nuclear-news

Some conservatives in USA now opposing nuclear loan gurantees

The National Taxpayers Union, Taxpayers for Common Sense, the Competitive Enterprise Institute and the Non-proliferation Policy Education Center all signed a letter to Congress on Dec. 8 that called for halting any increase in the amount allocated to the loan guarantees for nuclear plants.

Budget Hawks Oppose Nuclear Loan Guarantees – International Business Times, By Jesse Emspak | December 15, 2010 Fiscal conservatives have started questioning a government program that guarantees billions in loans for new nuclear power plant construction. Traditionally, the GOP has been a strong supporter of the nuclear power industry. Senators such as Lamar Alexander, Orrin Hatch, Mitch McConnell, Jeff Sessions and Richard Shelby have all stated they favor development of nuclear energy. It was a Republican-controlled Congress and White House that passed the 2005 Energy Policy Act, which put in place a loan guarantee program for nuclear plants.

…….But now, some groups that see themselves as fiscal conservatives are saying that the loan guarantees would unfairly shift the risk of defaults to the taxpayers, and cost the government money that could better be spent elsewhere. Those with a more libertarian bent say the guarantees distort the cost of capital. If the private sector was willing to finance nuclear energy, they say, it would be done.

The National Taxpayers Union, Taxpayers for Common Sense, the Competitive Enterprise Institute and the Non-proliferation Policy Education Center all signed a letter to Congress on Dec. 8 that called for halting any increase in the amount allocated to the loan guarantees for nuclear plants. Currently the government can guarantee up to $20.5 billion in loans ($2 billion is slated for backing uranium distribution and enrichment projects). Congress has before it a proposal to boost that by $7 billion. There are two projects in Georgia that have a total of $8 billion allocated to them. The loan guarantees cover up to 80 percent of the project cost a

Traditionally, the GOP has been a strong supporter of the nuclear power industry. Senators such as Lamar Alexander, Orrin Hatch, Mitch McConnell, Jeff Sessions and Richard Shelby have all stated they favor development of nuclear energy. It was a Republican-controlled Congress and White House that passed the 2005 Energy Policy Act, which put in place a loan guarantee program for nuclear plants. Alexander even went so far as to praise the Obama administration for pushing to increase the loan guarantees.

But now, some groups that see themselves as fiscal conservatives are saying that the loan guarantees would unfairly shift the risk of defaults to the taxpayers, and cost the government money that could better be spent elsewhere. Those with a more libertarian bent say the guarantees distort the cost of capital. If the private sector was willing to finance nuclear energy, they say, it would be done.

…..Ryan Alexander, president of Taxpayers for Common Sense, says the record of the Department of Energy in administering loan programs is not encouraging. She cites a 2003 Congressional Budget Office study says default rates can hit 50 percent or more, and that would mean that several projects totaling billions could leave the government footing the bill. “It’s just an unacceptable risk for the taxpayer to take,” she said. Alexander says it would be better if the entire risk of default was not on the government……

William Yeatman, policy analyst at the Competitive Enterprise Institute, says the costs of a nuclear power plant aren’t really well-known, because nobody has built one in the U.S. for so long — since 1979. Another problem is the removal of any risk from the investors. With no risk, there is less incentive to be prudent about costs, he says. As importantly, the method for calculating the loan subsidy costs – a percentage that the borrower has to pay to make up for the risk the government is taking — is not transparent…..

December 16, 2010 - Posted by Christina Macpherson | politics, USA