Obama DOE gave Southern Nuclear "sweetheart deal" on Vogtle 3 & 4 loan guarantees

"Burning Money" image by Gene Case, Avenging AngelsThe Inter Press Service has reported that President Barack Obama's U.S. Department of Energy has offered Southern Company a "sweetheart deal" on federal nuclear loan guarantees for the Plant Vogtle Units 3 & 4 proposed new atomic reactors: a 0.5 to 1.5% credit subsidy fee, lower than college students pay on their federal student loans. These facts came to light thanks to a courtroom victory by the Southern Alliance for Clean Energy (SACE), which won a Freedom of Information Act (FOIA) ruling from a federal judge who ordered DOE to divulge the terms of the first and only federal taxpayer-backed nuclear loan guarantee yet conditionally awarded.

Remarkably, Southern Co. has been asked for a mere $17 to $52 million of "skin in the game," in exchange for $8.3 billion in federal taxpayer-backed nuclear loan guarantees for Vogtle Units 3 & 4 -- proposed Toshiba-Westinghouse AP1000s (1,100 Megawatt-electric "Advanced Passive" pressurized water reactors). If Southern and its partners default on their loan repayments, the federal taxpayer will be left holding the bag. To make matters worse, taxpayers are not only guaranteeing the loans, they are also providing the loans. The source of the loans, the U.S. Finance Bank, is federal taxpayer funded. Despite the nuclear loan guarantees, private investment banks have not touched the financially risky project. 

The "moral hazard with a radiological twist" represented by this risky financial scheme puts 15 times more taxpayer funding at risk than was lost in the Solyndra solar loan guarantee scandal ($535 million); NIRS executive director Michael Mariotte pegs the default risk of Vogtle 3 & 4 as some 50 times higher than Solyndra's.

Despite such favorable terms, President Obama's Office of Management and Budget is still wary of the deal, offering opponents an opportunity to kill it. The "sweetheart deal" revealed by the unearthed documents has prompted Harvey Wasserman of Nukefree.org to ask, "Why should nuke loan guarantees cost less than student or home loans?"

"Vogtle nuke loan guarantee resolution up in the air" -- TAKE ACTION!

"Burning Money" image by Gene Case, Avenging AngelsThe trade press publication SNL has reported that Southern Company and the U.S. Department of Energy have agreed to extend negotiations over the conditional loan guarantee for $8.3 billion for the construction of two new reactors at the Vogtle nuclear power plant in Georgia until the end of the year. The conditional nuclear loan guarantee, the award of which was announced by President Obama himself in Feb. 2010, was supposed to be finalized 90 days after the U.S. Nuclear Regulatory Commission (NRC) approved the Vogtle 3 & 4 combined Construction and Operating License Applications (COLAs). On Feb. 9, 2012, by a 4 to 1 vote (with NRC Chairman Jaczko dissenting), NRC approved both COLAs. As Jaczko stated in his dissent, approval of Vogtle 3 & 4 without requiring that Fukushima lessons learned be applied was "as if Fukushima never even happened." In late 2011, NRC also approved the Toshiba-Westinghouse AP-1000 (a so-called Advanced Passive, 1,100 Megawatt-electric reactor) design proposed for Vogtles 3 & 4, despite lingering safety concerns identified by an environmental coalition and its expert witness, nuclear engineer Arnie Gundersen of Fairewinds Associates.

The stumbling block appears to be the level of "credit subsidy fee" the Department of Energy (and White House Office of Management and Budget, OMB) will charge Southern Co. for the taxpayer-backed nuclear loan guarantee. Documents recently obtained by the Southern Alliance for Clean Energy (SACE) reveal that in 2009, DOE told project partner Georgia Power it would be charged a credit subsidy fee of $17 to 52 million. That's not much skin the game, when federal taxpayers face the loss of $8.3 billion if the project defaults on its loan repayment. The Solyndra solar loan guarantee scandal involved the loss of $535 million by federal taxpayers -- a mere 1/15th the amount of taxpayer funding at risk on Vogtle 3 & 4.

In October 2010, the Obama OMB demanded an $880 million credit subsidy fee from Constellation Nuclear of Baltimore, in return for a $7.5 billion nuclear loan guarantee for the Calvert Cliffs 3 reactor (a French Areva EPR, so-called Evolutionary Power Reactor of 1,600 MW-e) targeted at Maryland's Chesapeake Bay shoreline. Constellation was unwilling to risk that much of its own money, and not only walked away from Calvert Cliffs 3, but from the new reactor biz altogether.

Given the major delays in finalization of the Vogtle 3 & 4 nuclear loan guarantee -- not to mention construction cost overruns and construction schedule delays that have already started piling up before the real work has even begun -- this entire proposal is very vulnerable to being blocked.

Please contact President Obama and his Energy Secretary Steven Chu. Urge them both to prevent "Solyndra on Steroids" -- the loss of $8.3 billion in the financially (as well as radiologically) risky Vogtle 3 & 4 new reactor scheme! Urge them to cancel the Vogtle nuclear loan guarantee!

More than $900 million cost overrun documented at Vogtle 3 & 4 new reactor construction project

"Burning Money" image by Gene Case, Avenging AngelsA coalition of environmental groups, including North Carolina Waste Awareness and Reduction Network (NC WARN), has issued a press release decrying a nearly billion dollar cost overrun at the Vogtle 3 & 4 new reactor construction project in Georgia. The groups warn that further cost increases are likely, due to rushed design and construction that has led to errors, as in sub-foundation grading, rebar quality assurance, and even radiological containment "shield building" design and construction.

The coalition's expert witness Arjun Makhijani, President of the Institute for Energy and Environmental Research (IEER), said: “Southern Company rushed into this project, as evidenced by the many requests for modifications of the license and early technical difficulties and problems including failure of ‘some details’ of early construction to conform to the Design Control Document, according to Georgia Power’s filing with the Securities and Exchange Commission.  Indeed, a part of the cost increase of $900 million appears to be attributable to overcoming delays and rushing the project again despite construction non-compliance.  The cost increase should not be a surprise; rather it is déjà vu all over again.  Rushing nuclear power reactors is not prudent and stockholders and/or the vendors, not ratepayers, should bear the burden of such costs.  It would be much better if construction were suspended until all design issues were resolved.”

"Nuclear industry suffers major defeat in Iowa"

"Burning Money" image by Gene Case, Avenging AngelsFriends of the Earth (FOE) reports that the Iowa State Legislature has ended its session without approving "Construction Work in Progress" (CWIP), a gimmick by which nuclear utilities can charge ratepayers on their electricity bill for the construction of atomic reactors, even if they never recieve one watt of electricity from their involuntary "investment." The victory is thanks to the efforts of an environmental coalition, including FOE as well as grassroots groups such as Green State Solutions. The grassroots environmental victory comes despite intense lobbying efforts by Warren Buffett's MidAmerican Energy, which hoped to foist the construction costs for its proposed "dirty, dangerous, and expensive" atomic reactor onto the ratepayers of Iowa, despite 3/4ths of Iowans opposing the plan.

"Stop the Nuclear Industry Welfare Program"

"Burning money" image by Gene Case, Avenging AngelsJust a couple days after rocking an anti-nuke rally in Brattleboro, Vermont, calling for the immediate shutdown of Entergy Nuclear's Vermont Yankee atomic reactor, Independent U.S. Senator Bernie Sanders has joined forces with Taxpayers for Common Sense Executive Director Ryan Alexander to pen an article on theHuffington Post entitled "Stop the Nuclear Industry Welfare Program." Sanders and Alexander list the many, large-scale taxpayer subsidies the nuclear power industry has enjoyed for over half a century. They point out the irony of filthy rich nuclear utility companies, like Exelon and Entergy, receiving such public support in the first place: they take in annual revenues of $33 billion and $11 billion, respectively.

On March 11, 2011, the Union of Concerned Scientists unveiled two major studies, one by David Lochbaum about the near misses at U.S. reactors in 2010, the second by Doug Koplow, a comprehensive analysis of half a century of taxpayer and ratepayer subsidies to the nuclear industry. The long scheduled press conference was eclipsed by the Fukushima Daiichi nuclear catastrophe which began just hours earlier. In this year's annual review report, "Living on Borrowed Time," Lochbaum documented that 5 of 15 near misses at U.S. reactors in 2011 took place at Entergy owned (Palisades, MI X 2; Pilgrim, MA X 2) or operated (Cooper, NE) plants. Sanders and Alexander point out that, for any catastrophic radioactivity release at a U.S. reactor causing more than $12 billion, U.S. taxpayers would be looked to for picking up the tab, under the Price-Anderson Act.