From AEC to NRC: A Paradigm Shift in U.S. Nuclear Energy Regulation and its Consequences for the Industry

Abstract: Concerns over energy security and climate change are pushing countries to reconsider their stances on nuclear energy and plan new buildouts. The success of nuclear energy has historically varied greatly, depending to a great extent on the legal and regulatory environment. With the view that discerning which theory of regulatory impact is operative in the nuclear industry is important in developing an understanding of how the industry will behave in different regulatory contexts, this paper aims to ascertain the effect that the replacement of the Atomic Energy Commission by the Nuclear Regulatory Commission had on the U.S. nuclear industry. This is done by measuring the difference in log Tobin's Q and operating profit margins after depreciation before vs after the change of regulator, using data from the years 1966 through 1977. Both difference-in-differences and demeaned synthetic control methods are employed. The effect on log Tobin's Q is found to be either null or negative while a functioning model for operating margins cannot be identified with the data and methods used. The Granger test indicates some possibility of treatment anticipation but running the difference-in-differences model with earlier treatment years reveals that this is unlikely to account for the Granger test results.