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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
Jul042012

Obama DOE gave Southern Nuclear "sweetheart deal" on Vogtle 3 & 4 loan guarantees

"Burning Money" image by Gene Case, Avenging AngelsThe Inter Press Service has reported that President Barack Obama's U.S. Department of Energy has offered Southern Company a "sweetheart deal" on federal nuclear loan guarantees for the Plant Vogtle Units 3 & 4 proposed new atomic reactors: a 0.5 to 1.5% credit subsidy fee, lower than college students pay on their federal student loans. These facts came to light thanks to a courtroom victory by the Southern Alliance for Clean Energy (SACE), which won a Freedom of Information Act (FOIA) ruling from a federal judge who ordered DOE to divulge the terms of the first and only federal taxpayer-backed nuclear loan guarantee yet conditionally awarded.

Remarkably, Southern Co. has been asked for a mere $17 to $52 million of "skin in the game," in exchange for $8.3 billion in federal taxpayer-backed nuclear loan guarantees for Vogtle Units 3 & 4 -- proposed Toshiba-Westinghouse AP1000s (1,100 Megawatt-electric "Advanced Passive" pressurized water reactors). If Southern and its partners default on their loan repayments, the federal taxpayer will be left holding the bag. To make matters worse, taxpayers are not only guaranteeing the loans, they are also providing the loans. The source of the loans, the U.S. Finance Bank, is federal taxpayer funded. Despite the nuclear loan guarantees, private investment banks have not touched the financially risky project. 

The "moral hazard with a radiological twist" represented by this risky financial scheme puts 15 times more taxpayer funding at risk than was lost in the Solyndra solar loan guarantee scandal ($535 million); NIRS executive director pegs the default risk of Vogtle 3 & 4 as some 50 times higher than Solyndra's.

Despite such favorable terms, President Obama's Office of Management and Budget is still wary of the deal, offering opponents an opportunity to kill it. The "sweetheart deal" revealed by the unearthed documents has prompted Harvey Wasserman of Nukefree.org to ask, "Why should nuke loan guarantees cost less than student or home loans?"

Saturday
May122012

More than $900 million cost overrun documented at Vogtle 3 & 4 new reactor construction project

"Burning Money" image by Gene Case, Avenging AngelsA coalition of environmental groups, including North Carolina Waste Awareness and Reduction Network (NC WARN), has issued a press release decrying a nearly billion dollar cost overrun at the Vogtle 3 & 4 new reactor construction project in Georgia. The groups warn that further cost increases are likely, due to rushed design and construction that has led to errors, as in sub-foundation grading, rebar quality assurance, and even radiological containment "shield building" design and construction.

Such cost overruns, as well as construction schedule delays, could lead to the Vogtle 3 & 4 project defaulting on its loan repayments. This puts $8.3 billion in federal taxpayer nuclear loan guarantees (and even the actual loans themselves, since they come from the taxpayer-funded U.S. Finance Bank) at risk. $8.3 billion is 30 times the amount taxpayers lost to the Solyndra solar loan guarantee scandal.

The coalition's expert witness Arjun Makhijani, President of the Institute for Energy and Environmental Research (IEER), said: “Southern Company rushed into this project, as evidenced by the many requests for modifications of the license and early technical difficulties and problems including failure of ‘some details’ of early construction to conform to the Design Control Document, according to Georgia Power’s filing with the Securities and Exchange Commission.  Indeed, a part of the cost increase of $900 million appears to be attributable to overcoming delays and rushing the project again despite construction non-compliance.  The cost increase should not be a surprise; rather it is déjà vu all over again.  Rushing nuclear power reactors is not prudent and stockholders and/or the vendors, not ratepayers, should bear the burden of such costs.  It would be much better if construction were suspended until all design issues were resolved.”

Monday
Apr162012

"Stop the Nuclear Industry Welfare Program"

"Burning money" image by Gene Case, Avenging AngelsJust a couple days after rocking an anti-nuke rally in Brattleboro, Vermont, calling for the immediate shutdown of Entergy Nuclear's Vermont Yankee atomic reactor, Independent U.S. Senator Bernie Sanders has joined forces with Taxpayers for Common Sense Executive Director Ryan Alexander to pen an article on theHuffington Post entitled "Stop the Nuclear Industry Welfare Program." Sanders and Alexander list the many, large-scale taxpayer subsidies the nuclear power industry has enjoyed for over half a century. They point out the irony of filthy rich nuclear utility companies, like Exelon and Entergy, receiving such public support in the first place: they take in annual revenues of $33 billion and $11 billion, respectively. Federal nuclear loan guarantees, backed by U.S. taxpayers, for new reactors and uranium enrichment facilities are included in Sander's and Alexander's list.

On March 11, 2011, the Union of Concerned Scientists unveiled two major studies, one by David Lochbaum about the near misses at U.S. reactors in 2010, the second by Doug Koplow, a comprehensive analysis of half a century of taxpayer and ratepayer subsidies to the nuclear industry. The long scheduled press conference was eclipsed by the Fukushima Daiichi nuclear catastrophe which began just hours earlier. In this year's annual review report, "Living on Borrowed Time," Lochbaum documented that 5 of 15 near misses at U.S. reactors in 2011 took place at Entergy owned (Palisades, MI X 2; Pilgrim, MA X 2) or operated (Cooper, NE) plants. Sanders and Alexander point out that, for any catastrophic radioactivity release at a U.S. reactor causing more than $12 billion, U.S. taxpayers would be looked to for picking up the tab, under the Price-Anderson Act.

Tuesday
Apr102012

Take action to block teetering nuclear loan guarantees!

The latest essay by Harvey Wasserman (pictured, left) of Nukefree.org,"America's Two New Nukes are on the Brink of Death," describes how President Obama's Office of Management and Budget has some newly revealed, serious concerns about the financial viability of an $8.33 billion taxpayer-backed nuclear loan guarantee for the two new proposed reactors, Toshiba-Westinghouse AP1000s, at Vogtle 3 & 4 in Georgia. Harvey also reports how ratepayers in North Carolina could block new reactors targeted at South Carolina, Summer Units 2 & 3 (also proposed AP1000s). He shows how grassroots anti-nuclear activism from Japan to Germany, Vermont to California, India and beyond represents a global nuclear power retreat, and renewable ("Solartopian") renaissance. EcoWatch and the Waterkeeper Alliance have provided a petition where you can take action against the teetering Vogtle 3 & 4 federal loan guarantee, before it gets finalized!

Wednesday
Feb152012

Obama administration calls for no expansion to nuclear loan guarantee program in FY2013 budget!

The American taxpayer could still get burned for $8.3 billion if the Vogtle atomic reactors #3 & 4 default on their loan repaymentsAs reported in the Huffington Post, for the first time in three years, the Obama administration has not called for a major expansion in the nuclear loan guarantee program. In fact, it has called for no expansion at all.

In his Fiscal Year 2011 and Fiscal Year 2012 budget requests, fresh on the heels of explicitly promoting nuclear power in his State of the Union addresses, President Obama called for a major expansion of the nuclear loan guarantee program, to the tune of $36 billion. However, as a testament to people power over nuclear power, the nuclear lobbyists didn't get away with it -- we stopped them time and again on Capitol Hill, through tireless concerned citizen pressure! It's a huge grassroots environmental victory!

The program already had $22.5 billion, however, mostly authorized during the George W. Bush administration, snuck through on December 23, 2007 when most Americans were more tuned into holiday celebrations with family and friends, rather than the backroom wheeling and dealing by dirty energy industry lobbyists on Capitol Hill. Of that $22.5 billion already authorized, $18.5 billion was set aside for new atomic reactors, while $4 billion was set aside for new uranium enrichment facilities.

In Feb. 2010, President Obama announced the first nuclear loan guarantee himself -- $8.3 billion for two new atomic reactors at Vogtle nuclear power plant in Georgia. On December 30, 2011, the U.S. Nuclear Regulatory Commission approved the Toshiba-Westinghouse AP1000 reactor design, despite lingering concerns about major safety flaws. Just this month, by a 4 to 1 vote (with NRC Chairman Jaczko dissenting), the NRC Commissioners approved the combined Construction and Operating License Application (COLA) for Vogtle Units 3 and 4.

Another leg up for Vogtle 3 & 4, this time at ratepayer expense, is Construction Work in Progress (CWIP) charges on ordinary family's electricity bills, making them pay for the reactors in advance. CWIP is illegal in most states. Yet another leg up, at federal taxpayer expense: the AP1000, along with the General Electric Hitachi ESBWR (so-called "Economic Simplified Boiling Water Reactor") has benefitted from U.S. Department of Energy "Nuclear Power 2010" research and development 50/50 cost sharing.

That leaves $10.2 billion in the new reactor loan guarantee fund. Constellation Energy walked away from an Obama administration offer of $7.5 billion in loan guarantees for the Calvert Cliffs 3 French Areva "Evolutionary Power Reactor" (EPR), because the Office of Management and Budget demanded an $880 million credit subsidy fee up front -- something Constellation had unsuccessfully lobbied for American taxpayers to have to largely pick up, too, on their behalf. Another lead candidate for a massive federal new reactors loan guarantee was the South Texas Project Units 3 & 4 -- but this proposal "melted down" after the Fukushima Daiichi Nuclear Catastrophe because partners included Tokyo Electric Power Company, as well as Toshiba and Hitachi of Japan, and the Japan Bank of International Cooperation. 

The $4 billion set aside for new uranium enrichment plants was intended for Areva of France's project in Idaho, and U.S. Enrichment Corporation's project in Portsmouth, Ohio. Both proposals have hit snags.

On Feb. 15, Energy Secretary Chu visited the Vogtle Nuclear Power Plant, in a continuing sign of support by the Obama administration for new nuclear power expansion, despite its cancellation of the nuclear loan guarantee expansion. Chu is still requesting $770 million from Congress for promotion of nuclear power in the new fiscal year. Such subsidies would be in addition to the $13 billion authorized by the 2005 Energy Policy Act, and hundreds of billions of dollars in public subsidies provided by ratepayers and taxpayers to the nuclear power industry over the past 50 years.

Just last Friday, Chu warned the more federal energy loan guarantees could default, as did Solyndra.

Vogtle is an ironic poster child for the "nuclear renaissance" (or relapse). Vogtle Units 1 and 2 came in 1,300% over budget. If Vogtle Units 3 and 4 default on their loan repayments, the American taxpayer could be left holding the bag for $8.3 billion -- 15 times more than the $535 million recently lost to the Solyndra debacle.

As indicated in the Huffington Post article above, the Solyndra scandal could explain in large part why the Obama administration is backing away from a major expansion in the nuclear loan guarantee program in a presidential election year. A E&E Special Report on the Solyndra scandal, entitled "As controversy simmers, Obama seeks no new funding for DOE loan guarantees," ran on Feb. 14th.

Thanks to all Beyond Nuclear supporters who have taken actions on any of our countless calls over the past 5 years to urge your elected officials to oppose nuclear loan guarantees. The Obama administration's cancellation of the $36 billion nuclear loan guarantee expansion in the FY2013 budget request is a huge grassroots environmental victory, and it wouldn't have happened without you!

But we must remain ever vigilant -- the U.S. Congress could authorize a nuclear loan guarantee expansion, even if the President hasn't requested it. And given Obama's continuing support for nuclear power, he would probably sign such a congressional proposal into law. So please print up copies of our "Crushing Burden" ad, and send it to your two U.S. Senators and your U.S. Representative, urging them to oppose any nuclear power subsidies whatsoever. And send copies to President Obama and Energy Secretary Chu, thanking them for canceling the $36 billion nuclear loan guarantee expansion, and calling on them to roll back other nuclear power subsidies as well.