nuclear-news

Taxpayers dudded on loan guarantees for Vogtle Nuclear Power Plant

The credit subsidy cost these documents reveal for the Vogtle project is absurdly low. It is now years out of date and little information on how it was justified is provided. This information shows that taxpayers should be even more worried about signing off on an $8.3
billion loan guarantee for the Vogtle reactor.” “A one percent fee doesn’t even begin to reflect the risk of default” 

Taxpayers deserve to see the basis on which the ridiculously low fee for Southern Company was calculated. 

SACE has filed a FOIA request to unearth what the new estimates are in order to understand what risks taxpayers still face…… the terms
of the updated loan guarantee deal are still being held in secret.

Secret Documents Highlight Nuclear’s Risk to Taxpayers  Market Watch, ATLANTA, May 23, 2012 /PRNewswire via COMTEX/ — A closer look at new documents shows Department of Energy significantly underestimated controversial Vogtle Nuclear Plant’s risk of default

Late last week Southern Alliance for Clean Energy (SACE) successfully negotiated the release of hundreds of pages of secret nuclear loan guarantee documents to settle Freedom of Information Act (FOIA) litigation spanning nearly two years. These documents reveal that one of the nation’s largest utilities, Southern Company, was aggressively pursuing controversial federal nuclear loan guarantees at significantly below market rates.

One of the most substantial
revelations revealed in the recently uncensored documents centers
around the credit subsidy fee. The credit subsidy fee represents the
“price tag” a utility must pay to the federal government for the loan
guarantee, and it is calculated based on the borrower’s risk of
default.According to the uncensored credit subsidy cost documents
which showed a 0.5-1.5% fee for Southern Company, their credit subsidy
cost for their share of the $8.3 billion loan guarantee would be only
$17 to $52 million.

Southern Company’s largest subsidiary, Georgia Power, is majority
owner. The uncensored documents also reveal that the other major
utility partners were offered a conditional loan guarantee with
substantially higher credit subsidy fees. Oglethorpe Power’s fee was
2.5-4.3% for a range of $70-132 million and MEAG’s fee was 5-11.1% for
a range of $108-180 million. No one outside the nuclear industry
itself has advocated for a subsidy fee as low as the one initially
offered to Southern Company in the recently released documents.

“It is outrageous to learn that Southern Company was conspiring to secure
below-market rate loan guarantees, which would have put billions of
dollars of taxpayer money at risk, for a controversial nuclear plant
in Georgia,” said Dr. Stephen Smith, executive director of Southern
Alliance for Clean Energy. “It is still unclear why the Department of
Energy (DOE) has entertained this level of favoritism to this
particular company.

More information needs to be revealed about any terms of the loan
guarantees that have been proposed since the commitments were
initially made in order to learn whether any undue influence was
brought to bear on DOE to accept this high-risk venture on the backs
of taxpayers.”These documents provide crucial information related to
the $8.3 billion U.S. taxpayer-financed nuclear loan guarantees that
were conditionally committed to Southern Company and its utility
partners in February 2010. The guarantees would support the utility
companies’ efforts to build two new Toshiba-Westinghouse AP1000 design
nuclear reactors at an estimated cost of over $14 billion at the
existing Plant Vogtle site near Waynesboro, Georgia.

“We are extremely pleased to have negotiated a settlement for our
client that finally provides those concerned with the loan guarantee
program the information that should’ve been public from the
beginning,” said Mindy Goldstein, director of the Turner Environmental
Law Clinic, who represented SACE in the FOIA litigation. “The public
can now meaningfully evaluate the loan guarantee offers and determine
whether Southern Company was given preferential treatment at the risk
of taxpayer dollars.” “It is past time DOE start shedding light on the
troubled loan guarantee program,” said Ryan Alexander, president,
Taxpayers for Common Sense. “They are playing hide-the-ball with
outdated and redacted materials that only get us so far in
understanding the real risks taxpayers are assuming with these loan
guarantees.

The credit subsidy cost these documents reveal for the Vogtle project is absurdly low. It is now years out of date and little information on how it was justified is provided. This information shows that taxpayers should be even more worried about signing off on an $8.3
billion loan guarantee for the Vogtle reactor.” “A one percent fee doesn’t even begin to reflect the risk of default,” declared Arjun Makhijani, president of the Institute for Energy and Environmental
Research. “With rising costs of Vogtle, low natural gas prices, and
declining growth rates for electricity, the risk of default is far
greater. Taxpayers deserve to see the basis on which the ridiculously
low fee for Southern Company was calculated. The DOE should carefully
study the experience of the first wave of nuclear power when scores of
plants were cancelled, for relevance to Vogtle. That experience
suggests that the probability of default due to non-completion could
be far greater than 10%.” Recent news reports suggest the agency may
have increased the credit subsidy fee from its initial offers. If
true, this indicates that DOE may now believe investment in nuclear
power plants is riskier than originally estimated. ……

SACE has filed a FOIA request to unearth what these new estimates are
in order to understand what risks taxpayers still face. “My
organization urges that the loan guarantee for Plant Vogtle be
terminated,” said Dr. Smith. “Despite this newly revealed information,
and perhaps because of the ongoing controversies resulting from the
nuclear accident at the Fukushima Dai-ichi complex in Japan, the terms
of the updated loan guarantee deal are still being held in secret. We
call for an investigation into this sweetheart deal and for all
records of the negotiations and political influence to be made public.
We believe this is a high-risk project, far from completion, that puts
both taxpayers and ratepayers at risk. We believe there are safer,
cleaner, more-cost effective alternatives to generating electricity.

Criticism of the loan guarantee program has abounded for several
years. Many reports by various government agencies have stated that
the DOE has mismanaged the loan guarantee program. (
http://www.gao.gov/assets/590/589210.pdf ) To view the newly released,
uncensored documents that Southern Alliance for Clean Energy has made
publicly available, go to
http://www.cleanenergy.org/index.php?/Testimony.html .
http://www.marketwatch.com/story/secret-documents-highlight-nuclears-risk-to-taxpayers-2012-05-23

May 24, 2012 - Posted by Christina Macpherson | politics, USA