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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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Tuesday
Jul282015

"Prefab Nuclear Plants Prove Just as Expensive"

"Burning money" graphic by Gene Case, Avenging AngelsRebecca Smith has reported in the Wall Street Journal that the "[m]odular method has run into costly delays and concerns about who will bear the brunt of the expense."

Joseph "Buzz" Miller, Georgia Power's executive vice president for nuclear development, is quoted as saying "The promise of modular construction has yet to be seen."

The two proposed new Toshiba-Westinghouse AP1000 reactors, Vogtle Units 3 & 4, that Georgia Power is building are years behind schedule, and billions of dollars over budget. $8.3 billion in federal nuclear loan guarantees, awarded by the Obama administration at no cost to the nuclear utilities, would leave taxpayers holding the bag if the project defaults on its loan repayment.

That's 15 times the amount of taxpayer money at risk than was lost to the U.S. Treasury with the Solyndra solar loan guarantee default several years ago.

The article also reports: "Stephen Byrne, president of South Carolina Electric & Gas [SCE&G], recently told investors his company is in discussions with Westinghouse and CB&I [Chicago Bridge & Iron] about the cost overruns and who will bear the burden. Utilities want those added costs to be shared, getting vendors to pay for some of the added expense but vendors are examining the claims. 'We feel that there’s an opportunity for a settlement in the future,' he said."

The two AP1000s under construction at Summer nuclear power plant in SC have been financed by repeated "Construction Work in Progress" (CWIP) surcharges on ratepayer electricity bills over the past many years. Such a "nuclear tax" is illegal in most states.

These cost overruns and schedule delays were to be expected, based on the previous history of nuclear power in the U.S. and overseas.

In 1985, Forbes wrote "The failure of the U.S. nuclear power program ranks as the largest managerial disaster in business history, a disaster on a monumental scale."

In fact, ironically enough, Vogtle Units 1 & 2 were the poster children for cost overruns, coming in at 1,300% their originally estimated price tag.

And the Watts Bar Units 1 & 2 are the case studies in atomic reactor schedule delays. Watts Bar took from 1973 to 1996 to become operational. Watts Bar 2 began construction in 1972, and is still struggling to begin generating electricity, 23 years later!

Such problems extend overseas, as well. A decade-long delay, and huge cost overruns, at the Olkiluoto new reactor construction site in Finland have led to major lawsuits between the nuclear utility, TVO, and the bankrupt French reactor vendor, Areva, to determine who is liable.

Sunday
Mar082015

"Experts warned of nuke work overruns"

The Vogtle Unit 3 reactor pressure vessel, parked in front the Vogtle Unit 4 containment vessell bottom head, May 2013. Photo credit: Georgia Power.As reported by Matt Kempner in the Atlanta Journal Constitution, the two new atomic reactors under construction at the Vogtle nuclear power plant in Waynesboro, Georgia are "more than three years behind schedule," and costs for just one partner, Georgia Power (a subsidiary of Southern Nuclear) "is at least $1.4 billion, or 23 percent, over original projections."

The Vogtle 3 & 4 construction project (see photo, left) is being financed through "Construction Work in Progress" (CWIP), or "advanced cost recovery" -- that is, simply surcharging ratepayer electricity bills. This practice is illegal in most states, but has been made legal in Georgia, as well as South Carolina -- where two more new reactors at Summer nuclear power plant are also under construction (and also suffering schedule delays and massive cost overruns).

Highly controversial CWIP resulted in the loss to ratepayers of $3 billion, for a cancelled new nuclear power plant. Somehow that massive amount of money was spent, even though ground was not even broken on the failed project.

The Georgia Public Service Commission, the same agency that approved ratepayer CWIP surcharges in the first place, will now decide on whether or not ratepayers will eat the cost overruns at Vogtle 3 & 4.

In addition to gouging ratepayers, Georgia Power/Southern Nuclear is also gouging federal taxpayers, compliments of the Obama administration. In Feb. 2010, President Obama himself made the announcement that his U.S. Department of Energy was awarding $8.3 billion in federal loan guarantees to the Vogtle 3 & 4 project. In addition to the loan guarantees, the actual loan is coming from U.S. taxpayers as well -- from the taxpayer-funded U.S. Finance Bank. In that regard, the federal nuclear loan guarantee is already a failure -- it was supposed to entice private investors to actually loan the money to the project.

Incredibly, the DOE didn't even charge a penny in credit subsidy fee. This means Southern Nuclear/Georgia Power has no skin in the game. If the loan repayment is defaulted upon, taxpayers will be left holding the bag, entirely.

Vogtle 3 & 4 have put at risk 15 times more money than was lost in the Solyndra solar loan guarantee default. And Vogtle 3 & 4's risk of default is actually significantly higher than Solyndra's risk ever was.

(Re: the RPV in the photo above, it actually was involved in a transport accident at the Port of Savannah in Jan. 2013, when its transport train carriage collapsed under its massive weight. It then limped back to the Port, where it was exposed to the elements for an extended period, covered only partially by run of the mill tarps.)

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!