New Documents Confirm Southern Company Gets Sweetheart Deal from Energy Department for Multi-Billion Dollar Vogtle Loan Guarantees; $1.8 Billion Deal for MEAG Raises Serious Concerns–Not Yet Finalized
The nuclear industry hasn’t built a new reactor in the U.S. in over 30 years. In an attempt to overcome the uncertainty, expense, and risk of financing new nuclear reactors, nuclear proponents are asking for billions of dollars in taxpayer-financed federal loan guarantees–essentially a taxpayer funded bailout. The government’s first nuclear loan guarantee gamble is with $8.3 billion, announced in February 2010, was offered to Southern Company, MEAG and Oglethorpe Power, for two more nuclear reactors at Plant Vogtle in Waynesboro, Georgia despite, at the time, an uncertified reactor design and unlicensed site. Over four years later, $6.5 billion of the Vogtle loan guarantees were finalized with MEAG’s $1.8 billion portion still unresolved and no other loan guarantees have been awarded as the so-called “nuclear revival” continues to sputter.
What are Federal Loan Guarantees?
Federal loan guarantees for new reactors are essentially a taxpayer bailout of the nuclear industry. Wall Street considers investment in nuclear reactors too risky, making it difficult for utilities to finance these high capital projects. So the government stepped in and shifted the risk to taxpayers if the project defaults. The Union of Concerned Scientists released a report in February 2011 detailing subsidies the nuclear industry enjoys from cradle to grave.
In 2007 Congress authorized the Department of Energy to guarantee up to $18.5 billion of debt for nuclear power projects. In early 2010 President Obama proposed tripling that to $54.5 billion and also requested the $36 billion increase in subsequent proposed Administration’s budgets, but failed to receive. These guarantees mean that if the borrowers, in this case the utilities, default on their loans, U.S. taxpayers will shoulder the burden and pay back the debt.
Though over four years has passed since the Vogtle loan guarantee was announced, no other conditional loan guarantee commitments for new reactor projects have been offered. SCE&G’s V.C. Summer plant in South Carolina may be the only viable top contender for a portion of the remaining $10 billion in nuclear loan guarantees as past “contenders” have since fizzled out — NRG’s South Texas project and Unistar’s Calvert Cliffs in Maryland are no longer legitimate proposals for example.
Nuclear proponents thought $18.5 billion was going to be enough to spur a nuclear “renaissance,” but per reactor cost estimates have skyrocketed, more than tripling in some cases. It is now apparent that new reactors are so risky and uncertain economically that $18.5 billion is only a fraction of what the industry needs.
Vogtle Loan Guarantee
SACE remains very concerned about the controversial $8.3 billion nuclear loan guarantee offered to Southern Company’s proposed new reactors at Plant Vogtle by President Obama back in February 2010. SACE filed a Freedom of Information Act (FOIA) request to the Department of Energy in March 2010 and a FOIA appeal in May 2010 in order to find out more about these risky loan guarantees and we failed to receive a satisfactory response. On August 9, 2010 we filed suit against the Department of Energy, read more in our blog. Eventually, we were victorious and reached a settlement in May 2012 with the Department of Energy, and many documents were released–revealing that taxpayers were still lacking key protections and mismanagement still plagued the DOE’s loan guarantee program.
SACE commissioned an analysis from Synapse Energy Economics and Earth Track to study the documents we received in May 2012 along with more recent October 2012 requests. Find the January 2013 report here along with the supplemental memo. Additionally, we worked to provide an expansive online library of the vast amount of documents we received. Taxpayers for Common Sense (TCS) shares our concerns, read their summary of the troubled Vogtle project here and find four fact sheets issued in October 2013 here.
SACE filed an administrative appeal in January 2014 after receiving an inadequate response from the Department of Energy from our earlier September 2013 FOIA requests. In mid-February, the DOE finalized the loan guarantees for Georgia Power and Oglethorpe and SACE immediately filed a FOIA request to get the final terms and conditions, only to be ignored. In April it was revealed through an E&E News story that the credit subsidy fees for both utilities was shockingly reduced to nothing, $0. MEAG’s $1.8 billion loan guarantee has yet to be finalized and MEAG received yet another extension, until January 2015. Read more about the concerns with the loan guarantee here.
- Sign the petition calling for an investigation!
- View fact sheet from Taxpayers for Common Sense
- Contact Congress
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The Many Problems with Nuclear Loan Guarantees
New Nuclear Reactors are Risky Ventures
A 2003 Congressional Budget Office report found “the risk of default on a [nuclear] loan guarantee to be very high-well above 50 percent”. In July 2010, the Government Accountability Office (GAO) issued a report that found mismanagement by the Department of Energy of the Title XVII loan guarantee program.
Clearly if the nuclear industry is given these loan guarantees and proceeds with construction, some, if not all, projects are likely to falter due to cost overruns, delays, lack of demand or cancellation due to the emergence of cheaper energy alternatives. Unfairly, taxpayers will end up bailing out the wealthy nuclear industry.
Nuclear Power is a Mature Industry Plagued with Problems
Loan guarantees for new nuclear reactors are a massive government handout for an already mature industry that has been plagued by cost overruns. Nuclear power has been receiving major subsidies for more than 50 years; it should be able to stand on its own.
Safety Concerns Exist
The nuclear reactor design proposed for many of loan guarantee applicants has never been built or operated anywhere in the world. During the certification process, safety issues were identified with the Toshiba-Westinghouse AP1000′s safety shield building potentially not being able to withstand severe weather events such as hurricanes, tornadoes, and earthquakes. Concerned organizations released a technical report detailing an additional serious flaw with the AP1000 design. Though the design was eventually certified, safety concerns remain.
Radioactive Waste Remains a Problem
New reactors will produce dangerous radioactive waste for which no safe storage exists even for the existing fleet of nuclear reactors. Addressing and solving the severe nuclear waste problem our country already has should be done before even considering whether new reactors should be built.
Loan Guarantee Program Lacks Transparency
Despite President Obama’s commitment to transparency in government, the loan guarantee program has been administered out of public view. The criteria the recipients are judged on has not been made public nor is it clear what deal making is going on to determine the fees borrowers must pay to risk taxpayer money or whether utilities will pay even a portion of it back if their gamble goes bad. And when the public has complained, obstacles prevented their voices from being heard. For instance, over 22,500 signatures were collected urging President Obama and Sec’y Moniz to stop the Vogtle loan guarantees — but DOE rejected the stack of petitions!
What You Can Do – Say NO to More Bailouts for New Nuclear Reactors!
The Department of Energy has not yet selected the other nuclear reactors in the running for what remains of the $18.5 billion in loan guarantees nor have President Obama’s earlier budget requests to increase the program by $36 billion to $54.5 billion been approved. Further, the Vogtle loan guarantee has NOT been fully finalized — there is still time to stop MEAG’s portion of this boondoggle!
We need to take action now and stop more money going into the risky nuclear loan guarantee program that will likely lead to a taxpayer bailout of the nuclear industry.
- Write a letter to your Congressional Representative and U.S. Senators urging them to oppose any new loan guarantees for risky nuclear reactors and encourage the Department of Energy to withdraw the remaining $1.8 billion offer to MEAG for the existing Vogtle loan guarantee offer given cost increases and schedule delays. Instead, members of Congress should support investments in truly clean energy options that offer broad benefits such as energy efficiency and conservation, wind,solar, and bioenergy that offer broad benefits.
- Sign the petition calling for an investigation of the $6.5 billion in loan guarantees to Southern Company and Oglethorpe Power for the Vogtle reactors!
- Demand that your elected officials look out for YOUR interests, not the big power companies.
- Urge your elected officials and regulators to move our region towards a bright future built upon energy efficiency and clean, renewable energy that can protect our families and businesses from financial risk as well as preserve the region’s vital natural resources on which our economy relies.
 Congressional Budget Office, U.S. Congress. 2003. Cost estimate: S. 14, Energy Policy Act of2003. Washington, DC, p. 11