What is the true cost of nuclear energy?

I wish I had an objective assessment of the true cost of electricity from nuclear power in Ontario (in Ontario because that's where I live). I haven't seen a careful analysis of that from either friends or foes of nuclear energy.

Here's an example of a slightly hidden subsidy and an example of why it's important to look at the numbers when you read the news.

Star reporter Tyler Hamilton wrote an article for today's edition pointing out significant investment losses in an account whose funds are set aside for the decommissioning of nuclear plants. He mentioned another account whose funds are set aside for managing nuclear fuel waste. Both funds were created five years ago in 2003 and Ontario Power Generation pays into them annually.

The fund managing waste fuel, currently valued at $4.792 billion, has grown. The province guarantees it a rate of return of 3.25 per cent annually above inflation.

The good news, I suppose, is that the money for managing waste fuel has not been lost in the recent stock market meltdown. What I want to point out is that over the last five years the yield on the long term (30 y) Canadian government real return bond has ranged from 1.44% to 2.79% with an average of 1.95%. Most recently it has been around 2.5%. But the province of Ontario has guaranteed a rate of return of 3.25% above inflation.

That's a subsidy.

Now, I'm not accusing anybody of trying to hide a subsidy. In 2003 the long term real return bond yield ranged from 2.8% to 3.2% so it's possible 3.25% above inflation was a fair guarantee for the initial deposit of funds into the waste fuel account. But payments in subsequent years have benefited from an above-market rate of return and that's where the subsidy lies.

What's so bad about subsidies? Well, Ontario has a nascent renewable energy industry. If that industry has to compete with subsidies to nuclear energy and subsidies to fossil fuel energy (i.e. being able to emit greenhouse gases for free), it will have a hard time growing -- which is the case! To counter that, the government of Ontario is subsidizing renewable energy and energy conservation, but it takes extra work to figure out where all the counter-balancing subsidies have to be applied and in what amounts.