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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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Thursday
Feb202014

DOE signs $6.5 billion federal nuclear loan guarantee for Vogtle 3 & 4

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.U.S. Secretary of Energy Ernest Moniz has announced that the Department of Energy (DOE) will sign an agreement with Southern Co. and Oglethorpe Power for a $6.5 billion loan guarantee that puts federal taxpayers on the hook if the Vogtle 3 & 4 new reactor project defaults on its loan repayments. This, despite the fact that the project is seriously over budget and behind schedule, as has been so common in the history of nuclear power. The sluggish construction has only been able to slog along thus far due to gouging of ratepayers via Construction Work in Progress (CWIP) surcharges on their electricity bills, illegal in most states.

Energy Secretary Ernest Moniz will speak at the proposed new reactor construction site at 2 PM Eastern today, Thursday, Feb. 20th (you can listen to his address by calling 1-800-282-1696).

President Obama gave the Vogtle 3 & 4 federal loan guarantee offer (for a total of $8.3 billion) the highest profile possible, by announcing it himself at a press event in Feb. 2010. Despite this, it has taken over four years for the project proponents to sign on the dotted line, given their reluctance to put any of their own "skin in the game," in the form of credit subsidy fees. The nuclear loan guarantee program was authorized in the 2005 Energy Policy Act, and $22.5 billion was approved by Congress and George W. Bush for new nuclear facilities on Dec. 23, 2007 ($18.5 billion for new reactors, $4 billion for new uranium enrichment).

The $8.3 billion Vogtle 3 & 4 federal loan guarantee is 15 times bigger than the infamous Solyndra solar loan guarantee, which defaulted on its loan repayment, a $585 million loss to the U.S. Treasury. But the Vogtle 3 & 4 loan guarantee is at much higher financial risk of default than was the Solyndra solar project!

Beyond Nuclear's Paul Gunter blasted the deal in a Common Dreams interview. Southern Alliance for Clean Energy (SACE) also blasted the deal in a press release. Harvey Wasserman has penned an essay entitled "Obama's Nuke-Powered Drone Strike on America's Energy Future."

Please contact President Obama and Energy Secretary Moniz, registering your disapproval of this $6.5 billion nuclear loan guarantee, and urging them not to grant the remaining $1.8 billion nuclear loan guarantee to project partner MEAG for Vogtle 3 & 4. Also urge them to withdraw any further nuclear loan guarantee offers, with the remaining $10.2 billion authorized for new reactors, and $4 billion authorized for new uranium enrichment.

But the federal nuclear loan guarantees, and even the CWIP charges which are gouging Georgia ratepayers, are not the only subsidies benefitting this proposed new reactor project. If Vogtle 3 & 4 do get built and operated, the George W. Bush DOE also obligated U.S. taxpayers to ultimate liability for the risks and costs of the high-level radioactive waste they would generate. DOE hastily signed the contract in the last days of the Bush administration, despite the fact that federal courts are awarding $500 million per year in damages to nuclear utilities for DOE's breach of contract for failing to begin taking title to irradiated nuclear fuel in 1998 under the contractual agreements signed in the mid-1980s. The hastily signed contacts were exposed by D.C. attorney Diane Curran, IEER President Arjun Makhijani, and Beyond Nuclear's Kevin Kamps in a March 24, 2010 press conference based on a FOIA Request.

Thursday
Feb062014

Still time to express your opposition to $8.3 billion nuclear loan guarantee for Vogtle 3 & 4!

"Burning money," graphic by Gene Case of Avenging Angels, used with permissionSouthern Alliance for Clean Energy (SACE) has re-posted on its website an op-ed by Kennedy Maize that originally ran in PowerMag, severely questioning the wisdom of U.S. taxpayers not only guaranteeing $8.3 billion in federal loans for the construction of the proposed new reactors at Vogtle 3 & 4 in Georgia, but making the loan outright (via the federal taxpayer-funded U.S. Finance Bank).

The Vogtle 3 & 4 partners have now been granted a 7th extension to the deadline for signing on the dotted line. President Obama himself announced the loan guarantee award offer in Feb. 2010, but the nuclear utility companies have been unwilling to sign on the dotted line for four years now -- afraid to put any of their own skin in the game, given the very high financial risks of the project.

If the project's proponents have so little confidence in their own proposal, why should federal taxpayers be asked to shoulder the risks, and be left holding the bag in the event of a default on the loan repayment?! The Vogtle 3 & 4 nuclear loan guarantee involves 15 times the amount lost on the Solyndra solar loan guarantee, only the Vogtle 3 & 4 nuclear loan guarantee is at a significantly higher risk of default than was the Solyndra solar loan guarantee!

There is still time to take action in opposition to the Vogtle 3 & 4 nuclear loan guarantee. Please use the following sample message as is, or to fashion your own, and send it to President Obama and Energy Secretary Moniz:

"Dear President Obama and Energy Secretary Moniz,

As a federal taxpayer, I object to the $8.3 billion loan guarantee -- and loan -- you have offered to the nuclear utilities proposing to build new atomic reactors in Georgia, Vogtle Units 3 and 4. Although President Obama offered the lucrative loan guarantees four long years ago now, the utility partners have been reluctant to put any of their own skin in the game, and have refused thus far to sign on the dotted line. The Dept. of Energy has, absurdly, allowed seven deadline extensions. The amount of taxpayer money at risk is 15 times larger than the amount lost in the Solyndra solar loan guarantee default. Yet, the Vogtle 3 & 4 loan is at significantly higher risk of default than was the Solyndra solar loan guarantee. Please protect $8.3 billion in federal taxpayer money by withdrawing the Vogtle 3 & 4 nuclear loan guarantee -- and loan -- offer. Vogtle 3 & 4 should sink or swin in the free market, not be propped up at huge taxpayer risk!" [include your name and contact information]

Wednesday
Jan012014

Vogtle nuclear loan guarantee drags into fifth round of delays

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.As reported by Platts, and conveyed in a Friends of the Earth press release, the December 31, 2013 U.S. Department of Energy deadline for finalization of the $8.3 billion federal taxpayer backed nuclear loan guarantee for Vogtle 3 & 4 has been extended yet again, for a fifth time, until the end of January, 2014.

As reported by FOE: "Freedom of Information Act requests and litigation revealed that the credit subsidy fee offered to Southern Company ranged from 0.8 to 1.5 percent. The credit subsidy fee is supposed to insulate against default, but the fee offered to Southern Company is woefully inadequate to cover the risks involved in major nuclear construction. According to the Nuclear Regulatory Commission, 32 percent of reactor construction is cancelled before any electricity is produced."

Watchdog groups have long called for a credit subsidy fee commensurate with the risk of the nuclear new build proposals. Congressional auditors reported several years ago that new reactors, historically, have had a 50% risk of cancellation and potential default. The Vogtle 3 & 4 nuclear loan guarantee puts 15 times more taxpayer money at risk than did the Solyndra loan guarantee scandal, which had a significantly lower risk of default than does Vogtle 3 & 4.

Vogtle 1 & 2 were the poster children for cost overruns in decades past, coming in with a price tag 1,300 percent higher than originally estimated! Vogtle 3 & 4's price tag has also skyrocketed over the past several years.

The only way that Vogtle 3 & 4 have proceeded this far is that Georgia lawmakers made legal what is illegal in most states: the gouging of ratepayers on their electricity bills with "Construction Work in Progress" (CWIP) surcharges for the building of the new reactors. This makes ratepayers unwilling investors, who receive no share of the profits that are made -- at who are put at risk of losing every penny invested, if the project ever goes belly up. Ratepayers in Florida just experienced this at the Levy new build site -- $1.5 billion lost, and nothing to show for it.

Given the Obama administration offered the $8.3 billion nuclear loan guarantee nearly four years ago, and now this latest delay, concerns continue to mount that the project is a financial house of cards, and will ultimately leave taxpayers holding the bag. Nuclear Watch South has called for taxpayers to express their concerns to decision makers, as has Beyond Nuclear.

Tuesday
Dec172013

"A Christmas Peril": Obama DOE poised to risk $8.3 billion of taxpayer money on Vogtle 3 & 4 nuclear loan guarantee

Street theater performers, activist supporters, and members of the news media in front of DOE HQ on Dec. 11, 2009 protesting nuclear loan guarantees in solidarity with an International Climate Day of ActionIn late November, partners in the Vogtle 3 & 4 new reactor construction project in Georgia announced that they are "almost over the finish line" in negotations with the U.S. Department of Energy (DOE) regarding an $8.3 billion nuclear loan guarantee.

Not only would federal taxpayers back this massive loan guarantee -- they would also provide the loan, via the federal taxpayer-funded U.S. Finance Bank.

Giving the deal the highest possible profile, President Obama himself announced the award in Feb. 2010. However, DOE and proponents like Southern Nuclear have been squabbling ever since, about how much company "skin in the game" would be required to secure the loan guarantee. Documents unearthed thanks to a multi-year court battle waged by Southern Alliance for Clean Energy (SACE) under the Freedom of Information Act showed that a paltry $17 to $52 million were being asked at certain points in time. Despite this, Vogtle 3 & 4's pushers have been very reluctant for nearly four years now to sign on the dotted line.

The Vogtle 3 & 4 nuclear loan guarantee amounts to 15 times more taxpayer money at risk than was lost in the infamous Solyndra solar loan guarantee scandal ($535 million). Only, Vogtle 3 & 4's risk of default is significantly higher than Solyndra's was!

Meanwhile, Vogtle 3 and 4's behind-schedule, over-budget construction proceeds, funded by the gouging of ratepayers under Georgia's Construction Work in Progress (CWIP) charges on electricity bills -- illegal in most states.

In addition, over the past year, DOE has also forked over another $450 million in taxpayer subsidies to the nuclear power industry, in R&D support for "Small Modular Reactors." However, as pointed out by Beyond Nuclear board member Kay Drey of St. Louis, at 200-300 Megawatts-electric, SMRs should not be called "small." Two subsidy installments of around $225 million each have gone to NuScale-Fluor and Babcock & Wilcox-Bechtel, targeting construction at Idaho and the Tennessee Valley Authority, respectively.

Dr. Ed Lyman, Senior Scientist in the Global Security Program at Union of Concerned Scientists, has published a report, Small Isn't Always Beautiful: Safety, Security, and Cost Concerns about Small Modular Reactors.

Dr. Arjun Makhijani, President of Institute for Energy and Environmental Researcy, has also published a report, Light Water Designs of Small Modular Reactors: Facts and Analysis. The report is accompanied by an audio recording of a press conference.

On Dec. 11, 2009, Beyond Nuclear teamed up with Public Citizen and other allies like NIRS and FOE for a street theater at DOE HQ in Washington, D.C. entitled "A Christmas Peril." (see photo, above left; thanks to Public Citizen for an excellent video record of the fun event, complete with a soundtrack!) The performance, featuring the Ghosts of Nuclear Power's Past, Present, and Future, warned about and protested against President Obama's and DOE's decision, just a couple of months later, to award the $8.3 billion nuclear loan guarantee for Vogtle 3 & 4. The warning is as relevant as ever, now that Obama's DOE is poised to ink the deal, nearly four long years later.

Contact President Obama and Energy Secretary Moniz. Urge them to cancel the financially risky Vogtle 3 & 4 nuclear loan guarantee, before taxpayers get left holding the bag for many billions of dollars of unpaid loans if and when the project defaults. And urge them to stop subsidizing so-called SMRs -- after a half-century of enjoying the lion's share of taxpayer and ratepayer energy subsidies, nuclear power should at long last either stand on its own two feet in the marketplace, or else crawl into the dust bin of history where it belongs.

Also urge your U.S. Senators and U.S. Representative to block any further subsidies, including loan guarantees, for nuclear power. They can be contacted via the U.S. Capitol Switchboard at (202) 224-3121.

Saturday
Aug032013

Nuclear revolving door gobbles up billions of dollars of ratepayers' money, threatening to move onto taxpayers next

Commissioner Geoffrey Merrifield's NRC file photoWhile still a U.S. Nuclear Regulatory Commission (NRC) Commissioner, Geoffrey Merrifield did the nuclear power industry a big favor. He spearheaded a seemingly simple, but significant, change in NRC regulations, which paved the way for new reactor construction, unfettered by bothersome environmental safeguards. Merrifield shephered through a change in the definition of the word "construction." Now, nuclear utilities could build any aspect of a nuclear power plant, save for the reactor and its containment building, without having to first complete an environmental impact statement, as required by the National Environmental Policy Act (NEPA). Thus, large aspects of a new reactor construction job -- such as foundation excavations for the reactor complex, or construction of the turbine building -- could proceed apace, building "facts on the ground," and momentum that would be hard to stop.

 

Merrifield capped such corruption by leaving NRC immediately after his dirty work, and going to work for the Shaw Group, which specializes in -- you guessed it -- new reactor construction! This example of the nuclear revolving door between supposed government regulator and industry even made a number of senior managers at NRC uneasy about Merrifield's blatant, self-serving conflict of interest.

 

Now, as reported by the Atlanta Progressive News, to such corruption must be added incompetence, raising not only financial risks, into the billions of dollars, but radiological risks that could impact millions of lives:

 

'...Chicago Bridge and Iron (CB&I), formerly known as Shaw Modular Solutions, makes modules being used to assemble four Westinghouse AP1000 reactors being built at Plant Vogtle in Georgia and V.C. Summer in South Carolina.

“CB&I is unable to provide properly constructed modules... and [have demonstrated a] continued inability to reliably meet the quality and schedule requirements of the project," Barbara Antonoplos, a ratepayer, testified, citing a report from the utility's regulatory staff in South Carolina.

"These problems have existed from the beginning and been raised in every other CB&I hearing and still there is no fix... they [Georgia Power] still do not have a competent outfit making parts and once the new parts get delivered to Vogtle, they are repairing them to make them acceptable.  This alarms me because incompetence of this magnitude breeds disaster especially when it comes to construction of a nuclear device. There is no way these reactors can be considered safe... when ‘patch it together’ is the best construction model they are able to come up with," Antonoplos said.

"Ongoing failures of this sort result in escalating cost and I don't believe you should force ratepayers to foot the bill for such gross incompetence," Antonoplos said.

Southern Company’s projections do not include the cost of the lawsuit they’re engaged in with their contractor, The Shaw Group/Chicago Bridge and Iron, nor the full cost of not getting Federal Loan Guarantees, for which the negotiation deadline has been extended three times according to Georgia WAND's website...'

Alex Flint, NEI's Senior Vice President for Governmental AffairsSpeaking of nuclear revolving doors and federal loan guarantees, the top lobbyist for the nuclear power industry, Alex Flint at the Nuclear Energy Institute (NEI, photo left), has passed through multiple times. For one, he "served" as the staff director on the U.S. Senate Energy and Natural Resources (ENR) Committee, under Sen. Pete Domenici (R-NM), on whose personal staff Flint had previously "served." The ENR Committee hatched the passage of the Energy Policy Act of 2005. In addition to the $13 billion of direct taxpayer subsidies in that bill aimed at promoting new atomic reactor development, Flint wrote the federal nuclear loan guarantee language. After the bill was enacted into law, Flint left "public service" and went to work at NEI, where he remains to this day.

In a very real sense, Flint wrote his own (likely high six-figure, if not more) paycheck, while "serving the public" -- up for dinner to the nuclear industry, that is!

In late 2007, $18.5 billion for new reactor loan guarantees, and another $4 billion in new uranium enrichment loan guarantees, were approved by Congress and George W. Bush. However, even though President Obama, in Feb. 2010, awarded $8.3 billion in new reactor loan guarantees for the proposed new Vogtle 3 & 4 reactors -- giving it the highest profile possible, by making the announcement himself -- Southern Co. has never agreed to the terms. Too much of its own "skin in the game" is being asked of it, for such a financially risky scheme. Thus, no nuclear loan guarantees have yet been finalized.