Is What’s Good for Solyndra Good for Nukes, too? Just askin’….
April 2, 2012
If we are to believe the Tea Party congress, government backed loans to renewable energy projects are evil intrusions into the free market system, with the government “picking winners” among new technologies. This was the gist of the accusations that were made when solar panel fabricator Solyndra, the beneficiary of government loans, went bankrupt. It is the red herring argument that is made against renewal of the Production Tax Credit for Wind and other forms of Renewable Energy.
Yet, the government has been moving forward with similar loan guarantees for a large nuclear project in Georgia, loans 15 times greater than those given to Solyndra, and with much higher level of risk. Recently, however, there have been signs that the White House, stung by criticisms of the Solyndra loan, may have begun a more critical scrutiny of the proposed nuclear loan.
Georgia Power and its partners may not be able to reach terms with the US Department of Energy on $8.3 billion in loan guarantees to finance the Vogtle nuclear plant expansion, Alex Flint, senior vice president of governmental affairs for the Nuclear Energy Institute, said Thursday.
The conditional guarantees for the two-unit, 2,200-MW Vogtle plant expansion were announced by DOE in 2010 and were said to be a sign of the administration’s support for nuclear energy. One of the conditions was that the project sponsors receive a combined construction permit-operating license from the US Nuclear Regulatory Commission, which issued the license February 10.
Southern Co., Georgia Power’s parent company, expects to finalize the loan guarantees in the second quarter of the year, spokesman Steve Higginbottom said Thursday.
Betsy Higgins, the CFO of Oglethorpe Power, another of the partners, said March 20 that finalizing the loan guarantees was going more slowly than expected and they might be completed in the third quarter.
WASHINGTON, D.C. – Last week’s decision by the Nuclear Regulatory Commission to approve the licenses for the Vogtle Nuclear Power Plant means the Department of Energy (DOE) could at any time approve a loan guarantee of $8.3 billion for a project surrounded by serious safety concerns and to a company beset by financial woes related to the project. Today, Congressman Edward J. Markey (D-Mass), top Democrat on the Natural Resources Committee and senior member of the Energy and Commerce Committee, urged DOESecretary Steven Chu to implement of all recommendations made in the just-released White House-ordered review of the Energy Department’s loan guarantee program prior to awarding any further loan guarantees, either on a conditional or final basis. The proposed nuclear loan guarantee to the Southern Company is one of the largest of any previous loan guarantee under the DOE program and is more than 15 times larger than the loan guarantee granted toSolyndra. In the past 18 months, Southern Company’s credit rating has been downgraded as a result of its pursuit of the Vogtle project.
“The Republican push for a loan guarantee for a nuclear reactor project exponentially riskier than Solyndra proves that their interests are not in financial stewardship but in political game playing,” said Rep. Markey. “Given the massive taxpayer debt to be assumed and the extraordinary risk associated with the Vogtle project, we should not act on final approval of the Southern Company loan guarantee unless all of the improvements recommended in the Allison report have been put in place to reduce the likelihood of a multi-billion dollar taxpayer bailout.”
Nuclear power is no longer an economically viable source of new energy in the United States, the freshly-retired CEO of Exelon, America’s largest producer of nuclear power, said in Chicago Thursday.
And it won’t become economically viable, he said, for the forseeable future.
“Let me state unequivocably that I’ve never met a nuclear plant I didn’t like,” said John Rowe, who retired 17 days ago as chairman and CEO ofExelon Corporation, which operates 22 nuclear power plants, more than any other utility in the United States.
“Having said that, let me also state unequivocably that new ones don’t make any sense right now.”
Private lenders have declined to finance new reactors because of the enormously high cost of new nuclear power and the substantial risk that any such investment will fail. In 2003, the Congressional Budget Office (CBO) estimated that the chance of a loan for new nuclear reactor construction resulting in default would be “very high – well over 50 percent.”
The Obama administration’s proposed loan guarantee for Vogtle transfers the risk onto American taxpayers, who would pay up to $8.33 billion if Southern Company and its partners run into the same kind of trouble that is routine in the nuclear power industry-cost overruns, delays and project cancellations.
And Vogtle does have a history that should trouble taxpayers worried about assuming responsibility for the massive loan guarantee: the original two reactors at the Georgia site took almost 15 years to build, came in 1,200 percent over budget and resulted in the largest rate hike at the time in Georgia.