You are here


Nuclear Monitor Issue: 

The U.S. Department of Energy missed its self-imposed end-of-2009 deadline to hand out its first taxpayer-backed loan guarantees for new reactor construction. One new reactor project has been put on hold for the lack of loan guarantees and another project is embroiled in lawsuits and controversy. And two operating reactors are experiencing new problems that could lead to permanent shutdown.

NIRS - Washington, DC. Even before the Department of Energy (DOE) missed its own deadline for providing the first “conditional” loan guarantees for new reactor construction, UniStar Nuclear announced in December that it is placing its proposed Nine Mile Point-3 EPR project in upstate New York on indefinite hold. UniStar, which consists of Maryland-based Constellation Energy and dominant partner Electricite de France, said the lack of taxpayer loan guarantees was the reason for its decision. UniStar’s business model relies on loan guarantees: neither Constellation nor EdF have the US$10 billion (6.9 bn Euro) or so in cash it would take to build a new EPR, and even if they did, they sure wouldn’t risk their own money on a U.S. reactor project. After all, historically the average cost overrun for U.S. reactor projects stands above 200%.

Nine Mile Point-3 didn’t make the DOE’s “shortlist” of four potential loan guarantee recipients (UniStar’s Calvert Cliffs-3 is on the list, and the company will be concentrating on that one), and thus must wait and hope that more loan guarantee funds are forthcoming from Congress.

But even the four “shortlisters” are far from certain to be able to receive sufficient loan guarantees to actually continue their projects. The DOE has US$18.5 billion to provide, which is now generally agreed will cover at best 2 or 3 reactors. The four shortlist projects (Calvert Cliffs, MD; Vogtle, GA; Summer, SC, and South Texas) encompass seven proposed reactors.

The delay in issuing the loan guarantees is apparently due to a dispute between DOE and the White House Office of Management and Budget (OMB) on how much subsidy cost utilities will have to pay to obtain the guarantees. The industry and DOE have been pushing for a low subsidy cost -perhaps 1% of the guarantee total- while OMB, more attuned to the financial risk involved, apparently wants a higher cost. The subsidy cost is paid by the utilities to the government and is supposed to reflect the risk of a project using taxpayer funds, and protect the government in the event of default. Given the Congressional Budget Office projection of a 50% default rate, a high subsidy cost would seem applicable -although no one expects a subsidy cost that even remotely reflects the real risk involved.

Beyond that, there are also serious problems with some of the shortlist projects themselves. South Texas’ main players are NRG Energy and CPS Energy -a utility owned by the city of San Antonio, Texas. In the Fall, the city council of San Antonio was stunned to learn that the two proposed GE ABWR reactors would cost US$4 billion more -from US$13 to 17 billion- than they previously had been led to believe by NRG and CPS. The city responded with a management shake-up of CPS, followed by CPS filing suit against NRG and its partner Toshiba, for an astonishing US$32 billion. Negotiations over settling the suit have gone poorly, with CPS’s acting general manager walking out of a meeting on January 11 2010 because top NRG officials weren’t there to participate.

While CPS hasn’t yet formally withdrawn from the project, it seems unlikely that it will continue -certainly the elected officials of San Antonio, which already has invested hundreds of millions of dollars in the project, would face a substantial public outcry if they risked billions more on this increasingly controversial project, especially given new projections that San Antonio won’t need new power for many years. And, it seems equally unlikely that a project whose ownership is unclear could qualify for even a conditional federal loan guarantee.

Energy Secretary Steven Chu confirmed in a December 22, 2009 letter to Rep. Ed Markey that any loan guarantees issued at this point would be conditional, and no actual guarantees can be granted until a reactor design is certified by the NRC and a utility has received a Construction/Operating license from the NRC.

Meanwhile, two operating reactors have encountered serious new problems that could lead to their early shutdown. In a remarkable case of poor timing, a leak of radioactive tritium was found outside the Vermont Yankee reactor in early January. The Vermont legislature will soon be voting on whether to allow the reactor to receive a 20-year license extension, which is shaping up as the most controversial vote of the year there. Vermont is the only state that has the authority to determine a license extension.

And, in New Jersey, the State Department of Environmental Protection issued a draft order on January 7, requiring that cooling towers be built for the 40-year old Oyster Creek reactor, following a concerted campaign by environmentalists in the state. The reactor has been blamed for major fish kills and general spoilage of the environmentally fragile Barnegat Bay. The reactor’s owner, Exelon, said it would shut down rather than build the expensive towers. However, the draft order apparently gives Exelon seven years to complete the project, meaning that an early shutdown does not appear likely.

Source and contact: Michael Marriott at Nuclear Information and Resource Service (NIRS), 6930 Carroll Avenue, Suite 340, Takoma Park, MD 20912, U.S.A., Email:, Web:


Daniel L. Roderick, senior vice president for nuclear plant projects at GE-Hitachi Nuclear Energy, said that a year and a half ago, there were expectations that more than 20 units would be under construction by now in the United States. “That number is currently zero,” he said.
(New York Times, 23 December 2009)