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CBO Director on Loan Guarantees for New Nuclear Plants

imageThe Congressional Budget Office’s Director, Douglas Elmendorf, provided some important insight into how loan guarantees are assessed in the US government’s budget. For those who have been following the 50 percent default rate argument that nuclear critics have been making, CBO makes clear that the assumption of the rate in their 2003 report was for a piece of legislation that was never enacted.

In the Director’s blog post, CBO basically says that there are numerous varying assumptions that go into assessing the credit risk of each project. But “without such information, much of which would be proprietary, CBO has no basis for estimating the cost to the government of any specific loan guarantee of this type.

As said before and confirmed by CBO, no data exists to support the claim that 50 percent of new nuclear plants that are built will default. Perhaps the Director’s blog post puts this mis-understood claim to rest; somehow I don’t think so though…


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There's an invisible force powering and propelling our way of life.
It's all around us. You can't feel it. Smell it. Or taste it.
But it's there all the same. And if you look close enough, you can see all the amazing and wondrous things it does.
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To explore.
To discover.
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It's on even when we're not.
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Missing the Point about Pennsylvania’s Nuclear Plants

A group that includes oil and gas companies in Pennsylvania released a study on Monday that argues that twenty years ago, planners underestimated the value of nuclear plants in the electricity market. According to the group, that means the state should now let the plants close.


The question confronting the state now isn’t what the companies that owned the reactors at the time of de-regulation got or didn’t get. It’s not a question of whether they were profitable in the '80s, '90s and '00s. It’s about now. Business works by looking at the present and making projections about the future.

Is losing the nuclear plants what’s best for the state going forward?

Pennsylvania needs clean air. It needs jobs. And it needs protection against over-reliance on a single fuel source.

What the reactors need is recognition of all the value they provide. The electricity market is depressed, and if electricity is treated as a simple commodity, with no regard for its benefit to clean air o…