 billion. He was quick to come to the defense of nuclear power in the days following Fukushima, when just five days after the disaster he stated at a subcommittee hearing that "we need to allow time for reflection and careful analysis and learn from their mistakes. This is especially true when it comes to proposals that would make permanent changes in policy based on incomplete information."

Every year, corporations with connections to the nuclear power industry donate millions of dollars in campaign contributions to ensure their voices are heard in Washington. Click on the links to view data on the top contributors of the 2009-2010 and 2010-2011 election cycle.

Donor Total PAC Individuals % Democrat % Republican
Nuclear Energy Institute $434,147 $413,147 $21,000 49% 48%
General Atomics $426,600 $335,060 $91,540 42% 57%
AREVA Group $120,300 $116,400 $3,900 64% 33%
USEC Inc $97,900 $79,000 $18,900 53% 43%
Southern Co $91,000 $91,000 $0 37% 57%
Toshiba Corp $48,160 $37,000 $11,160 44% 56%
Nuclear Innovation North America $18,900 $0 $18,900 87% 13%
Lightbridge Corp $13,800 $0 $13,800 89% 11%
Exelon Corp $10,194 $0 $10,194 30% 70%
Bartlett Holdings $8,050 $0 $8,050 0% 100%
Donor Total PAC Soft Levin Outside Individuals % Democrat % Republican
General Atomics $2,438,899 $1,687,108 $605,791 $146,000 30% 70%
Nuclear Energy Institute $1,933,945 $1,551,865 $65,233 $316,847 34% 65%
Southern Co $659,751 $593,000 $66,751 $0 17% 82%
USEC Inc $522,976 $387,796 $102,680 $32,500 26% 73%
AREVA Group $395,268 $382,900 $12,36 $0 47% 51%
McDermott International $339,229 $311,149 $28,080 $0 20% 79%
BNFL PLC $247,718 $38,750 $46,868 $162,100 29% 71%
Toshiba Corp $93,600 $72,100 $21,500 $0 40% 60%
Nuclear Management Co $91,000 $90,500 $500 $0 35% 65%
UT-Battelle $85,311 $0 $85,311 $0 28% 72%

"Fred is bought and sold when it comes to nuclear power," said Kevin Kamps of Beyond Nuclear, an anti-nuclear watchdog group. "When you have Citibank calling nuclear power a corporation killer and the Congressional Budget Office telling us that loan guarantees carry a greater than 50 percent chance of default, and you have all these people saying it's a dog, you have to ask who is he serving, his constituents or the nuclear industry?" 

Upton receives a large portion of campaign funding from the nuclear industry; electric utilities donated $189,600 during his 2009-2010 campaign cycle alone. His top campaign contributor was Energy Solutions, a nuclear services company. Also contributing significant amounts of cash were FirstEnergy Corp and Exelon Corp, the largest operator of nuclear power plants in the U.S. Upton declined through a spokesman to be interviewed for this article.

Upton is not the only pro-nuclear politician in Washington. Critics contend that even the federal watchdog regulatory agencies are inappropriately warm to nuclear power.  

"The government is hugely biased toward seeing nuclear power go forward," said Hirsch. "All five NRC commissioners are advocates of expanding the power of the Atomic Energy Commission, on top of which there's the appointment of John Holdren as chief science adviser and Steven Chu as secretary of energy. Every significant position in the government is occupied by an advocate of nuclear power."

Prior to Fukushima, the embrace of nuclear power by the U.S. political establishment had been reaching new highs. In his proposed 2012 budget, President Obama has set aside significant money for nuclear power. The proposed budget includes an additional $36 billion in loan guarantees added to the $18 billion from the 2005 Energy Policy Act, as well as $800 million for nuclear energy research and $500 million for the development of small, modular reactors. The president's cabinet is also very pro-nuclear; he recently nominated John Bryson as Secretary of Energy. Bryson is a former chairman of the California Public Utilities Commission and former CEO and president of Edison International, operator of several nuclear reactors. Senate Energy and Resources Committee Chairman Jeff Bingaman (D-N.M.) has remained a firm supporter of nuclear power even after Fukushima, going so far as to speak for the rest of the Senate. On March 15, just days after Fukushima, Bingaman told ABC News that "most members, I believe, recognize the importance that nuclear energy provides in our energy mix." 

Bingaman also receives substantial financial support from nuclear interests. Los Alamos National Laboratory, notorious as the birthplace of the atomic bomb, is his largest donor, having given Bingaman $49,408 throughout his career. Exelon Corp comes in second at $38,250. Since 1989, Duke Energy has contributed more than $94,000 to Sen. Richard Burr (R-N.C.), one of Bingaman's colleagues on the Energy and Resources Committee. Other friends of the industry in the Senate include Lamar Alexander (R-Tenn.). In July of 2010, Alexander wrote an article for U.S. News & World Report touting the benefits of nuclear power, specifically in terms of its superiority over other renewable energy sources. Sen. Lindsey Graham (R-S.C.) was quick to take media representatives on a tour of Oconee atomic power station in the days following Fukushima, wherein he explained his belief that a nuclear disaster such as that in Japan could not happen at Duke Energy's reactors in South Carolina. His stance is hardly surprising, considering that since 1989 he has received nearly $70,000 in campaign donations from nuclear interests

Congressman John Barrow (D-Ga.), who sits on the House Committee on Energy and Commerce and is a staunch supporter of nuclear power, received $68,100 from electric utilities from 2009 to 2010, including $16,600 from Southern Co. and $13,250 from General Dynamics. Southern Co. is the operator of Plant Vogtle, the proposed location for the Vogtle 3 & 4 reactors, which are slated to be the first new-build reactors to come online since Three Mile Island. 

Recently, there have been efforts by the Tennessee Valley Authority to revive Bellefonte 1, a reactor in Alabama that began construction in 1974 and has since undergone a never-ending process of cancellations and cost overruns. In a Tuscaloosa News article, Rep. Mo Brooks, a Republican whose congressional district covers northern Alabama, voiced his support for completing the plant. "More people have been killed by coal than nuclear, by far, when you talk about the mining, the pollution of the water and the air pollution," he said. "Nuclear's not perfect, but it seems to be better than any alternative." Rep. Brooks received $4,000 in campaign contributions from 2009 to 2010 from Southern Co., which operates several nuclear power plants in the Southern United States.


FUKUSHIMA AND THE FUTURE

The momentum toward nuclear expansion brusquely crashed into the crumbling walls of the Fukushima reactors earlier this year. The Japanese disaster ominously resonated throughout the global nuclear industry. The German government voted overwhelmingly to shut down all 17 of the country's nuclear plants by 2022. In France, fears over Japan were heightened after a fire occurred at Tricastin nuclear power plant just two days after authorities had found 32 safety concerns at the facility, leading to increased calls for oversight. The fire came a week after French President Nicolas Sarkozy bolstered the French nuclear industry by pledging €1 billion of investment into atomic power as well as "substantial resources" for additional research into nuclear safety. 

Despite such reactions overseas, the domestic U.S. backlash to the disaster has been less severe. No plants have been shut down, and there haven't been widespread calls for shutdowns. 

"In terms of new plants being built [in the U.S.] the much larger factor will be the economy," said NEI spokesman Kerekes. "We don't expect that the expansion of new plants will be seriously affected, because we have plenty of time to incorporate the necessary changes."

The nuclear industry, however, has lost several battles already in 2011 that will impact expansion plans. Minnesota voted to preserve a 17-year-old moratorium on the construction of new nuclear reactors, and Kentucky also retained a similar ban. Despite safety concerns, most of this legislation stems from financial worries. 

"Safety worries aside, the real question about nuclear energy's survival comes down to dollars, more than sense," said Chris Gadomski, the lead nuclear analyst for Bloomberg New Energy Finance. "There is good reason why there is so little private sector investment in nuclear power. It's just too expensive and risky. It's difficult to generate investment interest for billions of dollars for nuclear projects that have a 50 percent failure rate, and even if they do get built, they are almost always over budget and overdue."

While Fukushima may have created additional hurdles to the expansion of nuclear power, the question of what will happen to the reactors currently operating in the U.S. is for many a much larger issue. 

"No state, except Vermont, can deny a license application to operate a nuclear plant," said Slocum. "So they can keep operating until the Nuclear Regulatory Commission denies them an operating license, which it has never done and will probably never do, absent some local disaster. No plant that has ever applied for a renewed license has been denied. These plants are prohibitively expensive to build, but once they are operational, they are incredibly lucrative."

The aging nuclear plants in the U.S. continue to receive license extensions, despite the fact that many of these plants are already nearing or exceeding their original 40-year design limit.  Sixty-six of the 104 operational plants in the U.S. have been granted license renewals. This makes terrific economic sense for utility companies, as by the end of their original licenses, reactors are mostly paid for, and are thenceforth generating pure profits.

"It's been much more economical to produce electricity by increasing the output of reactors instead of building new ones. Eventually, as our plants get older, we will need new facilities, but for now, we need to work with what we have," Kerekes said. "But that doesn't mean our extant system is unsafe. You have to be safe every day, already. You have to be safe already with a renewal application."

According to NEI, nuclear energy is the cheapest source of electricity in the country, at just over 2 cents per kilowatt-hour in 2009 as compared with 5 cents from natural gas and 3 cents from coal. By keeping these reactors running, the industry avoids the massive costs associated with design, construction, licensing and testing of a new plant. And while the NRC has hinted that there will likely be increased scrutiny of the U.S. reactor fleet, there have been no indications that any pending or current operating licenses will be revoked. Despite the disaster in Japan, as well as recent near misses at reactors in Nebraska (threatened by floods) and the nuclear weapons lab at Los Alamos (endangered by a raging wildfire), it's still business as usual for the nuclear power industry. 

 

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