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Loan Guarantees

New reactor construction is so expensive and unpredictable that no U.S. utility is willing to take the risk without the backing of federal loan guarantees, potentially in the hundreds of billions of dollars. Beyond Nuclear and others fight to prevent the mature nuclear industry from seizing any such subsidies which are better spent on true climate solutions such as renewable energy and energy efficiency programs.

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Wednesday
Dec312014

"Success for program that funded Solyndra"

"Burning money" graphic by Gene Case, Avenging AngelsAs reported by the Washington Post, "20 of 30 clean-energy projects that got loans are generating revenue." The article refers to the federal energy loan guarantee program.

In fact, as reported," In California, Tesla Motors has flourished, paying back a $465 million loan nearly 10 years early."

Congressional Republicans had attempted to make a lot of hay out of the "Solyndra scandal," a solar loan guarantee that defaulted, costing federal taxpayers $435 million.

Even now, as the article reports, Rep. Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, says "We are not out of the woods by any stretch. Our oversight efforts will continue as problems still persist, and more needs to be done to protect billions of dollars in taxpayer interests."

But as much noise as Upton and his Republican colleagues have made, for years, about Solyndra, they have had nothing to say about the Vogtle 3 & 4 nuclear loan guarantee. Awarded by the Obama administration to Southern Nuclear and its partners, the $8.3 billion federal taxpayer-backed loan guarantee (and loan -- it comes from the taxpayer-funded U.S. Finance Bank) for two proposed new reactors in Georgia represents 15 times more taxpayer money at risk than was lost at Solyndra. And the risk of loan default at Vogtle 3 & 4 is significantly higher than the risk that the Solyndra was initially deteremined to have been.

But then again, Upton is one of the nuclear power industry's "best friends in Congress," as documented over the years by Beyond Nuclear in a two-page summary; a full-length backgrounder; and supporting documents, showing individual campaign contributions to Upton, tied to the nuclear power industry, as well as nuclear power industry-related political action committee campaign committee (PAC) campaign contributions made to Upton. In return for the favors, Upton has long supported nuclear power industry lobbying priorities at every turn.

Upton went so far as to sponsor a bill in 2009 that would have defined nuclear power as "renewable energy." His bill fell just short of passage in the Energy and Commerce Committee, when four pro-nuclear Democrats (such as Barrow from Georgia) supported it. It is all the more ironic, and telling, then that Upton opposes renewable loan guarantees, but supports nuclear power loan guarantees.

Tuesday
Dec162014

One-year construction delay at Vogtle 3 & 4 means $730 million in cost overruns for GA ratepayers!

The Vogtle 3 & 4 construction site (aka money pit) as it appeared in July 2013.As reported by the Augusta Chronicle, construction schedule delays at the Vogtle 3 and 4 new reactor project in Georgia will add to the price tag at a whopping rate of $2 million per day! State ratepayer advocates now estimate a one-year delay in reactor start up, which amounts to a $730 million add-on to the already multi-billion dollar cost.

Under Georgia's Construction Work in Progress (CWIP) law, ratepayers are forced to pay for the constructions costs with a surcharge on their electricity bills. This practice is illegal in most other states.

In addition to gouging ratepayers, Vogtle 3 & 4 is also gouging federal taxpayers. The Obama administration awarded an $8.3 billion loan, and loan guarantee, to the project -- Southern Co. and its partners have not one cent of skin in the game. Talk about a financial "moral hazard," with a radiological twist! Let's hope the scheme doesn't "meltdown," and the investment turn "radioactive"!

In fact, the Vogtle 3 & 4 federal loan guarantee amounts to 15 times more federal taxpayer money than was lost in the Solyndra solar scandal. And, Vogtle 3 & 4 are actually more at risk of defaulting on their loan repayment than was Solyndra!

Thursday
Aug142014

Cost overruns and schedule delays at proposed new reactors in GA, SC, and TN

Aerial image of Vogtle nuclear power plant in GA, showing the operational Units 1 and 2, as well as the construction site for the proposed Units 3 and 4. Photo credit: High Flyer.We told them so. As the environmental movement warned 14 years ago, when the nuclear relapse was hatched by the Bush/Cheney administration, proposed new reactors at Vogtle 3 & 4 in Georgia, Summer 2 & 3 in South Carolina, and Watts Bar 2 in Tennessee are suffering major cost overruns and construction schedule delays.

Southern Alliance for Clean Energy (SACE) has published an update on Vogtle 3 & 4, which currently are suffering a 21-month schedule delay, and $1.4 billion cost overrun. The delays could well get worse, at a staggering cost increase of $2 million per day of delay!

Similarly, as reported by SRS Watch, delays of up to three years, and cost overruns topping $500 million, are afflicting the Summer 2 & 3 proposed new reactors in SC.

Note that those April 1st projected opening dates for the new reactors at Voglte and Summer, listed in the updates above, are no April Fool's joke. GA and SC ratepayers are already being gouged for the new reactors' troubled contstruction, on their electricity bills.

Vogtle 3 & 4's financial risks also now implicate federal taxpayers, in the form of a $6.5 billion loan guarantee, likely to soon grow to an $8.3 billion loan guarantee. This is compliments of the Obama administration. So, if Vogtle 3 & 4 default on their loan repayment, federal taxpayers will be left holding the bag. This is 15 times more taxpayer money at risk than was lost in the Solyndra solar loan guarantee scandal. And that risk, of Vogtle 3 & 4 defaulting on its loan repayment, was judged, years ago, by the likes of the Congressional Budget Office and Government Accountability Office, as a much greater risk than Solyndra defaulting on its loan repayment.

Vogtle 3 & 4, as well as Summer 2 & 3, are Toshiba-Westinghouse AP-1000 reactors. They are experimental, never having been built before anywhere in the world, although AP-1000s are also under construction in China.

The proposed new reactor in Tennessee, that is also suffering cost overruns and schedule delays, is the Tennessee Valley Authority's long-mothballed Watts Bar Unit 2.

To add to the irony, the existing reactors at Vogtle, Units 1 & 2, were the poster child for cost overruns in the last generation of reactor construction, coming in at 1,300% their originally estimated cost!

And the operational Watts Bar Unit 1 took 23 years to build, from 1973 to 1996!

Monday
Jun092014

Markey, Burgess Release Report Showing Legal Concerns over Energy Dept.’s Deals with Uranium Enriching Company

U.S. Senator Ed Markey (D-MA)A new GAO report, requested by U.S. Senator Edward J. Markey (D-Mass., photo left) and U.S. Rep. Michael Burgess (R-Texas), finds that the shuttered U.S. Enrichment Corporation (USEC) facility received hundreds of millions of dollars worth of uranium, while ignoring laws and losing taxpayer money.

The report details a pattern of actions by DOE that kept USEC’s facility in Paducah, Kentucky open and subsidized the development of questionable centrifuge technology at its Ohio facility, even as the company was rated as junk bond status, threatened with de-listing from the New York Stock Exchange, and ultimately spiraled into bankruptcy.

USEC was seeking a $2 billion federal taxpayer-backed loan guarantee for its American Centrifuge uranium enrichment plant in Portsmouth (Piketon), Ohio, but the deal fell apart amidst USEC's financial "meltdown," as well as due to technical difficulties with the technology's development.

“Our government has kept this uranium company on life support, wasting money and flouting the law, even though it was clear that it would end up in bankruptcy. This is the kind of government waste that Americans just don’t understand,” said Senator Markey, who is a member of the Environment and Public Works Committee. “It’s time to commit this junk technology to the junk bin.”

Some of the uranium involved is associated with supplying replacement tritium for U.S. nuclear weapons.

Sen. Markey has issued a press release, including a summary, and a link to the full 112-page GAO report.

Wednesday
Apr232014

Radioactive "Moral Hazard": DOE loans, and guarantees, $6.5 billion for two new reactors for a 0%, $0.00 credit subsidy fee!

Aerial image of Plant Vogtle Nuclear Generating Station - photo credit to High Flyer. The photo shows the operating Units 1 and 2, as well as the construction site for proposed new Units 3 and 4.Southern Alliance for Clean Energy reports in a press release entitled "New Documents Confirm Utility Giant Southern Company Gets Sweetheart Deal from Energy Department for Multi-Billion Nuclear Loan Guarantees for Vogtle Reactors":

"As revealed today in an Energy & Environment News story by Hannah Northey, the credit subsidy fee for utility giant Southern Company and its utility partner, Oglethorpe Power, for billions of dollars in taxpayer-backed federal loan guarantees, is nothing, $0. This shocking information was disclosed two months after the Department of Energy (DOE) finalized terms of $6.5 billion worth of loan guarantees that were offered as part of an $8.3 billion package to build two new nuclear reactors at Plant Vogtle in Georgia. A third partner in the project, MEAG, has yet to have their $1.8 billion loan guarantee finalized."

Please register your disapproval of this nuclear sweetheart deal, at taxpayer expense and risk, to President Obama, your two U.S. Senators, and your U.S. Representative! You can be patched through to your Members of Congress via the Capitol Switchboard at (202) 224-3121.

BACKGROUND

President Obama himself announced the $8.3 billion loan guarantee offer for Vogtle 3 & 4 in Feb. 2010. After four years of wrangling, the new reactor proponents have managed to convince Obama's DOE to provide the loan guarantees at no charge whatsoever.

The credit subsidy fee is supposed to be charged to the new reactor proponents so they have at least some "skin in the game," and to provide at least some meager protection to taxpayers if the project goes "belly up." Over a decade ago, the Congressional Budget Office reported that the history of new reactor projects reveals a whopping 50% risk of default.

In fact, of three dozen proposed new reactors targeted at the U.S. just several years ago, all but a handful are either indefinitely suspended, or outright canceled.

The only four actually under construction -- Vogtle 3 & 4 in Georgia, and Summer 2 & 3 in South Carolina -- have relied on gouging ratepayers through "Construction Work in Progress" surcharges -- or "nuclear taxes" -- on household and business electricity bills, a practice that is illegal in most states.

To that, Vogtle 3 & 4 now have added the advantage of federal nuclear loan guarantees -- which could leave taxpayers holding the bag for $8.3 billion. That's 15 times more taxpayer money than was lost in the Solyndra solar loan guarantee default -- only Vogtle 3 & 4 are at a much higher risk of defaulting that was Solyndra!

As Nomi Prins, a senior fellow at Demos, and author of All the Presidents' Bankers: The Hidden Alliances That Drive American Power, said on April 22, 2014 on KPFA's "Letters and Politics" (beginning at the 18 minute 27 second mark):

"...When money has no consequence, using it improperly has no consequence. Therefore, speculation or reckless activities with that money can create greater havoc for the broader population."

Economics refers to such dynamics as "moral hazards." With the Vogtle 3 & 4 proposed new reactors, the moral hazard comes with a radioactive twist. If the project simply defaults on its loan repayment, a total of $8.3 billion in taxpayer money could be lost to the U.S. Treasury. But if the two new reactors are actually built and operated, the public could bear costs not just to their pocketbooks, but also to their health, safety, security, and environment.

(Check out this op-ed Beyond Nuclear's Kevin Kamps submitted to public radio's "On the Media" in Nov. 2008, focusing on the habit of the media using nuclear metaphors to describe financial crises, but rarely covering literal nuclear risks or disasters themselves! Ironically, "On the Media" did not run with it. Nor did several other media outlets approached with similar op-ed ideas.)

In the form of the high-level radioactive wastes that would be generated, those risks would extend forevermore into the future. In fact, George W. Bush's DOE committed the U.S. taxpayer to ultimate liability for Vogtle 3 & 4's high-level radioactive wastes in his last day's in office, signing contracts with the nuclear utility just a day or two after Barack Obama won the presidential election, but before he took the oath of office.

Several years ago, when Obama's DOE demanded an 11-12% credit subsidy fee (amounting to $880 million) from Unistar Nuclear (a partnership between Constellation Energy and Electricité de France) to build a giant French Areva reactor on the Chespeake Bay in Maryland at Calvert Cliffs nuclear power plant, Constellation not only walked away from that particular project -- it got out of the new reactor biz altogether! The U.S. Nuclear Regulatory Commission was forced to end the licensing proceeding when the French partner could not find a new American partner, due to prohibitions on majority foreign ownership of reactors in the U.S. under the terms of the 1954 Atomic Energy Act.

Another top contender for federal loan guarantees were the proposed new Units 3 & 4 at South Texas Project nuclear power plant. However, its major foreign partners were Japanese, including Tokyo Electric Power Company. Shortly after the Fukushima nuclear catastrophe began at TEPCO's Daiichi nuclear power plant in March 2011, the U.S. partner, NRG of New Jersey, withdrew from the project. The Japanese consortium, including Toshiba, Hitachi, and the Japan Bank for International Cooperation, could not entice a new American partner to join the scheme.

Beyond Nuclear's Kevin Kamps attended (and took notes on, including making commentary) the giddy DOE-Southern Co. press conference featuring Energy Secretary Moniz announcing the $6.5 billion loan guarantee deal at the Vogtle 3 & 4 construction site on Feb. 20, 2014. Moniz said he looked forward to Vogtle 3 & 4's operation commencing “In four years, [although] I wish you could accelerate it by a year.” (Although DOE promoted the press conference on its own website, Georgia Power's PR department, a division of Southern Co., actually ran the press conference. Talk about a "private-public partnership" to promote nuclear power!)

A Southern Co. senior executive, perhaps not realizing the microphone was still on, joked back at the conclusion of the press conference “It would take me two hours to tell you why we can’t go faster.”

All joking aside, nuclear power is very slow to deploy. The last reactor to come online in the U.S. took 23 years to build! As Brice Smith of IEER wrote in his seminal 2006 book Insurmountable Risks: The Dangers of Using Nuclear Power to Combat Global Climate Change, nuclear power is not only too astronomically expensive, it is also too glacially slow, to solve the accelerating climate crisis.

Vogtle 3 & 4 have already experienced significant cost overruns, as well as schedule delays, in the past several years of construction.

Moniz spoke at the press conference of "$30 billion out, $40 billion yet to play" in terms of federal energy loan guarantees (emphasis added: note the gambling metaphor!). That includes another $10.2 billion for new atomic reactors, and $4 billion for new uranium enrichment, authorized several long years ago now.

Moniz also spoke enthusiastically about Small Modular Reactors (SMRs). DOE, on his watch, has granted nearly half a billion dollars of taxpayer money towards SMR R&D, despite SMR consortia putting their grand schemes on indefinite hold for lack of interested customers!

Urge Energy Secretary Moniz to direct federal support towards safe, clean, and cost-effective renewables such as wind and solar, not dirty, dangerous and expensive nuclear power!