Think what you want about nuclear power. Maybe it’s the best way to generate electricity, and maybe it’s the worst. If you are a taxpayer, that debate may be less relevant than the one aimed right at your pocketbook.
At issue is the use of taxpayer-backed federal loan guarantees to finance nuclear reactor projects — such as the Vogtle reactors in Georgia now awaiting a deadline later this month for final agreement on loan guarantee terms. If these terms are finalized, taxpayers will be left holding the bag in the event of a Vogtle default.
In February 2010, the U.S. Department of Energy (DOE) conditionally offered Southern Company and its partners $8.33 billion in taxpayer-backed loan guarantees to build two nuclear reactors in Georgia.
The subsidy for the twin reactor Vogtle project would be provided through the same DOE program that awarded more than $500 million to the now-defunct solar power company, Solyndra. The bad news is that the Vogtle project is roughly 16 times bigger than Solyndra in loan guarantee terms and perhaps every bit as troubled.
The Vogtle project is already experiencing construction delays that could increase costs substantially, and its design, the AP1000, has never been built in the United States nor been successfully completed or operated anywhere in the world.
Initial total cost estimates of $14.1 billion are already being pushed up to $15.3 billion; and with lawsuits being pursued by contractors designing the reactor, the cost could jump again to $16.2 billion.
All of this is unfolding against a backdrop of grim news for the nuclear industry in the U.S.
With the recent cancellation of the Levy nuclear project and the closure of the Crystal River nuclear plant in Florida, the shutdown of a reactor in California, the withdrawal of the largest nuclear energy provider in the world from U.S. nuclear investments, and the low cost of natural gas, it should come as no surprise that Wall Street won’t touch the Vogtle project.
So, why should we be gambling such an enormous sum of taxpayer dollars on such a high-risk investment?
Floridians know all too well the sting of being left on the hook for the nuclear industry’s failures. Florida’s cost recovery program and the cancellation of Duke Energy’s Levy nuclear project will force ratepayers to cover the costs of the state’s financial gamble for years to come, to the tune of $1.5 billion.
The Department of Energy’s nuclear loan guarantee presents the same type of risks to taxpayers, except the stakes are considerably higher.
One might ask: How does a large, profitable utility get the green light for an outrageous $8.33 billion subsidy?
That’s no mystery in Washington. Last year, Southern Company spent far more than any other electric utility on lobbying the federal government, according to the Center for Responsive Politics. It shelled out $15,580,000 in 2012, or roughly $42,000 a day, in order to help strong-arm a deal even though their financials and the project all point to a bad investment for taxpayers.
And all that campaign giving seems to have worked. Documents obtained through the Freedom of Information Act reveal wide-ranging negotiations between the Department of Energy and project owners. Years of closed door negotiations have allowed Southern Company and partners to craft a deal that heavily benefits them and exposes U.S. taxpayers to even greater risk.
Americans may be divided on the use of nuclear power, but very few people will defend the notion that massive utilities should be relying on taxpayers to build nuclear reactors. The bottom line is clear: Putting the full faith and credit of the U.S. government behind this costly, high-risk Vogtle reactor project is fiscally irresponsible.
Ryan Alexander is the president of Taxpayers for Common Sense.