2007 Proposed Loan Guarantees for Nuclear Industry

The Nuclear Energy Institute (NEI) has requested $25 billion in Fiscal Year 2008, and an additional $25 billion “or more“ in Fiscal Year 2009, from the U.S. Treasury for taxpayer-backed federal loan guarantees for the construction of new atomic reactors in the US. If successful, NEI would be back for mammoth subsidies in the years to follow as well. NEI and its member nuclear utilities and atomic construction firms, such as Bechtel, are desperate because Wall Street banks and investment firms are still too burned by the huge cost overruns and construction delays of the 1970s and 1980s to risk investing another penny in nuclear power. However, if these federal loan guarantees are enacted into law, and the nuclear utilities default on their loan repayments, then taxpayers would be left holding the bag. Private investors would then have nothing to lose, because taxpayers would be forced to repay the loans. The Congressional Budget Office has predicted that a whopping 50% or more of new nuclear construction projects will likely default on their loans, and that the U.S. Department of Energy will likely underestimate up-front fees charged to borrowing nuclear utilities intended to protect taxpayers against such loan defaults. The end result? Taxpayers would be left liable for untold billions, or even tens of billions, of dollars in nuclear construction loan defaults. It would be an atomic version of the Savings and Loan Scandal, Chrysler Bailout, and Subprime Loan Meltdown.

Energy Bill Aids Expansion of Atomic Power

A one-sentence provision buried in the Senate’s recently passed energy bill, inserted without debate at the urging of the nuclear power industry, could make builders of new nuclear plants eligible for tens of billions of dollars in government loan guarantees.

FACT SHEET - Controversial Loan Guarantee Provisions in Energy Bill Undermine Congressional Oversight and Put America's Taxpayers at Risk

Energy legislation now before Congress contains a controversial provision that would significantly aflter how the Department of Energy (DOE) provides taxpayer funded loan guarantees for new energy technologies, expecially to costly nuclear power plants. This provision, if adopted, would eliminate Congressional safeguards to appropriate tax dollars for these risky projects and shift enormous finanacial risk from Wall Street banks to America's taxpayers.

FACT SHEET - Foreign Companies to Benefit from U.S. Taxpayer Nuclear Loan Guarantees

In July 2007, the Nuclear Energy Institute informed congressional appropriators that $50 billion in taxpayer funded loan guarantees are needed to jump-start the construction of nuclear power plants. The U.S. Chamber of Commerce, however, recently told the Department of Energy that such a loan guarantee program would create "an apparent advantaging of foreign commercial technologies over domestic technologies." The major beneficiaries of these U.S.100% taxpayer backed loans are major foreign corporations located primarily in France and Japan.

FACT SHEET - Removing Congressional Oversight over Unlimited Nuclear Loan Guarantees Undermines Constitutional Safeguards

Article I, Section 9, Clause 7 of the U.S. Constitution states that, “No money shall be drawn from the Treasury except for in consequence of appropriations made by law.” This gives Congress the explicit power of the purse and represents one of the most powerful checks on the federal bureaucracy. Through the annual budget process, Congress utilizes its prerogatives over spending to provide critical direction and oversight over federal agencies. Without this tool, many of the government’s programs would simply operate on auto-pilot without budget or staffing constraints or policy direction. The nuclear power industry and its allies in Congress are attempting to circumvent this Constitutional prerogative in order to gain lucrative subsidies for their industry. These subsidies come in the form of low-risk loan guarantees for expensive new nuclear projects that they are trying to exempt from the safeguards and requirements typically associated with federal credit programs.

FACT SHEET - Energy Bill to Allow Nuclear Power to Gobble up Loan Guarantees for Innovative Technologies

Provisions in the pending energy bills would allow the already highly subsidized nuclear power industry to gobble up the lion’s share of taxpayer-funded loan guarantees by removing Congress’ appropriations authority. The Senate version of the energy bill would give the Department of Energy (DOE) discretion to provide guaranteed loans to nuclear and coal projects virtually without Congressional oversight.

SUBSIDIZING DISASTER

Like some B-movie space alien… “The Thing” is back, and it is coming at us with an insatiable appetite. If only The Thing was a piece of fiction. Unfortunately, it’s all too real. It is the return of the nuclear power industry.