Nuclear Energy Firms Seek More than Loan Guarantees for Revival
Raising the amount of federal loan guarantees available for new nuclear plants is just part of what the industry wants Congress to do to spur its revival.
Department of Energy Secretary Steven Chu told reporters on Friday that the DoE budget, which will be released on Monday, would call for a $54 billion loan guarantee program, tripling the current amount.
The move was praised by industry lobbyists but criticized by some environmental and fiscal watchdog groups for putting too much taxpayer money at risk.
Congress has already approved an $18.5 billion loan guarantee program in hopes of reassuring Wall Street investors about an industry with a history of cost overruns. But the industry said additional financial support was needed. The loan guarantee program prompted 17 applications for projects that were estimated to cost $122 billion to build.
The announcement of the additional loan guarantees "is a very important signal of the seriousness about getting a clean energy industry back up and running," said Jim Connaughton, a former director of the White House Council on Environmental Quality in the Bush administration.
Connaughton is now an executive at Constellation, an electric utility that operates five nuclear reactors at three sites.*
Connaughton said negotiations with DoE are ongoing over what percentage a company should have to pay to DoE to reduce its risk. The industry wants to keep the "credit cost" at 1 percent or below the anticipated total cost to build a new plant. A company would be required to pay DoE $100 million to reduce the risks for a $10 billion project, but industry critics have sought a much higher percentage.
The guarantees would mean the government would step in to repay 80 percent of a loan should a company default.
In addition to loan guarantees, the industry is also lobbying to remain eligible for support from a clean energy fund Congress is also considering.
The entity would support a variety of clean energy technologies through loans, grants and guarantees to reduce greenhouse gas emissions.
Industry lobbyists participating in the United States Climate Action Partnership (USCAP), a coalition of environmental groups and energy companies that support climate change legislation, are working within the group to have nuclear power counted as clean energy in a Clean Energy Standard.
Such a standard would be an alternative to a Renewable Energy Portfolio renewable production mandate under consideration in Congress that is now limited largely to wind and solar power. It is opposed by environmental groups within USCAP.
The industry also continues to press for regulatory changes to speed the time it takes the Nuclear Regulatory Commission (NRC) to approve a nuclear application. Industry officials say the long process of winning regulatory approval discourages potential investors.
Utilities like Constellation and Exelon, which operate nuclear plants, also continue to press for a cap-and-trade bill that would give the plants a competitive advantage over coal and natural gas plants that emit carbon dioxide.
And Connaughton said the industry would press for an even higher level of loan guarantees.
There are around 100 nuclear reactors in operation, but the NRC has not approved a new application for a reactor in more than two decades.
Politically, the industry has already undergone a revival of sorts. Before DoE announced it would seek additional loan guarantees, President Barack Obama said a comprehensive climate and energy bill should include support for new nuclear plants.
Nuclear power is likely to be a central component of the climate legislation compromise that emerges from the negotiations led by Sens. John Kerry (D-Mass.), Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.).
But much of the industry's agenda will be opposed by environmental groups and by fiscal watchdogs that worry billions of taxpayer dollars are at risk with the loan guarantee program.
"Increasing loan guarantees for nuclear power beyond what Congress already has authorized would shift unacceptable risks from the nuclear industry to U.S. taxpayers," said Ellen Vancko, nuclear energy and climate change project manager at Union of Concerned Scientists.