WASHINGTON, D.C. – February 16, 2010 – Ryan Alexander, president of Taxpayers for Common Sense, issued the following statement today in the wake of the U.S. Department of Energy issuing an $8.3 billion taxpayer-backed “conditional loan guarantee” to Southern Company for the construction of two nuclear reactors in Waynesboro, Georgia:

Today President Obama announced an $8.3 billion taxpayer-backed, conditional loan guarantee to the Atlanta-based Southern Company for the construction of two nuclear reactors in Waynesboro, Georgia. The two AP1000 reactors have been estimated to cost more than $14 billion, but these estimates are likely to skyrocket, as problems with construction and design have already begun. Recently, the Nuclear Regulatory Commission (NRC) rejected the AP1000 design because it would not withstand severe weather, such as hurricanes, tornadoes and earthquakes. The loan guarantee will be awarded through the Department of Energy Loan Guarantee Program.

Although the DOE has offered Southern Company a “conditional” loan guarantee, which means that the final sign off will not happen until the terms of the agreement are met, the risk to taxpayers is still unacceptable. Given this and the current status of other nuclear reactor projects, it is difficult to comprehend how the DOE could receive financial assurances, now or in the near future, that could protect the $8.3 billion taxpayer commitment.

Taxpayers should not be asked to tie up billions of dollars backing loans for an industry plagued with financing, design, and construction delays and a track record of defaulting on loans even in the post-licensing period due to construction problems, and cost overruns. If the nuclear industry is a solid investment, then they should be able to receive the backing of Wall Street.

Over the last six decades, taxpayers have given the nuclear industry more than $100 billion in subsidies. It does not make fiscal sense to promise billions more for an industry that has a history of cost overruns and other financial problems nor a project that is already having problems with its design. DOE should take a cue from Wall Street and keep taxpayers out of the nuclear industry.

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Background:

Under the Department of Energy Loan Guarantee Program, Southern Company applied for two 1,102 MW reactors at its Vogtle site in Waynesboro, Georgia. Southern Co. would construct the reactors, while Georgia Power, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia, and The City of Dalton, Georgia would jointly share ownership.ⁱ Southern Co. plans to build two Westinghouse AP1000 reactors as the third and fourth Units at the Vogtle site.ⁱⁱ Southern Co. plans for the first unit to come online in 2016, with the second unit following in 2017, but recent delays could easily push back the completion date.ⁱⁱⁱ

Georgia Power’s share of the cost has been estimated at $6.4 billion, with the cost of the entire project estimated to total $14 billion.^iv,v  After the Georgia Public Service Commission approved Georgia Power’s request to receive early recovery of financing costs, Georgia Power estimated that this may bring their share of the costs down to $4.5 billion.^vi However, significant problems with the AP1000 design are likely to increase delays and costs.

In the late 1980’s Georgia Power experienced significant cost overruns with the first two reactors on the site. Original estimates for four reactors were under $1 billion, but the final cost ended up being $9 billion for the completion of only two.^vii

The proposed reactors will be built by the Southern Nuclear Operating Company and be jointly owned by Southern Co., Oglethorpe Power Corporation, Municipal Electric Authority of Georgia, and The City of Dalton, Georgia.

DOE has indicated other front runners for nuclear loan guarantees include SCANA and its major subsidiary SCE&G in South Carolina, Nuclear Innovation American (a partnership between NRG and Toshiba in South Texas), and Unistar Nuclear Energy of Maryland, a joint partnership of Constellation Energy and Electricité de France (EDF).

 More Information

Top Nuclear Loan Guarantee Contenders in Financial Shambles

Administration Triples Risky Loan Guarantees for Nuclear Reactors

Taxpayers for Common Sense Statement: Nuclear Industry Must Pay For Its Renaissance

i.    Southern Nuclear Operating Company COL application.
ii.   NRC’s reactor application page.
iii.   Augusta Chronicle article, “Groups sue to limit Plant Vogtle work” Oct 30, 2009.
iv.  PR Newswire article “Georgia Power Files Diverse Energy Plan” August 1, 2008.
v.   Bloomberg “Utilities Seek $122 Billion in Nuclear Loan Support” by Daniel Whitten October 2, 2008.
vi. Atlanta Business Chronicle article “Report: Southern Co. gets fed money for nuke project” June 17, 2009.
vii. Atlanta Journal Constitution, “AP: Southern Co. to get federal loan guarantees for nuclear reactors.”