Nuclear industry wants another $100B subsidies with less responsibility for failures

[kristopher]

Let's put this into perspective -

In 2003 after saying for years that IF the nuclear industry could JUST get:
loan guarantees covering the investors for 50% of the cost of new nuclear plants and
fast-track, one stop permitting authority that severely restricted input by the public, the Congress, AND the courts and
a special subsidy of $500,000,000 in the event there were problems with the design that REQUIRED the NRC to halt or delay construction to fix the problems;

THEN they could build about ten plants on time and on budget in a way that would reduce the $2500/kw forecast price to by 2/5ths to a price of $1500/kw by 2011.

This was submitted to the CBO for analysis and the CBO said that didn't seem like such a hot idea to them:

For this estimate, CBO assumes that the first nuclear plant built using a federal loan guarantee would have a capacity of 1,100 megawatts and have associated project costs of $2.5 billion. We expect that such a plant would be located at the site of an existing nuclear plant and would employ a reactor design certified by the NRC prior to construction. This plant would be the first to be licensed under the NRC’s new licensing procedures, which have been extensively revised over the past decade.

Based on current industry practices, CBO expects that any new nuclear construction project would be financed with 50 percent equity and 50 percent debt. The high equity participation reflects the current practice of purchasing energy assets using high equity stakes, 100 percent in some cases, used by companies likely to undertake a new nuclear construction project. Thus, we assume that the government loan guarantee would cover half the construction cost of a new plant, or $1.25 billion in 2011.

CBO considers the risk of default on such a loan guarantee to be very high—well above 50 percent. The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources. In addition, this project would have significant technical risk because it would be the first of a new generation of nuclear plants, as well as project delay and interruption risk due to licensing and regulatory proceedings.

Well, by 2005 the nuclear industry nonetheless managed to get the package included in the 2005 energy bill and the industry was off to the races, the Great Nuclear Renaissance was *finally* underway!

Except that it wasn't.

Even though several projects were proposed and a few preliminary plans were submitted for review by the NRC...
Even though the proposals for plants were all in jurisdictions where local laws would allow the investors to recoup cost overruns and losses not covered by Federal loan guarantees from the ratepayers...

Still no one wanted to invest in a huge project that had little chance of being profitable and a very high risk of going bankrupt.

So in comes Obama; to curry favor for support from Republicans on climate and energy legislation, he took a step unpopular with the base - he not only stood by the support Bush had promised the nuclear industry but he UPPED the amount covered by loan guarantees AND he approved government funded loans.

All the nuclear industry had to do was pay a fee upfront to offset the expected losses to the public. The figure arrived at for the Calvert Cliffs projects was $880M.

The first response was that Constellation, the US partner to French nuclear vendor EDF, backed out of the project. "Too high" they said.

Now we have this statement in the article below:

Nuclear society president-elect says loan guarantee changes are needed

Charlotte, North Carolina (Platts)--26Oct2010/626 am EDT/1026 GMT

The president-elect of the American Nuclear Society said the US Department of Energy's loan guarantee program needs changes if it is to increase the number of nuclear power plants in the country.

The current program "is in need of reform,"...

"The Office of Management and Budget has set terms and conditions may destroy the project's economics and prevent the project from going forward," he said.

The program could be changed to improve the chances of success... (by) adding $100 billion to the federal government's loan guarantee authority and increase direct government support for the industry.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Nuclear/8107310

[struggle4progress]

1. It seems like only yesterday the nuclear industry was collecting billions in "rate hikes"

to cover the "stranded costs" of prematurely defunct reactors

[kristopher]

2. That's still going on...

Florida just allowed the people trying to build to confiscate $160B from ratepayers for a plant that has a strong chance of never being built.

[Kolesar]

3. $160 billion--that's a lot of grapefruits...eom

[kristopher]

4. That is only the 2011 portion

http://www.businessweek.com/ap/financialnews/D9J3IRIG2.htm

Fla. PSC continues Progress Energy nuke plant fee

By BILL KACZOR

Progress Energy Florida can keep billing customers, although at a slightly lower rate, for another year for a nuclear power plant that might never be built, state utility regulators agreed Tuesday.

The Public Service Commission unanimously agreed to let the utility, a subsidiary of Progress Energy Inc., recover $163.6 million in nuclear plant construction costs from customers in 2011. That's down from $206.9 million this year.

Residential customers will pay a fee of $5.53 for 1,000 kilowatt hours per month, which is about average for a small home. That's $1.42 less than they are paying this year.

...(Southern Alliance for Clean Energy lawyer Gary) Davis said if the Levy County plant is built it would add about $40 to the average customer's monthly bill when it's ready to go on line in about 10 years.

...