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First federal nuclear loan guarantee goes to â?¦ someone else 

Greg Harman
[email protected]

President Obama announced this morning that the federal government will guarantee $8 billion in loans for two new nuclear reactors of an untested design in Georgia. With the federal blessing, the pair could become the first new reactors built in the country in nearly 30 years.*

At a Maryland headquarters of the International Brotherhood of Electrical Workers, Obama said it was “only the beginning” â?? that his new budget would triple the federal money available for other reactors to come. He cast his decision in economic, supra-partisan terms.

“On an issue which affects our economy, our security, and the future of our planet, we cannot continue to be mired in the same old debates between left and right; between environmentalists and entrepreneurs,” he said.

“Our competitors are racing to create jobs and command growing energy industries. â?¦ And the commitment of these other countries isn't just generating jobs; it's generating demand for expertise and new technologies. Make no mistake: whether it is nuclear energy, or solar or wind energy, if we fail to invest in these technologies today, we'll be importing them tomorrow."

The U.S. Department of Energy decision to back a new reactor design, one that the U.S. Nuclear Regulatory Commission ordered refigured out of fears that strong winds could blow it over, bodes poorly for the NRG Energy/CPS Energy gamble on an already approved, older design for new reactors in South Texas.

Writes Katherine Ling at The New York Times:

Southern estimates the two new reactors will cost $14.5 billion. Under the loan guarantee program, the government may guarantee up to 80 percent of a nuclear project's cost, but the recipient must pay a percentage as a "credit subsidy" fee set by DOE and the Office of Management and Budget. The size of the credit subsidy fee has been the focus of squabbles among the government, industry and advocacy groups.

Details of the loan guarantee are still being finalized today, an industry source said.

The fact that CPS and its nuke partner NRG, whose planned expansion of the South Texas Project nuclear facility is also a loan contender, are attacking each other in court probably didn't help their chances.

However, a cheerful DOE spokesperson familiar with the selection process was optimistic â?? and infinitely forgiving.

“There's a lot of stuff going on with all the applicants,” said Ebony Meeks. “Everything is taken into consideration. Saying that, I don't want to say `the lawsuit` doesn't â?¦ it's not a gold star, but it doesn't necessarily preclude you from being reviewed and eventually receiving a conditional commitment.”

What the selection of Southern Company's Georgia project means for NRG, CPS, and the planned expansion of the South Texas Project outside Bay City is unclear. It was just a few weeks ago that NRG CEO David Crane suggested that if his company didn't get the loan guarantee, he would pull out entirely.

Did he mean Round One, or does he have more sticking power given Obama's jump into the nuclear ring? A call to an NRG press agent in Houston was not immediately returned this morning.

Meanwhile, those opposing new nuclear in the country pointed to a major leak of radioactive tritium now flushing into the Connecticut River in Vermont as an illustration of the dangers the technology represents.

UPDATE (12:06) In a conference call this morning, Secretary of Energy Steven Chu said of the new reactors: "If you lose control of it, it will not melt down. ... The new generation of reactors are much safer." Of course, he also said radiation was "contained" during the Three-Mile Island release and near-total meltdown. So, there ya go.


* The exception to this statement would be Watts Bar in Tennessee. Unit One at Watts Bar was begun in 1973, idled for many years, and completed in 1996. If Southern Company's reactors can be completed in six years, they would be the first reactors completed in 20 years. However, Watts Bar Unit 2, begun in 1985 and also later idled, has been restarted by the Tennessee Valley Authority and is expected to be completed in 2013.

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