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How Tax Codes Negatively Distort Our Energy Choices Tax codes are often written to support national goals, above and beyond mere revenue generation. This is often called "social engineering" although an engineer might not recognize it as such - By Joseph Somsel - The U.S. tax code is a marvelous and impressive intellectual structure. As an engineer I took a business class in taxation for corporations while getting my MBA. Engineering is the art of extracting utility from first principles of science and combining it with hard-won practical experience. I found, to my frustration, that taxation is not like that. Taxes are whatever Congress and the IRS say they are, logic or principle be damned. "The power to tax is the power to destroy." - Chief Justice John Marshall

How Tax Codes Negatively Distort Our Energy Choices Tax codes are often written to support national goals, above and beyond mere revenue generation. This is often called "social engineering" although an engineer might not recognize it as such - By Joseph Somsel - The U.S. tax code is a marvelous and impressive intellectual structure. As an engineer I took a business class in taxation for corporations while getting my MBA. Engineering is the art of extracting utility from first principles of science and combining it with hard-won practical experience. I found, to my frustration, that taxation is not like that. Taxes are whatever Congress and the IRS say they are, logic or principle be damned. "The power to tax is the power to destroy." - Chief Justice John Marshall

"The Oswego County Legislature has approved a one-year tax agreement with Constellation Energy Nuclear Group for the Nine Mile Point Unit I plant. The tax agreement nearly triples the amount of taxes the company would pay Oswego County, the town of Scriba and the Oswego school district. The company this year paid $4 million through its payment in lieu of taxes, or PILOT, and would pay $11 million in 2011 with the tax agreement. The county receives $1,489,000 this year and would receive $4,096,400 under the tax agreement."

The Utah Supreme Court on Friday denied EnergySolutions Inc. two big tax deductions the company says it deserves. The five justices, in a decision penned by Chief Justice Christine Durham, agreed with a lower court ruling that clarified the Salt Lake City-based nuclear waste company's obligations under a 2001 tax. In 2006, the low-level waste site in Tooele County expanded dramatically and changed its name to EnergySolutions. "The Radioactive Waste Tax Act and its amended version, the Radioactive Waste Facility Tax Act, are unambiguous in requiring the inclusion of all payments received by Envirocare for the receipt and disposal of radioactive waste in its gross receipts for tax purposes," Durham wrote. "The statute does not permit Envirocare to deduct from its gross receipts amounts it bills customers for use either in paying its Waste Tax or in meeting its contractual obligations to Tooele County."

"* Nuclear producers say might study legal ways to fight tax * Eye energy plan in August for new line on life extensions German utilities said on Thursday they might sue the government over a planned tax on nuclear power production after a meeting in Berlin on Wednesday failed to appease them. "We will look into possible legal steps if the tax is imposed without any compensation," a spokesman for E.ON (EONGn.DE) said. A spokesman for RWE (RWEG.DE) said it would consider legal steps, once the tax plan became more concrete, not least because stock market regulations would oblige the company to do so. "But, currently, it does not make sense to issue threats as the plans have not been spelled out in detail," he said."

Review of accelerated depreciation, investment tax credit, and production tax credit provisions of Senator Kerry's and Senator Lieberman's American Power Act In May 2010, Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) released a discussion version of The American Power Act (henceforth referred to as the "K-L Bill" or the "APA"). The K-L Bill as proposed is a wide-ranging piece of energy legislation that includes a number of new subsidies to nuclear power. This memo evaluates three of those nuclear provisions, describing how they work and estimating their subsidy value to recipients in the nuclear power sector: * 5-year accelerated depreciation period for new nuclear power plants (section 1121). * Investment tax credit (ITC) for nuclear power facilities (section 1122) and the related grants for qualified nuclear power facility expenditures in lieu of tax credits (section 1126). * Modification of credit for production from advanced nuclear power facilities (section 1124). The K-L Bill includes a number of subsidies to nuclear power that were not evaluated in this memo, and as a result this memo should be viewed as one part of a larger picture of how federal subsidies distort US energy markets and fuel choice.1 The values presented

"Breaks Under Kerry-Lieberman Wipe Out Risk for Utilities Already Benefiting From Massive Loan Guarantees Earth Track Analysis Finds That Just Two of the Subsidies Add Another $1.3 Billion to $3 Billion in Tax Breaks Per Reactor; May Make It More Likely Taxpayers Will Face Downside Risk. Washington, DC -- The nuclear industry could end up facing no risk under massive tax break subsidies in the Kerry-Lieberman climate bill, according to an important new analysis conducted for Friends of the Earth by the research organization Earth Track. These tax breaks totaling $9.7 billion to $57.3 billion (depending on the type and number of reactors) would come on top of the Kerry-Lieberman measure's lucrative $35.5 billion addition to the more than $22.5 billion in loan guarantees already slated for nuclear power. Friends of the Earth President Erich Pica said: "Doling out an additional $1.3-$3 billion in tax breaks per new reactor means the industry would be at the table playing almost entirely with taxpayer money. Industry will have little to lose when a reactor goes belly up. While taxpayers are bankrolling the industry's nuclear gamble they would share in none of the reactor's financial returns. In fact, all taxpayers will receive if the reactors are built is responsibility for disposing of the waste. By contrast, investors stand to make billions with no risk should their reactor gambit goes belly up and enter bankruptcy." "

The largest tax break given under city policies in effect for several years might have to be revised now that USEC Inc. and its partner and contractors have begun laying off employees, city officials said last week. The property tax break, valued at up to $5 million over a 10-year period, was approved about a year ago -- before USEC ran into trouble getting a big loan guarantee from the U.S. Department of Energy. The $2 billion guarantee would have been used for work on USEC's American Centrifuge Program.

The largest tax break given under city policies in effect for several years might have to be revised now that USEC Inc. and its partner and contractors have begun laying off employees, city officials said last week. The property tax break, valued at up to $5 million over a 10-year period, was approved about a year ago -- before USEC ran into trouble getting a big loan guarantee from the U.S. Department of Energy. The $2 billion guarantee would have been used for work on USEC's American Centrifuge Program.

The Vermont Supreme Court will hear arguments today on how much money the state owes the former owner of the Vermont Yankee nuclear plant in interest on a tax refund stemming from contributions the former owner made to the plant's decommissioning fund in 1992. The issue involves the 1992 tax return filed by Vermont Yankee Nuclear Power Corp., according to Danforth Cardozo, an attorney with the Vermont Department of Taxes. Cardozo said that the state has already given Vermont Yankee Nuclear Power Corp. $800,000 in a tax refund in 2005, and the company is seeking interest dating back to 1992.

"Namibia's Chamber of Mines, which represents the mining industry in the southern African country, is concerned that power and water supply shortages and royalty tax legislation could hamper investment. Mike Leech, president of the industry body in one of the world's top uranium producers, said a royalty tax passed at the end of 2008 would "increase rather than reduce investor risk". "(The tax) is likely ... to make it harder for exploration companies to get projects past the credit committees of the banking institutions they will have to raise the money from," he said in an annual review the chamber published last week."

President Barack Obama outlined a budget plan Thursday that would end $26 billion in oil and gas industry tax breaks, point to a new direction for dealing with nuclear waste and shift government aggressively toward helping to develop renewable energy sources. Obama called the tax break to the oil and gas industry "unjustifiable loopholes" in the tax system that in most cases other companies do not get. The proposed budget, details of which were released Thursday, calls for abandoning the decades-old Yucca Mountain nuclear waste project in Nevada and begin the search for another answer to disposing thousands of tons of used reactor fuel now kept at power plants in 31 states. It also would end government subsidies to the nuclear industry to help them certify and plan new nuclear power plants, cutting the program from $178 million to $20 million.

"The La Salle County property tax review board ruled the equalized assessment value for Exelon Nuclear's generating plant south of Seneca is $525 million. J. Bradley Fewell, legal counsel for Exelon Nuclear, issued a written statement Friday saying the assessed value "will increase the station's property taxes to approximately $21 million per year, a 75 percent increase from what the station paid in 2009." "We will evaluate all options available to us, including an appeal to the Illinois Property Tax Appeal Board," Fewell said."

"Germany's government has proposed a new nuclear fuel tax as part of a wider austerity package, without linking this explicitly to the expected extension of nuclear run-times. According to a statement posted on the government's website, extra profits generated by nuclear plant operators in the wake of higher power prices because of extra CO2 certificates justifies the next tax, which also will contribute to financing nuclear waste storage solutions. From 2011, the government expects Eur2.3 billion ($2.8 billion) a year until 2014 from nuclear plant operators through the planned new measures. E.ON, RWE, EnBW and Vattenfall Europe, which run Germany's 17 operational reactors, are hoping their plants' life spans will be extended beyond the start of the next decade, when nuclear power should be phased out, according to a still valid law. "

A city board endorsed a property tax abatement on Tuesday that could be worth $5 million. It's the largest tax break approved by the Oak Ridge Industrial Development Board since the abatement policies -- designed to lure new businesses to town -- went into effect several years ago.

Nuclear energy sounds like the answer to this country's energy problems, but it isn't. For decades, nuclear power has been peddled as being an efficient and inexpensive energy. In the '50s, nuclear advocates loudly promised the world that atomic power would provide electricity "too cheap to meter." That promise dissolved with the reality of reactor construction costs in the 1970s and 1980s. But the price to consumers isn't limited to just the cost of the power usage that is listed on your monthly electricity bill. It goes way beyond that. Nuclear power is not cheap. Since the very beginning the government has been heaping subsidies, which come from our tax dollars, into the building and running of nuclear plants. But these cash payments and tax breaks are not the most valuable subsidies that they receive. The most important subsidies that the investors and owners can receive come from shifting the risks onto the taxpayers or the surrounding area's population.

Nuclear energy sounds like the answer to this country's energy problems, but it isn't. For decades, nuclear power has been peddled as being an efficient and inexpensive energy. In the '50s, nuclear advocates loudly promised the world that atomic power would provide electricity "too cheap to meter." That promise dissolved with the reality of reactor construction costs in the 1970s and 1980s. But the price to consumers isn't limited to just the cost of the power usage that is listed on your monthly electricity bill. It goes way beyond that. Nuclear power is not cheap. Since the very beginning the government has been heaping subsidies, which come from our tax dollars, into the building and running of nuclear plants. But these cash payments and tax breaks are not the most valuable subsidies that they receive. The most important subsidies that the investors and owners can receive come from shifting the risks onto the taxpayers or the surrounding area's population.

Construction of a new Fermi 3 nuclear power plant by DTE Energy would boost jobs and tax base in Monroe County, but could harm the state's overall economy in the long run, a former federal Nuclear Regulatory Commissioner said Thursday. "The tax benefits, in particular, are uncontestable and the local job benefits as well," said Peter Bradford, who served on the NRC from 1977-82. But he said the resulting rise in electric costs could cause firms to flee the state and discourage others from settling in Michigan, ultimately eroding the state's overall tax base. "No state ever created a net increase in jobs by raising electric rates to commercial and industrial customers more than necessary to maintain supply," he said. "A new nuclear plant in Michigan also will do nothing to further the success of hybrid automobiles."

THE Opposition's desire to embrace nuclear power in the absence of an emissions trading scheme or carbon tax would result in electricity price rises of between 10 per cent and 33 per cent, according to estimates by the Howard government's nuclear energy expert, Ziggy Switkowski. In a report for John Howard in 2006, Dr Switkowski found nuclear power would never be commercially viable unless fossil fuel-generated electricity was made more expensive using an ETS or carbon tax. This resulted in Mr Howard embracing an emissions trading scheme as a way to reduce greenhouse gases while keeping open the nuclear option for the future.

THE Opposition's desire to embrace nuclear power in the absence of an emissions trading scheme or carbon tax would result in electricity price rises of between 10 per cent and 33 per cent, according to estimates by the Howard government's nuclear energy expert, Ziggy Switkowski. In a report for John Howard in 2006, Dr Switkowski found nuclear power would never be commercially viable unless fossil fuel-generated electricity was made more expensive using an ETS or carbon tax. This resulted in Mr Howard embracing an emissions trading scheme as a way to reduce greenhouse gases while keeping open the nuclear option for the future.

In announcing its application to extend the life of Diablo Canyon nuclear reactors until 2045, PG&E emphasized the taxes it contributes to the local economy. However, there is a long list of unresolved safety and security issues that were not acknowledged. Storing radioactive waste next to two earthquake faults presents a permanent hazard. Neither the faults nor the waste will ever go away. The Nuclear Regulatory Commission and Homeland Security declare that all nuclear plants are targets of terrorists, and the San Luis Obispo Mothers for Peace has a lawsuit pending in federal court regarding the vulnerability of the wastes stored at Diablo. In addition, the NRC is currently investigating why and how Diablo operated for a full 18 months with a defect in the controls of the system designed to flood the Unit 2 reactor in the event of an accident or sabotage causing a loss of essential cooling water. Diablo property taxes do not compensate for the safety hazards inherent in the nuclear reactors and waste storage.

In announcing its application to extend the life of Diablo Canyon nuclear reactors until 2045, PG&E emphasized the taxes it contributes to the local economy. However, there is a long list of unresolved safety and security issues that were not acknowledged. Storing radioactive waste next to two earthquake faults presents a permanent hazard. Neither the faults nor the waste will ever go away. The Nuclear Regulatory Commission and Homeland Security declare that all nuclear plants are targets of terrorists, and the San Luis Obispo Mothers for Peace has a lawsuit pending in federal court regarding the vulnerability of the wastes stored at Diablo. In addition, the NRC is currently investigating why and how Diablo operated for a full 18 months with a defect in the controls of the system designed to flood the Unit 2 reactor in the event of an accident or sabotage causing a loss of essential cooling water. Diablo property taxes do not compensate for the safety hazards inherent in the nuclear reactors and waste storage.

The Government is considering fresh tax breaks for Britain's nuclear power industry that could smooth the way for the construction of a new generation of UK reactors, The Times has learnt. Whitehall insiders have told The Times that officials at the Department for Energy and Climate Change have been studying the possibility of an exemption for nuclear electricity from the climate change levy, a tax on industrial energy consumption that was created to boost energy efficiency. The levy, which was introduced in 2001, raises an estimated £1 billion a year for the Treasury. Suppliers pay the levy on electricity provided to businesses to Customs & Excise and then pass on the costs to customers.

The Government is considering fresh tax breaks for Britain's nuclear power industry that could smooth the way for the construction of a new generation of UK reactors, The Times has learnt. Whitehall insiders have told The Times that officials at the Department for Energy and Climate Change have been studying the possibility of an exemption for nuclear electricity from the climate change levy, a tax on industrial energy consumption that was created to boost energy efficiency. The levy, which was introduced in 2001, raises an estimated £1 billion a year for the Treasury. Suppliers pay the levy on electricity provided to businesses to Customs & Excise and then pass on the costs to customers.

The Seabrook Station nuclear plant pays almost half of the property taxes in town, but the company that owns the plant is arguing that its $15.3 million tax bill is simply way too much. Florida Power and Light, the company that owns the major portion of the Seabrook nuclear power plant, recently filed an abatement appeal with selectmen over the new taxable value of its facility. According to Seabrook Town Manager Barry Brenner, the town received Florida Power and Light's appeal of the town's new $1.65 billion assessment of the plant on Monday, making the deadline for such abatement appeals. The prior agreed-upon worth of the plant was $1.043 billion, meaning the new value represents an increase of $607 million.

"New Subsidies for Constructing Reactors Would Shift Financial Risks to Taxpayers Massive government subsidies proposed in two pending Senate climate and energy bills would shift the risk of financing and constructing new nuclear reactors from the industry to U.S. taxpayers, according to an analysis released today by the Union of Concerned Scientists (UCS). Such subsidies would disadvantage more cost-effective, less risky approaches to curbing the heat-trapping emissions that cause global warming, including energy efficiency programs and renewable energy technologies, the group said. The UCS analysis is the first to quantify the most significant subsidies for the nuclear industry proposed in the American Power Act (APA) and the American Clean Energy Leadership Act (ACELA). Those subsidies include expanded federal loan guarantees, reduced accelerated depreciation periods, a 10 percent investment tax credit, expanded production tax credits, and expanded federal regulatory risk insurance. Assuming eight new reactors are built over the next 15 years, UCS found those subsidies would amount to approximately $40 billion, or $5 billion per reactor, slightly more than half of what a typical 1,100 megawatt reactor would cost to build today. If the industry is able to secure federal approval to build the 31 new reactors it is expected to request, UCS found that total proposed subsidies could be worth from $65 billion to as much as $147 billion."