Statement by Steve Ellis, Vice President, Taxpayers for Common Sense

at Southern Alliance for Clean Energy Tele-Press Conference Announcing Department of Energy Lawsuit over Freedom of Information Act Violations

August 10, 2010

Good afternoon and thanks for listening in. I am Steve Ellis, Vice President of Taxpayers for Common Sense, a national non-partisan budget watchdog.

And thanks to Southern Alliance for Clean Energy and the Turner Environmental Law Clinic for their efforts to force greater transparency and accountability at the Department of Energy Loan Guarantee Program. Although we are not a party to their lawsuit, after years of following the program, it is clear to TCS that their FOIA request experience is symptomatic of the flaws of this highly closed door program.

As was explained, Southern Company received an $8.3 billion taxpayer-backed loan guarantee for the construction of two nuclear reactors at their Vogtle site. This hefty loan guarantee was the first to be awarded to a nuclear reactor through the Loan Guarantee Program. The program currently has $51 billion in authority, with $18.5 billion earmarked for nuclear reactors, so this was a massive commitment to one project.

Although a “conditional” guarantee, which means that the final sign off will not happen until the terms of the agreement are met, the risk still appears to be unacceptable. I say “appears to be” because taxpayers have been kept in the dark throughout the selection process and we understand that the “terms and conditions” of the conditional guarantee will not be made public.

What we do know is that facing problems with construction and design, the Vogtle project’s two AP1000 reactors costs could sky-rocket well beyond their anticipated $14 billion price tag. The Nuclear Regulatory Commission (NRC) has rejected this design because it would not withstand severe weather, such as hurricanes, tornadoes and earthquakes. These unresolved problems could easily cause delays and risk the project’s default yet DOE still moved forward in issuing the loan guarantee, even granting Southern Company an additional 30 days to make a decision!

With the current status of the Vogtle project and other nuclear reactor projects in disarray, it is difficult to comprehend how the DOE could receive financial assurances, now or in the near future that could adequately protect the billions they intend to hand out. From information gleaned from company releases and the media, the Southern Company project and other likely recipients including Calvert Cliffs, and South Texas all have significant financial and technical hurdles standing in their way.

Everything indicates we should be putting brakes on this program, including the earlier mentioned GAO report that charges DOE is giving preferential treatment to nuclear applicants and has no clearly stated goals for the overall program. Instead of heeding these concerns, the agency continues to rush ahead, so confident in their closed door program that they have asked Congress to rush through an additional $9 billion in nuclear loan guarantees immediately and is asking for $27 billion more for fiscal year 2011.

So, DOE is hiding critical information behind their back with the one hand while they have their other hand out asking for billions more in loan guarantees. They already have the authority to give out more than $18 billion for nuclear reactors and still have yet to provide any assurances that these projects are smart investments. In fact, all the evidence points to taxpayers losing big on reactors like the Vogtle project. This is unacceptable and DOE must come clean and start fully answering these information requests or lawmakers should stop the program

Over the last six decades, taxpayers have given the nuclear industry billions in research in development money, liability and risk insurance and other tax breaks and subsidies. Now someone at DOE needs to explain quickly how it makes fiscal sense to promise billions to an industry that has been plagued with defaults for projects. When Wall Street doesn’t feel comfortable investing in these projects, how can taxpayers?