Modern Costing and Regulation Debates: From Opec 1 Onwards

Abstract

Construction of the first nuclear power plant in the US, at Shippingport, was initiated by President Eisenhower on Labor Day 1954. Some three years later, even before it came into operation—in a little remembered article in the AER papers and proceedings issue of May 1957 entitled “The Economics of Nuclear Power”—Richard Ty-bout presented both “optimistic” and “pessimistic” projections of cost estimates regarding nuclear power based upon and adapted from a 1956 JCAE background report. These included projected cost estimates for conventional and nuclear generated electricity in terms of mills per kilowatt hour [kwh] from 1960 to 1980. Tybout maintained that on an “optimistic” projection, by 1975 electricity from nuclear plants would be 0.5 mills cheaper to produce per kwh than conventionally produced power, that is 5.4 mills per kwh for nuclear as against 5.9 for conventional power. Even on the “pessimistic” projection for nuclear power, the JCAE figures Tybout provided estimated that by 1980, nuclear power would be almost as cheap to produce as conventional power, 5.9 as against 5.8 mills per kwh respectively. the nearest projected figures, for 1960, showed conventional power costing 6.1 mills per kwh as against a projected range of 8.5 (optimistic) to 10.3 (pessimistic) mills per kwh for nuclear power (Tybout, 1957, pp. 352–53). According to Tybout, nuclear cost reductions were “expected to come from operating experience and external economies” (1957, p. 353). These estimates, however, excluded the “subsidy in nuclear fuel prices” and the “insurance cost for nuclear plants” (1975, pp. 354–55).