Friday, July 16, 2010

Loan Guarantees and Desperation

Chet Edwards small-thumb-425x321 We’ve seen surprisingly little news for it, but maybe it’s a little too inside nuclear baseball. That doesn’t mean the news isn’t good, though:

House lawmakers approved a spending bill Thursday that includes $25 billion in loan guarantees for new nuclear reactors, an amount that could enable the expansion of North Texas' Comanche Peak plant.

That last bit explains why this is appearing in the Dallas News. And Luminant is certainly ready to roll:

Dallas-based Luminant, which owns the plant, said the additional amount "would be sufficient" to allow funding for its plan to build two reactors. Luminant said it was "the first alternate" last year when the U.S. Department of Energy selected four nuclear projects to further consider for loan guarantees.

"We can't guarantee it, but this is a very important step to enabling it," said David Campbell, chief executive of Luminant, the power-generation unit of Energy Future Holdings.

No playing favorites from us, but we wish them the best. Let’s see how it goes.

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Interestingly, Campbell give a shout-out to his local Representative Chet Edwards (D-Texas)

Campbell credited Rep. Chet Edwards, D-Waco, with helping to secure the funding. An earlier draft of the legislation didn't include funding for the nuclear program, which is unpopular among liberals in the House.

"We are at the dawn of a nuclear power renaissance in the United States, which will create hundreds of thousands of good-paying jobs and the clean energy our nation needs," Edwards said in a prepared statement.

Well, not all liberals in the House, surely. But Edwards didn’t say that, the reporter did (and shouldn’t have.) What Edwards said – all good.

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But back to the loan guarantees. The House had already moved $9 billion of the Obama administration’s loan guarantee authority request from 2011 to a 2010 supplemental spending bill, so the total authority between the two would be $34 billion. And an additional $25 billion has been committed for 2011 to renewable energy sources (so you can tweak your friends who try to portray this as a “bail-out” for nuclear energy).

Because, whether for nuclear or renewable energy sources, there’s no taint of bail-out here. As we point out every time we mention them, loan guarantees are not direct payouts from the government to an industry. Instead, they give private lenders confidence to loan money for nuclear energy plant construction.

Government offsets the risk in part because government, through regulation and a long licensing process, adds to the risk yet has a societal interest in new baseload (in the case of nuclear energy) electricity generation that does not produce greenhouse gases.

There are other considerations, too, including that the U.S., unlike other countries, leaves the energy sector largely to private business. Those businesses’ are relatively small – the largest U.S. electric company has a market value of about $33 billion and most are considerably smaller. So loan guarantees help ensure that an electric company isn’t risking financial disaster – obviously, also a social good. You can see NEI’s response here.

So – the news is good.

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Well, not for everyone:

This is nuclear power's summer of desperation. It has just a few short weeks to grab billions in taxpayer funding for new nuclear plants.

Last time we wrote, a $9 billion package was being slipped into an "emergency" war appropriations bill.

Now the industry is demanding $25 billion for unspecified projects. Again, your voice can make a difference.

This comes from Bonnie Raitt, Jackson Browne and Graham Nash. As happens, our summer of desperation is going just fine, thank you very much. Maybe to add to the good vibe, we’ll “demand” some iced tea and lay some of their vinyl on the turntable. Good entertainers all.

Rep. Chet Edwards.

1 comment:

JD said...

As a joke a friend signed me up for that nukefree.org newsletter. I replied to this most recent one, asking if they were in fact referring to loan guarantees. The letter itself only says "$9 billion package" and "demanding $25 billion", and of course the government won't be out this much money unless every single nuclear-related project fails.

Interestingly enough they failed to mention that the appropriations bill doesn't so much call for $9 billion in nuclear loan guarantees, as it calls for $18 billion in energy loan guarantees, split equally between nuclear and renewables.

Where then is the criticism of renewable energy loan guarantees in the appropriations bill?

I fear I know the answer to this question. Nukefree.org knows what's best for us, so it's okay if they mislead people toward that end. They've seized on the war appropriations bill because it's convenient, not because they disagree with the non-war spending. They don't mention renewables getting loan guarantees because if loan guarantees are "bailouts" (as nukefree.org constantly says) what does that mean for renewables?