Obama Admin Gives Nuclear Loan Guarantee For Free
The Obama administration has finalized a $6.5 billion loan guarantee to Georgia Power to build two new nuclear reactors near Augusta, Georgia. But in a surprise move, the Department of Energy will not charge a credit subsidy fee. The fee, intended to account for the risk borne by U.S. taxpayers, usually amounts to several hundred million dollars. But the Department of Energy agreed to provide the loan guarantee for the project for free, as reported by Environment and Energy Publishing (E&E) on April 21.
DOE confirmed its decision to waive the fee for two separate loan guarantees in a February 11 letter to Georgia Power and Oglethorpe, the two major owners of the reactors under construction. Obtained through Freedom of Information Act requests, E&E published the letters online earlier this week.
The Nuclear Regulatory Commission's decision in 2009 to approve two new reactors at the Alvin W. Vogtle Electric Generating Plant in Georgia was seen as the start of a U.S. nuclear renaissance. Using the new AP1000 design by Westinghouse, the plans were enthusiastically endorsed by the White House early in Obama's first term.
On February 16, 2010, Obama announced that DOE would issue $8.33 billion in loan guarantees for the project, but several years passed before terms could be agreed upon. The credit subsidy fee has been a sticking point for previous projects. Most notably, the owners of the Calvert Cliffs nuclear power plant in Maryland shelved their plans at expansion after balking at the $880 million subsidy fee DOE wanted.
News of DOE's decision to waive the fee has sparked some criticism. According to E&E, Sara Barczak, director of the Southern Alliance for Clean Energy's high-risk energy choices program, said, "It is outrageous that the Department of Energy and Office of Management and Budget somehow determined that the two reactors under construction at Plant Vogtle pose less of a risk of default today than they did a couple years ago."
DOE spokesperson Dawn Selak responded to the criticism by noting that the project is owned and operated by responsible companies. "This calculation is based upon a standard methodology used across the federal government," she said. "In this case, it should be noted that the Vogtle project sponsors are well-established, sizable companies that are already heavily invested and wholly committed to the project."
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The article Obama Admin Gives Nuclear Loan Guarantee For Free originally appeared on Fool.com.Written by James Burgess at Oilprice.com.
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