Georgia Power and partner utility Oglethorpe Power pay nothing for credit subsidy fee, taxpayers instead bear the risks for new reactors in Georgia
Contact: Jennifer Rennicks, Southern Alliance for Clean Energy, 865-235-1448
Atlanta, Ga. (April 21, 2014) ///PRESS STATEMENT/// As revealed today in an Energy & Environment News story by Hannah Northey, the credit subsidy fee for utility giant Southern Company and its utility partner, Oglethorpe Power, for billions of dollars in taxpayer-backed federal loan guarantees, is nothing, $0. This shocking information was disclosed two months after the Department of Energy (DOE) finalized terms of $6.5 billion worth of loan guarantees that were offered as part of an $8.3 billion package to build two new nuclear reactors at Plant Vogtle in Georgia. A third partner in the project, MEAG, has yet to have their $1.8 billion loan guarantee finalized.
Since the conditional offers were made over four years ago, the Southern Alliance for Clean Energy (SACE) has filed 10 Freedom of Information Act (FOIA) requests to unearth important details on the risks posed to U.S. taxpayers if the more-than $15 billion nuclear project should default — a reality that plays a large role in the nuclear industry’s history. The most recent request, filed in mid-February when DOE finalized the terms, demanded that the terms and conditions of the loans, including the credit subsidy fees, be made public immediately. Once again, the agency failed to respond.
SACE went to court twice to force DOE to disclose the information requested and, in light of this litigation, finally received documents in 2012 revealing some of the loan guarantee terms, including the tentative credit subsidy fees. This fee represents the “price tag” a utility must pay to the federal government for the loan guarantee and is calculated based on the borrower’s risk of default. In previously-released documents that SACE acquired due to successful FOIA litigation, the fee ranges appeared to be too low to protect taxpayers. These documents showed that Georgia Power’s fee was 0.5-1.5% for a range of $17-52 million and Oglethorpe’s was 2.5-4.3% for a range of $70-132 million.
Given today’s E&E News article, and despite the significant delays and cost overruns facing the Vogtle project as well as an over $900 million lawsuit between the utility and the lead contractor, Westinghouse, it is clear that DOE adjusted the credit subsidy fees to $0, failing to reflect these new realities. The deteriorating power market over the past few years and the ongoing Fukushima nuclear accident in Japan that is impacting the nuclear industry worldwide are also factors that were not present when the loan guarantee was first offered, arguably making the Vogtle project more risky today, not less.
The organization calls upon Congress to conduct an investigation of this loan guarantee process including the lack of transparency that surrounded it before DOE issues the final Vogtle guarantee to MEAG, which received an extension until the end of July, and before it issues any other loan guarantees to additional projects. In previously received documents, MEAG’s credit subsidy fee range was 5-11.1%.
Sara Barczak, high risk energy choices program director with the Southern Alliance for Clean Energy, issued this statement in response to today’s news:
“We are astonished that utility giant Southern Company is getting an amazing sweetheart deal with basically no protections for taxpayers. 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 four years ago. Have these agencies been living under a rock? Fukushima has happened, natural gas prices have fallen, nearly all other new reactor projects have vanished and, most importantly, the Vogtle expansion is 21 months behind schedule, well over $1 billion over budget and has a large outstanding lawsuit of nearly another billion dollars between Southern Company and Westinghouse. How that together doesn’t constitute an unacceptable risk to taxpayers is baffling.”
Mindy Goldstein, director of Emory’s Turner Environmental Law Clinic and counsel to SACE, issued this statement in response to today’s news:
“Throughout the four-year, Vogtle loan guarantee process, DOE has continuously failed to be transparent in its decision making. Despite repeated requests from SACE, the agency refused to timely disclose to the public the terms and conditions of the deal. And now our worst fears have been realized. Under the shroud of secrecy, DOE provided billions of dollars to Georgia Power and Oglethorpe, but asked them to pay nothing to ensure against default. Instead, in the event of default, taxpayers alone will be forced to pick up the bill. Our laws should protect citizens from this unfair exposure, and we call on Congress to investigate the loan guarantee process and demand that DOE make any further loan guarantee decisions in full view of the public.”
For additional background, please view a report analyzing some of the loan guarantee documents SACE received from previous FOIA litigation here and the supplemental memo. Unlike DOE and OMB, the Southern Alliance for Clean Energy has made thousands of pages of documents received publicly available through an online library.
Founded in 1985, the Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that create global warming solutions and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at www.cleanenergy.org