PEST(EL) in the Nuclear Industry – The Political (part 2)

Last week I discussed some of the basic political landscape affecting the nuclear industry. This week I’m looking at the myriad agencies that affect the industry. I had tried to start a blog post series last fall on the alphabet soup of agencies out there and started out with some descriptions of DOE, NRC, and IAEA. Here, I’m just going to talk about the political aspects of these agencies.

Department of Energy (DOE)

Much of the DOE’s budget is dedicated to managing the national lab system which is more or less dedicated to military rather than commercial uses of nuclear power. This confounding confuses the public and works to help anti-nuclear organizations make claims relative to subsidies and military support.

Some funding is provided to DOE to research various areas of interest to the commercial nuclear industry. However, this funding is erratic and frequently changes focus. This inconsistency makes it difficult to manage the long lead times research in the industry requires.

Since 2005, loan guarantees have been offered to the industry through the DOE. Unlike loan guarantees to renewable energy which do not require any up front capital from the recipient, the nuclear loan guarantees require the recipient to make a significant non-refundable “down payment” to the government to cover the potential risk. These payments can be a significant fraction of the total plant cost (8-10%).

Nuclear Regulatory Commission (NRC)

Remembering that “L” of PESTEL is Legal framework, which gets into the details of regulation, the NRC will appear in that post as well. This time around, we’re going to concentrate on the political.

Up until recently, the NRC was pretty non-political. They have been pretty intrusive regulators, but the commission was set up to be pretty balanced between the two political parties and the laws regarding the chairman and the commissioners were intended to keep politics out of the equation. However, the current chairman (Dr. Jaczko) was chosen as a part of a political deal between President Obama and Senator Reid of Nevada. I’ve already written about his actions here.

Dr. Jaczko has essentially “pocket-vetoed” the review of the Yucca Mountain submittal by the NRC. The commission is split 2-2 (with one abstention) regarding the withdrawal of that review. By continuing to hold the vote open at the NRC, he has created an opportunity for him to unilaterally act to end the review by withholding any funds.

Dr. Jaczko has continued to try to force his political agenda on the rest of the commission. Fortunately, the commission arrangement does not allow him unilateral policy decisions. He must get at least two other commissioners to vote with him in order to move forward. As of this writing, all of the remaining four commissioners voted against his stated wish to complete reviews in 90 days and force implementation of the Fukushima task force within 5 years and have stated a preference for a more deliberate pace.

This repudiation of the chairman’s stance may be as much about the other commissioners making it clear to the president that the current state of affairs at the NRC is no longer acceptable.

International Atomic Energy Agency (IAEA)

With the events at Fukushima, there have been calls for increased authority in an international agency. The IAEA is clearly the agency that would gain that power.

I believe this will not happen. It would require each nation to give up power over its own electricity supply. While many nations import some energy from neighboring countries, I cannot imagine any country allowing an outside agency to have significant influence over the such a vital sector of their economy.

The more likely scenario is that those countries that are just beginning to develop commercial nuclear power will be “encouraged” to allow the IAEA a larger role in the development of regulation and oversight. Perhaps even to have the IAEA work side-by-side with their fledgling regulatory authority.


It looks like there will be third week of Political in my PESTEL analysis. After that, I promise to move on to the first E (Economics).