Falling Federal Support Dims Nuclear Industry’s Future : Budget: Coalition of environmentalists and fiscal conservatives has pushed Congress to slash a number of programs.

When the promise of nuclear power glowed bright in the 1950s, General Atomics spared no expense on its futuristic research campus in San Diego.

But the lavishly landscaped facility, perched atop a mesa just beyond eyesight of travelers on Interstate 5, is facing a harsh reality today: The federal government, for decades a reliable financial partner, is taking a historic turn against nuclear power.

Although overshadowed this year by such issues as welfare and Medicare reform, federal assistance for nuclear research is undergoing what could be a fatal battering by the Republican Congress.

Despite the nuclear industry’s decline--through years of attacks by environmentalists and economic losses--Congress appropriated $203 million as recently as last year for nuclear fission research and $366 million for fusion research.

This year Congress has slashed such support by more than one-third and ordered the shutdown of facilities that were once a showcase of American technology.

Since the first nuclear reactor was built in 1942, the federal government has poured as much as $30 billion into the technology, one of the biggest gambles on technology in history. Except for advocates in the nuclear power industry, the conventional wisdom is that recent research has yielded scant economic benefit and that the time has come to cut federal losses.

An unlikely coalition of environmentalists and fiscal conservatives formed this year to kill off nuclear power research programs that had become entrenched in the federal budget for decades.

“Some of these nuclear research programs were nothing more than corporate and white-coat welfare,” said Rep. Dana Rohrabacher (R-Huntington Beach), chairman of the House Science Committee’s subcommittee on energy and the environment. “It was a big subsidized community of elite scientists and physicists.”

In legislation this year, for example, Congress has canceled General Atomics’ program for helium-cooled reactors--which the company says are safer and more efficient than conventional water-cooled reactors. The federal government has poured $1 billion into the program since the 1960s and General Atomics has put in another $1 billion, according to company Vice Chairman Linden Blue.

The only major nuclear fission research program still sponsored by the Energy Department is the advanced light-water reactor, which was also scaled back and is being targeted for an attack next year by critics who say that it is economically wasteful. In recent years, Congress has shut down the nation’s last two breeder reactors, a controversial technology that produces more radioactive fuel than it burns.

Similar reductions have hit fusion research, which has received about $9 billion in funding over the last 40 years. Projections that the technology would take another $10 billion and 40 years before even a prototype plant could be built left GOP conservatives convinced that the program was too speculative. Proponents say fusion energy eventually could be a clean and inexpensive energy source.

The cutbacks for fusion research, which left just $244 million in fiscal 1996, may leave enough to continue operations at the major fusion research facilities, located at the Massachusetts Institute of Technology, Princeton University and General Atomics, congressional sources said.

Rohrabacher vowed to cut the fusion budget even more next year “unless it starts showing some results.” In contrast, Rohrabacher praised progress made in solar energy research and vowed to continue strong funding for the technology.

The long decline for nuclear power began in the late 1970s, when predictions that the price of oil would rise to $100 per barrel proved untrue. In 1979, the near meltdown at the Three Mile Island nuclear plant in Pennsylvania alarmed the public over the potential hazards of nuclear power.

As a result, the licensing of nuclear plants, as well as resolving how spent nuclear fuel should be stored, turned into major political battles. Utilities and their customers have paid dearly.

Wall Street investors, meanwhile, came to disdain electric utilities with heavy reliance on nuclear plants. Today, shares in nuclear utilities trade at roughly a 15% discount compared to utilities without nuclear plants, said Douglas Christopher, a securities analyst at Crowell Weedon & Co.

Even Energy Department officials, traditionally among the biggest boosters of nuclear power, are reluctant to predict that another nuclear reactor will ever be built in this country.

Although the investment in nuclear energy has been one of the biggest technology bets laid down by the federal government since World War II, nobody can agree on exactly how much taxpayers have spent.

The figure is put at roughly $30 billion by congressional experts and groups such as the Natural Resources Defense Council. Experts at the Energy Department guess that spending was $10 billion to $20 billion. Industry officials insist that only $3.7 billion was invested, but they include only direct spending on commercial, water-cooled reactors.

Only now is the federal government owning up to the fact that much of the investment failed. Terry R. Lash, the Energy Department’s director of nuclear energy, admitted in a letter to Congress this year that the 30 years of funding for the helium-cooled reactor program were “without tangible benefit.”

Anti-nuclear critics, allied with the GOP, see that program as a vulnerable target.

“If General Atomics thinks this research is commercially relevant, then it should pay for it out of its own pocket,” said Jim Adams of the Safe Energy Communication Council. “Why should taxpayers pay for it?”

Blue, the General Atomics executive, calls the cutbacks “misguided,” saying that they reflect a fundamentally anti-nuclear bias by top Energy Department officials. As a result of the cuts, General Atomics is shuttering its facility to produce a new kind of fuel pellet, he said. The firm already has laid off dozens of scientists and engineers.

Nuclear proponents fear that the United States is throwing in the towel at exactly the wrong time--just as Asian nations embark on ambitious programs to increase their reliance on nuclear plants.

Nuclear power generates 21% of U.S. electricity and the 110 nuclear plants spread across the nation are operating more efficiently and more safely than before, said Phillip Bayne, president of the Nuclear Energy Institute in Washington.

Bayne said the industry is on the threshold of developing standard, pre-licensed plants, which would be far more attractive to utilities. If the federal government cuts its support, leadership of the industry, which accounts for $17 billion of annual exports, will pass to Japan, South Korea and Taiwan, he said.

“We need to have the nuclear option,” Bayne said. “We need to do more research on reactors and--if we don’t do it--then 30 years from now we will not have a viable economy.”

General Atomics vows that it will not drop its helium-cooled technology. It is continuing to work on a deal with Russia to build a new reactor, despite opposition by the Energy Department. The privately held firm also says it will relocate research on the technology to its operations in Europe.

General Electric Co. officials, meanwhile, say that their newest generation of advanced reactors will be safer, more efficient and create less radioactive waste.

The firm is supplying two reactors to new generating plants in Japan and is holding out hope that U.S. utilities eventually will place orders, said Lynn Wallis, a GE spokesman.

But Paul Parshley, a utilities analyst with the Wall Street investment firm Lehman Bros. Inc., said the United States suffers from a surplus of electricity-generating capacity, which may only grow worse as the utility industry is deregulated.

The promise of standard nuclear plant designs and one-stop licensing, while attractive in theory, is untested, he said. Were a utility to suddenly announce an order for a nuclear power plant today, Parshley said, the first reaction of stock traders would be to dump shares in the company as fast as possible.

“If things keep going as they are,” Parshley said, “there will not be new plant orders.”