Friday, March 30, 2012

Vogtle nuclear plant loan guarantees may not be finalized: NEI


[Commentary: After the sudden collapse of South Texas Project 3&4 Nuclear Power Units due to the pulling of the federal loan guarantee, this event is alarming. The Obama Administration's calculated rates on the loan appear to be excessive. Does this signal the true intentions of the current administration and their position on growth in nuclear power for the United States?]

Georgia Power and its partners may not be able to reach terms with the US Department of Energy on $8.3 billion in loan guarantees to finance the Vogtle nuclear plant expansion, Alex Flint, senior vice president of governmental affairs for the Nuclear Energy Institute, said Thursday.

The conditional guarantees for the two-unit, 2,200-MW Vogtle plant expansion were announced by DOE in 2010 and were said to be a sign of the administration's support for nuclear energy. One of the conditions was that the project sponsors receive a combined construction permit-operating license from the US Nuclear Regulatory Commission, which issued the license February 10.

Southern Co., Georgia Power's parent company, expects to finalize the loan guarantees in the second quarter of the year, spokesman Steve Higginbottom said Thursday.

Betsy Higgins, the CFO of Oglethorpe Power, another of the partners, said March 20 that finalizing the loan guarantees was going more slowly than expected and they might be completed in the third quarter.

DOE has said it is in final negotiations with the applicants to complete the transactions.

David Frantz, acting executive director of DOE's loan programs office, said Wednesday at a hearing of the House Appropriations Subcommittee on Energy and Water Development that he has weekly contact with the Vogtle partners.

"We're in the final negotiations to close the documentation on this project. We have every expectation that it's going to be a great success story in terms of the renaissance of nuclear power in the United States," he said in testimony at the hearing.

Flint did not provide details on why the loan guarantees might not be finalized, but said implementation of the program's regulations has been "painful."

The White House Office of Management and Budget, which helps set certain fees for the loan guarantees, "was not an enthusiastic supporter of the loan guarantee program," Flint said. The way in which regulations were issued "were not conducive to a successful program," he said.

The DOE rules and regulations were not designed for the type of ownership structure used in the Vogtle project, Higgins said during a conference call to discuss financial results.

The Vogtle loans are backed by the full credit of the involved companies, instead of being assumed by a project finance company whose only asset is the new units, Higgins said. As a result, the partners have sought exemptions from some requirements in the loan guarantee program in order for the project's application to move forward, she said.

NEI has said a formula used by OMB to calculate the fees that must be paid by loan guarantee recipients is flawed and as a result fees are too high.

LINK

No comments:

Post a Comment

This is an unmoderated blog. Please be professional and respectful as you post.