Nuclear loan guarantees face continued delays
Among the multitude of deadlines missed by the federal government this week is the decision whether or not to finalize an $8.3 billion loan guarantee to expand the Plant Vogtle Nuclear Generating Station near Waynesboro, Ga.
September 30 marks the fifth time that the Department of Energy has extended the deadline to finalize a loan guarantee for the Vogtle nuclear reactors. The conditional loan guarantee was first offered by the Department of Energy in February 2010. The new deadline to finalize the loan guarantee is December 31, 2013.
The specific terms of the loan guarantee are shrouded in secrecy. However, 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 (documents released through this Freedom of Information Act request are available online). The credit subsidy fee is supposed to insulate against default, but the subsidy 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.
In the more than three years since the conditional loan guarantees were initially offered to Southern Company and its partners (see note) in the Vogtle reactors they have faced multiple lawsuits and had their credit ratings downgraded. Cost overruns and schedule delays have plagued the Vogtle reactors from the beginning, drawing criticism from independent monitors and driving credit downgrades for the Vogtle partners.
The Department of Energy, Office of Management and Budget and other federal offices overseeing the Vogtle loan guarantee should take advantage of the current delay to reassess the risks of the projects. Among these risks, in addition to construction problems and depressed credit ratings, are the continually unfolding lessons from the Fukushima Dai-ichi catastrophe.
Friends of the Earth’s nuclear subsidies campaigner Katherine Fuchs commented on the missed loan guarantee deadline saying, “This delay only highlights what we already know, the federal loan guarantee program is broken. Tax dollars should not be propping up mature technologies like nuclear reactors, especially not at bargain basement prices like we’re seeing with the Vogtle loan guarantee. Rather then continuing to extend the deadline the Department of Energy should protect taxpayers and the environment by walking away from risky the Vogtle reactors.”
Note: Georgia Power (Southern Company subsidiary) 45.7% of Vogtle units #3 & #4, Oglethrope Power Coporation 30%, Municipal Electric Authority of Georgia (22.7%), City of Dalton, Ga. 1.6%