Fed loans to boost nuclear restarts

Promising "this is only the beginning," President Barack Obama announced more than $8 billion in federal loan guarantees Tuesday for the construction of the first nuclear power plant in the United States in nearly three decades.

The new $8.3 billion in federal loan guarantees will go toward the construction and operation of a pair of new reactors at Plant Vogtle in Burke County, Ga., by Southern Co. The assistance is part of $36 billion in new federal loan guarantees added to $18.5 billion already budgeted but not spent for new nuclear power plants.

Obama cast his move as both economically essential and politically attractive as he sought to put more charge into his broad energy agenda. Obama called for comprehensive energy legislation that assigns a cost to the carbon pollution of fossil fuels, giving utility companies more incentive to turn to cleaner nuclear fuel.

"Our competitors are racing to create jobs and command growing energy industries," he said. "And nuclear energy is no exception."

Rising costs, safety issues and opposition from environmentalists have kept utility companies from building new nuclear power plants since the early 1980s.

The president conceded that nuclear energy has "serious drawbacks." He said a bipartisan group of leaders and nuclear experts will be tasked with improving and accelerating the safe storage of nuclear waste, and that the plants themselves must be held to strictest safety standards.

"But investing in nuclear energy remains a necessary step," Obama said.

During a visit to Dalton, Ga., on Tuesday, U.S. Sen. Johnny Isakson, R-Ga., praised the White House for the announcement and urged the Obama administration to go further by supporting the reprocessing of spent nuclear fuel.

"If you go to France or most anywhere else in the world, government loan guarantees are a critical part of the financing," Sen. Isakson said. "The loan guarantee by the government gives some predictabiity to attract capital for the building of those plants."

Critics, however, say the guarantees are a form of subsidy that will put taxpayers at risk given the industry's record of cost overruns and loan defaults.

Don Cope, president of Dalton Utilities which owns 1.6 percent of Plant Vogtle, said he is confident the new reactors will be built by 2016 and 2017 to supply carbon-free generation. Customers of Dalton Utilities collectively paid $17 million in 2009 toward initial work on the new reactors, Mr. Cope said, and the utility plans to contribute another $20 million or so this year out of its operating revenues.

"We are on a path to be debt free next year, and we believe it is in the best interests of our customers to pay for this project out of operating revenues," he said.

The new Westinghouse AP-1000 reactors to be built at Plant Vogtle are among 13 proposals for new nuclear plants being considered by the U.S. Nuclear Regulatory Commission.

The Tennessee Valley Authority has an application pending for a similar type of reactor at its Bellefonte Nuclear Plant in Hollywood, Ala.

Through its involvement in a lobbying group in the 1990s known as TVA Watch, Southern Co., claimed TVA had an unfair borrowing advantage over its investor-owned utility neighbors because TVA can borrow through the Federal Financing Bank for its operations. The loan guarantees announced Tuesday would give Georgia Power access to the same borrowing source.

Southern Co. says the Georgia project would create about 3,000 construction jobs, while the new reactors would generate power for about 1.4 million people and permanently employ 850 people.