WASHINGTON, D.C. – February 16, 2010 — The following is a written statement by Ryan Alexander, President of Taxpayers for Common Sense on the Department of Energy issuing its first nuclear loan guarantee under the Title XVII loan guarantee program:

“The time to stop the endless cycle of nuclear subsidies has come. Since the 1940’s the nuclear industry has received more than $100 billion in federal subsidies. From construction to decommissioning, taxpayers have provided generous subsidies for nuclear reactors. But no matter how generous the subsidies, nuclear power continues to be riddled with cost and risk concerns that keep private financial backers away, leaving the industry asking for more and more taxpayer handouts. It’s high time the feds cut our losses and take a cue from Wall Street and just say no before we lose billions more.

In 2005, a suite of subsidies for nuclear power was added to the energy bill, including a massive loan guarantee program. Under the program, Congress has already slated $18.5 billion in loan guarantees for new nuclear reactors. But federal investigators have found nuclear reactors will ‘result in significant risk to the Government and, therefore, the American taxpayer.’ One government report put the default risk for nuclear reactors at well above 50% percent.

With extremely high capital costs, significant technology risks, and private investors on the run–even when times were good–nuclear power has lined up for the federally backed loan guarantees. In fact, they told Congress $18.5 billion wasn’t enough and have requested $122 billion.

For taxpayers, these loan guarantees could have huge financial consequences. The Congressional Budget Office considers the risk of default on the part of the nuclear industry to be very high–above 50 percent–and payments for defaults would come directly from the U.S. Treasury, in other words, the U.S. taxpayer. Additionally, DOE loan guarantees carry an extremely high risk because they can cover the entire value of a loan worth up to 80 percent of a project’s total cost–terms far better than any private lender would provide. Consider that cost estimates for new nuclear reactors have risen to at least $7 billion each, and it becomes apparent how serious it would be if these companies default.

Unfortunately, DOE has put the full faith and credit of the U.S. Treasury behind a multi-billion dollar project that has already experienced cost overruns, delays, and design flaws even though construction has yet to begin. In fact, many of the new reactors rely on designs that are in financial shambles in other parts of the world.

Given the current financial crisis, asking taxpayers to front risky reactors is fiscally irresponsible. If nuclear power is the future, private industry should find private financing, not come knocking again on the door of federal taxpayers.”

###

ABOUT TAXPAYERS FOR COMMON SENSE

Founded in 1995, Taxpayers for Common Sense (TCS) is an effective, non-partisan budget watchdog dedicated to cutting wasteful spending and subsidies in order to achieve a responsible and efficient government that operates within its means. TCS believes that the federal budget is about more than just dollars; it’s about reflecting national priorities and values. TCS seeks to improve our government spending decisions to better mirror the nation’s true social, economic, environmental, security, and democratic values.

CONTACT: Autumn Hanna, (202) 546-8500 ext. 112

More Information

Top Nuclear Loan Guarantee Contenders in Financial Shambles

Administration Triples Risky Loan Guarantees for Nuclear Reactors

Department of Energy Announces Risky Loan Guarantee for Southern Company

###