Stop Wasting Tax Dollars on Failing Nuclear Projects
In 2014 and 2015 the Department of Energy finalized $8.3 billion in taxpayer-backed loan guarantees for the Vogtle Nuclear Reactor Project in eastern Georgia. Now, as the project has ballooned in cost and must adjust to the recent bankruptcy of Westinghouse, the project’s construction firm, the Energy Department is proposing to provide yet another handout to the project. This is quite literally throwing good money after bad, and Congress or the Energy Department itself should put a stop to it.
The original $8.3 billion in guarantees went to three of the project owners — Southern Company subsidiary Georgia Power Company, Oglethorpe Power Company and the Municipal Electric Authority of Georgia (MEAG Power).
The owners estimated that the Vogtle project would cost about $14 billion, and projected that two new reactors would come online in 2016 and 2017 respectively. After repeated struggles with cost increases and schedule delays, the project is still years away from completion and asking the Energy Department for more help.
Despite the early warnings, the Energy Department issued $3.06 billion and $3.45 billion in loan guarantees to Oglethorpe and Georgia Power in February 2014; and $1.8 billion in loan guarantees the following year to MEAG Power. The guarantees not only subsidized the project by reducing the owners’ cost of borrowing, they also put taxpayers on the hook for billions of dollars should the project go belly-up and the owners default on the loans.
Now as many as six years behind schedule and more than $11 billion over budget, the future of the Vogtle project is uncertain, at best. This past spring, Westinghouse filed for bankruptcy, attributing their financial state largely to the mounting liabilities associated with the Vogtle project and the construction of two other nuclear reactors in South Carolina. Since then, the owners of the other project in South Carolina have announced plans to shut down construction of their nuclear reactors.
This summer, the Vogtle owners announced that the project is even further over budget and behind schedule than previously known. It’s now estimated that the two reactors could cost as much as $25 billion and come online as late as 2022 and 2023.
Not surprisingly the project owners have come back, yet again, asking Congress and the Department of Energy for more handouts. In a call with investors on Aug. 24, Oglethorpe executives were candid about their efforts.
They acknowledged working with Southern Company and the congressional delegations from South Carolina and Georgia to lobby for extending and greatly expanding the nuclear production tax credit. A bill to that effect recently passed the House of Representatives, and if passed by the Senate, would hand out up to $2.2 billion in tax credits to the owners, who don’t qualify under current law. (Tax-exempt entities like project partner, MEAG Power, generally don’t benefit from tax credits. The proposed work around allows them to trade their credits to their for-profit partners.)
They also mentioned their pursuit for additional loan guarantees from the Energy Department, though it was previously unknown for just how much. And now the Energy Department has answered their calls by putting another $3.7 billion in taxpayer dollars on the line for the troubled Vogtle project.
The Energy Department needs to stop ignoring the risk associated with the Vogtle project. It needs to ignore the latest specious argument now being promoted by former Obama Energy Secretary Ernest Moniz, that we need to pour subsidies into nuclear power as a matter of national security. Instead, the Energy Department needs to start protecting taxpayers by safeguarding the federal funds already tied up in this troubled project. Throwing another $4 billion in taxpayer subsidies at it won’t be enough to solve its financial woes. It certainly won’t make a difference in non-proliferation. It only puts us on a never-ending path of giving more financial support at the expense of federal taxpayers.