France's nuke power poster child has a money melt-down

http://www.freepress.org/columns/display/7/2009/1732


France's nuke power poster child has a money melt-down
March 19, 2009

The myth of a successful nuclear power industry in France has melted
into financial chaos.

With it dies the corporate-hyped poster child for a "nuclear
renaissance" of new reactor construction that is drowning in red ink
and radioactive waste.

Areva, France's nationally-owned corporate atomic façade, has plunged
into a deep financial crisis led by a devastating shortage of cash.

Electricite de France, the French national utility, has been raided by
European Union officials charging that its price-fixing may be
undermining competition throughout the continent.

Delays and cost overruns continue to escalate at Areva's catastrophic
Olkiluoto reactor construction project in Finland. Areva has admitted
to a $2.2 billion, or 55%, cost increase in the Finnish building site
after three and a half years. The Flamanville project---the only one
now being built in France---is already over $1 billion more expensive
than projected after a single year under construction.

In 2008, France's nuclear power output dropped 0.1%, while wind
generation rose more than 37%.

Attempts to build new French reactors in the US are meeting stiffened
resistance.

And the definitive failure of America's Yucca Mountain nuke waste dump
mirrors France's parallel inability to deal with its own radioactive
trash.

Widely portrayed as the model of corporate success, reactor-builder
Areva is desperately short of money. As it begs a bailout from its
dominant owner, the French government, Areva's mismanagement and
overextension in promoting and building new reactors has wrecked its
image in worldwide capital markets. According to Mycle Schneider,
Paris-based author of "Nuclear Power in France---Beyond the Myth,"
Areva shares have plunged by over 60% since June 2008, twice as much
as the CAC40, the standard indicator of the 40 largest French
companies on the stock market.

Areva's hyper-active public relations department has made much of
recent orders to build two new reactors in China. But it's now begging
France's taxpayers for some $4 billion in short term bailout money,
and may need still another $6 billion more to pay for investments in
uranium mines, fuel production and heavy manufacturing ventures.

Areva will also need more than 2 billion Euros (about US$3 billion) to
buy back shares in its nuke reactor unit after Germany's Siemens
pulled out of a joint venture. There have been significant, highly-
publicized bumps in the Chinese transaction. And Areva may now be
forced to pony up billions more in penalties from delays and overruns
at its reactor construction fiasco in Finland.

The Finnish government will also have to meet additional costs from
trading in carbon emissions because it had firmly counted on the new
reactor to supply "green" power as of this year. Olkiluoto is now not
expected to deliver electricity before 2012.

Areva's woes have caused French President Nicolas Sarkozy to face
possible job cuts and asset sales at the government-controlled energy
giant, which was formed in 2001.

China's two-reactor order includes a promise from Areva to supply up
to 20 years worth of nuclear fuel. Areva also hopes to sell at least
seven reactors in the US, but these plans are meeting stiff
resistance. Complex ownership and licensing battles have erupted at
Constellation Energy, meant to be the conduit for two new reactors in
Maryland. Ratepayer revolts in Florida and Missouri have arisen over
plans to force the public to pay for new reactors as they are being
built. Electric rates in the Sunshine State have already begun to soar
due to proposed nuke construction, prompting an angry grassroots
upheaval.

The potential American reactor market has also been bloodied by the
definitive disposal of the proposed high level dump at Yucca Mountain,
Nevada. After decades as the centerpiece of America's "solution" to
the nuke waste problem, with at least $10 billion spent on it, Yucca's
failure underscores France's own waste dilemma.

The French reprocessing center at La Hague has come under widespread
attack for its massive radiation discharges into the English Channel
and surrounding atmosphere. The plant has produced over nine thousand
containers of extremely high level wastes with no safe place to go.
Its by-product of plutonium has complicated global attempts to curb
the spread of radioactive materials capable of being turned into
nuclear bombs.

In addition to the reprocessing wastes, without a permanent repository
of its own, France's 58 reactors have also accumulated over ten
thousand tons of spent fuel rods, as the 104 units in the US
constantly generate.

Areva says it hopes to raise cash by selling part of a uranium
enrichment plant under construction in southern France to Japan's
Kansai Electric. Other asset sales may be hampered by slumping market
values. Areva also hopes to partner with US weapons builder Northrop
Grumman to build heavy reactor equipment in Virginia.

But on March 11, European Union regulators raided EdF offices because
"suspected illegal conduct may include actions to raise prices on the
French wholesale electricity market." The stunning action against the
massive conglomerate, which is 84.8% owned by the French government,
could result in huge fines.

The EU says EdF may have manipulated prices and redrawn contracts for
some 60 key corporate users. Nuke backers constantly tout that close
to 80% of France's electricity comes from reactors whose power flows
through EdF. But Areva's cash shortage and EdF's price-fixing scandal
underscore the huge financial imbalances imposed by building and
operating atomic reactors. According to Schneider, "EDF's shares
dropped by over 40% during the last six months alone. When management
in February 2009 announced that larger than expected charges had
corroded profits, share value dropped by 7% overnight and continued to
fall since. The EDF share now stands 12% below the value when it was
first introduced to the stock market in November 2005. Not really a
brilliant investment."

EdF and Areva are at the core of what has been labeled as the global
"nuclear renaissance." Their escalating money problems underscore an
epic failure that has been a significant factor in the current global
economic crisis. After a half- century of massive government subsidies
in the US, UK, France and elsewhere, atomic energy still staggers
under an unsustainable load of high construction costs and
uncompetitive prices for the electricity it generates.

EdF's recent $17.5 billion takeover of nuke utility British Energy
came with a warning from EdF officials that England's commitment to
wind turbines could undermine the future of nuclear power. The
statement evoked widespread astonishment and scorn from the
environmental community.

In the financial community, concerns still linger over the half-
trillion-dollar (and still climbing) cost of the 1986 explosion at
Chernobyl. The instant $900 million conversion of the "asset" at Three
Mile Island into an epic liability occurred 30 years ago this month.
(The conversion of Michigan's Fermi I reactor at Monroe into a $100
million molten mess happened October 5, 1966).

The costs from the earthquake last year that crippled seven reactors
at Japan's Kashiwazaki are still rising. The failure of Yucca Mountain
has converted billions of dollars in utility and taxpayer investments
into pure waste. Growing grassroots movements in Vermont and elsewhere
threaten to cut off license extensions and shut American reactors at
which decommissioning funds have been slashed by the collapse of US
investment funds.

The argument that atomic energy provides an answer for global warming
turned to a deep embarrassment in France when reactors were forced to
shut during the summer heat because they were raising river
temperatures far beyond legal limits. In another case, a reactor
containment had to be sprayed in order to cool it back to operational
temperatures. Similar shutdowns came at a reactor in Alabama.

But as massive cost overruns and delays continue to escalate at
Areva's showpiece reactor construction fiasco in Finland, the industry
clamors for unlimited access to taxpayer funds. The surging stream of
atomic failure continues to guarantee that private investors will
instead favor true green technologies like solar, wind and
efficiency.

Thus in France, as elsewhere, the "nuclear renaissance" may be still-
born. In 2007, world nuclear electricity generation dropped by an
unprecedented 2%. According to Schneider, in 2008, for the first time
in nuclear power history, no new reactor was connected to the grid
anywhere on Earth.

As Schneider's "Nuclear Power" in France---Beyond the Myth" points
out, after 35 years of nuclear power development, the French "nuclear
dreamland" gets only 16% of its final energy from nuclear power.
Commissioned by the Greens-EFA Group in the European Parliament
(Brussels, December, 2008) , Schneider's report (http://www.greens-
efa.org/cms/topics/rubrik/6/6659.energy@xxxxxx) shows that despite its
huge nuclear commitment, almost half of France's energy consumption
still comes from oil.

In fact, says Schneider, "the wasteful nature of the French economy
and households leads to a higher per capita consumption of oil than in
Germany, Italy, the UK or even the EU on average.

"Those who think that nuclear power would be a cheap and clean way to
render the US less dependent on oil should have a close look at the
French record."

At the French heart of its "renaissance," the nuclear clock is winding
down, not up. Time is running out for a radioactive technology that,
after fifty years, remains unable to muster a sustainable level of
private financing, shows no real promise of ever paying for itself,
and has now plunged into deepening financial chaos.

--
Harvey Wasserman is author of "Solartopia! Our Green-Powered
Earth" (http://solartopia.org). He is Senior Editor of http://freepress.org,
where this article first appeared.
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