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Posts Tagged ‘Nuclear Loan Guarantees’


Thursday, January 6th, 2011

Nuclear Townhall
January 6, 2011

Ryan S. Hecker


Ryan Hecker is a young Houston attorney who has already made a name for himself by becoming the principle organizer of the Contract From America, laying out a hybrid Tea Party agenda in the recent watershed midterm election. Although not an expert in nuclear, he seems to have a firm grasp on what’s happened in the industry – an exquisitely clean and powerful technology that has been challenged by government inertia and regulation.

“There are billionaires out there that believe in nuclear energy,” Hecker told Politico when he was interviewed in an excellent overview last week. “One of the major problems is not just capital costs, but that they’re on an unfair playing field. In America, we’re about the free market. I have a really, really hard time believing that nuclear energy can only survive, and can only prosper, under a government-controlled industry.”

It’s a good perspective to have because one of the first big issues the Tea Party is likely to confront is whether to continue awarding loan guarantees for new reactors. Many anti-nuclear groups have been advancing the thesis for some time that nuclear cannot survive without government subsidy. On the other hand, other forms of energy – particularly solar and wind – seem far more dependent on government help. We asked Hecker how he expected the Tea Party to approach the energy arena.

NUCLEAR TOWNHALL:  First, about that Contract. How did it come about?  Did you poll Tea Party members?  Sent out questionnaires?  In the end, you adopted an “all of the above” energy strategy, with offshore drilling, coal, nuclear and renewables, just as long as we move forward on energy. Was that the consensus?  How did you arrive at that?

HECKER:  The Contract from America was developed in a crowd-sourced, transparent, bottom-up way. We created a website that allowed anyone to post and debate ideas. Over the course of a few months, we had over 100,000 people debate and post over 1,000 ideas. We then did a series of surveys and grassroots focus groups to narrow this list to 21 ideas. In February 2010, we launched the final vote to narrow the list of 21 to 10. Over the course of two months, nearly half a million (452,000) votes were cast. The final Contract represents the top vote getters. This document thus comes not from one individual, but directly from the people. The “All of the Above” energy policy was an idea that was submitted during the early submission process and was one of the top-ten ideas selected in the final vote.

NUCLEAR TOWNHALL:  One question the Congress will face, of course, is the future of loan guarantees for new reactors in the face of deficit reduction constraints. Loan guarantees appear pivotal to the first wave of new reactors.  How are you going to reconcile that with budget cutting?

HECKER:  The reason why the industry may need loan guarantees is because the current regulatory system is broken. Due to various government regulations, a nuclear energy entrepreneur has to jump though extremely costly and time- consuming hoops that create a major barrier to entry. The tea party movement demands bold regulatory reform solutions over the next two years that put nuclear energy on an even playing field with other alternative energies. At best, loan guarantees, which include the nuclear energy entrepreneur taking on most of the risk, are a very short-term response. But adding more government involvement is ultimately harmful, and definitely not the solution for the nuclear energy industry.

NUCLEAR TOWNHALL:  There is a strong case that the whole idea of nuclear being propped up by the government is a myth. The current 104 reactor fleet was largely built without any federal assistance. The production tax credits in the 2005 Energy Act – which haven’t been awarded yet – are the first direct subsidy to nuclear. Yet they have been standard in the wind and solar industries since 1979. Is there any talk of removing all energy subsidies and mandates?

HECKER:  Absolutely. The lobbyist-friendly culture on Capitol Hill has ensured that alternative energy industries that have been around the longest, are based in early primary states, or are better versed at “playing the political game” have a competitive leg up in receiving subsidies, even if their energy form is not the most cost-effective for the American consumer. This perverse result can only be changed with less government involvement and trust in the free market.

NUCLEAR TOWNHALL:  Even if you get to a level playing field as far as subsidies and mandates are concerned, you still have the issue of licensing. Current procedures seem to be taking about five years, although none have been fully consummated as yet. Will there be any thought of addressing regulatory impediments to new plants and technologies in concert with maintaining safety, which has been a hallmark to date of the U.S. industry?

HECKER:  Absolutely. The longstanding licensing procedures are based on outdated environmental and safety fears. Nuclear technology has improved greatly since these procedures were created and is no less safe than other forms of energy that do not have similar requirements. One of the major problems with government oversight of this industry is that the responsiveness to industry improvements has been poor. Congress needs to sunset all nuclear energy regulations.

NUCLEAR TOWNHALL:  With the current abundance of natural gas, the path of least resistance is probably for utilities is to throw up natural gas plants and put everything else on the back burner. A lot of people find this disturbing because natural gas supplies may play out earlier than expected and we’ll be left very vulnerable to rising prices. Nuclear reactors operate on an 80-year cycle while natural gas’s advantages may disappear in ten years. Does letting the market make decisions leave any room for long-range planning?

HECKER:  Absolutely it does. You just described a short-term/long-term risk trade-off that the market considers every day in other industries. Certain communities might decide natural gas is the right choice, but others might prefer the long-term guarantee of nuclear energy. Monopolies are created by the government. There is enough room in the free market for many energy industries to prosper. If the nuclear industry believes in its product, it cannot be afraid of the free market and consumer choice. 

NUCLEAR TOWNHALL:  The Tea Party is obviously not the whole Congress. You’ve got other Republicans to deal with and then Democrats in the Senate, not to mention President Obama. If you want to reduce regulation of nuclear, can you expect these other parties to go along?

HECKER:  Support for nuclear energy is not a Republican or Democrat issue. We need to build a grassroots coalition of Democrats, Republicans, and independents who believe that we need to end lobbyist-driven government control in support of some energy industries to the detriment of others. It is not going to be easy, but no one would have imagined the impact of the Tea Party movement over the last two years. With enough grassroots support, anything is possible.

NUCLEAR TOWNHALL:  You’re a New Jersey boy, raised in the Northeast, educated at NYU and Harvard, and admitted to the New York Bar. Yet 2011 finds you in Houston coordinating the efforts of the Tea Party. Is this a national trend you’re representing or did you just find a Texas to be a more compatible environment as evidenced by the recent census findings?

HECKER:  I moved to Houston for my wife’s medical residency program, but I love it here. This is an entrepreneurial city, and there is a sense here that the best days of the city are ahead of us, not behind us.

NUCLEAR TOWNHALL:  Thanks very much and good luck with the 112th Congress.




Wednesday, December 15th, 2010

Nuclear Townhall
December 15, 2010

It could go either way. The incoming Republican Congress could favor nuclear as a means of strengthening the nation’s energy base. Or they could oppose it as an undue burden on taxpayers.
A coalition of conservative taxpayer groups – plus an infiltrator, the Non-proliferation Policy Education Center – voted for the latter yesterday, submitting a statement urging the new Congress to halt any increase in federal loan guarantees for new nuclear reactors.
"It’s just an unacceptable risk for the taxpayer to take," said Ryan Alexander, president of Taxpayers for Common Sense, according to a report form the International Business Times. Ryan cited a 2003 Congressional Budget Office study says default rates can hit 50 percent or more.
The CBO report has become the baseline for measuring risks in awarding loan guarantees and was the reason Constellation abandoned plans to build a third reactor at Calvert Cliffs. Using the CBO figures, the Department of Energy was asking Constellation to pay an 11 percent fee, adding $750 million to the project. Even William Yeatman, a policy analyst for the Competition Enterprise Institute, which also signed the letter, says the CBO figures overestimate the risk.
Most interesting is the presence of the Non-Proliferation Policy Education Center, an organization that is trying to prevent the spread of nuclear weapons by blocking civilian nuclear development worldwide. Like several other anti-nuclear advocates, NPEC has decided that conservatives can be turned against nuclear by emphasizing its costs. Henry Sokolski, executive director of NPEC, regularly writes for National Review Online. NPEC’s argument is that allowing other countries to build enrichment and reprocessing facilities will inevitably lead to the spread of nuclear weapons. The pursuit of this policy has meant that other countries continue to move ahead with nuclear development while the U.S. is being left behind.

Read more at the International Business Times



Thursday, December 9th, 2010

Nuclear Townhall
December 9, 2010


The jockeying for position on nuclear loan guarantees during the lame duck session began yesterday as House Democrats effectively excising $29 billion in budget authority from President Obama’s FY2011 request in a 12-month long continuing resolution (CR) for Fiscal Year 2011 that narrowly passed the chamber.

Loan guarantees for nuclear have never been a high-priority for the current House leadership. They also pose a dilemma for the incoming Republican majority, however, since Tea Party conservatives have made reducing federal subsidies the heart of their campaign.
Earlier this year, President Obama actively embraced nuclear energy as part of his global climate strategy and proposed expanding the current $18-billion loan guarantee program to $54 billion, a $36 billion increase. The current budget proposal enacted  by the House would limit the authority available in the current fiscal year to $25 billion, a $7 billion increase – about enough for two new reactor projects beyond the Vogtle project, which was consummated mid-year. That Constellation Energy recently withdrew a $7.5 billion reactor project that was about to receive federal funding probably didn’t help in advertising the urgency of the program. Constellation objected to the 11 percent fee demanded by the Office of Management and Budget, which would have added $800 million to its costs.

Congress is currently operating on a continuing resolution that holds last year’s outlays constant. Senate Republicans are expected to push for a partial-year CR extension favored by the incoming House Republican leadership, which could leave new loan guarantee authority up in the air until Spring.

Read more about it at Bloomberg News

DOE/OMB SHOCK: Feds try to get Constellation Back to the Loan Guarantee Table

Tuesday, October 12th, 2010

Platts is reporting via agency spokespeople that the U.S. Department of Energy and Office of Management and Budget feel hornswoggled by Constellation Energy’s late Friday afternoon withdrawal by letter from the Obama Administration’s loan guarantee sweepstakes for a new nuclear reactor at Maryland’s Calvert Cliffs nuclear site.

The White House and the US Department of Energy were purportedly "on the verge of
offering UniStar a new set of loan-guarantee terms," Platts says.

"On Friday, as DOE received this letter, literally, almost simultaneously, DOE and OMB had a whole new set of modified terms to go back to them with," OMB spokesman Kenneth Baer told Platts. "This was very surprising to us, because we were in the middle of a dialogue with them, and they seemed to cut it off."

"We hope that Constellation, or their other business partners in this project, will consider moving forward and working with us in [continuing to find] terms which are good for them and good for the taxpayer," Baer said.

Baer’s DOE counterpart, spokeswoman Stephanie Mueller echoed the sentiment to Platts. "We were surprised to get the letter about Constellation dropping out of this process since DOE has been working closely with them on this complex transaction and even on the day they sent this news had a modified set of loan terms that responded to the concerns they had," Mueller said.

In another development Platts is reporting via Senator Jeff Bingaman’s spokesman, Bill Wicker, that "although DOE has made great strides in improving the process in the last year, there still are too many steps of review with OMB and Treasury; those two agencies simply are not coordinating well enough."

Read more at Platts


Wednesday, June 30th, 2010

House leadership readies FY2010 Supplemental Appropriations bill for House floor action before leaving for July 4th recess.

The latest draft of the supplemental spending bill House Democrats plan to bring to the floor this week scales back funding for veterans exposed to Agent Orange to $10 billion from $13.4 billion, and aid to school districts to prevent teacher layoffs to $10 billion from $23 billion.

According to a summary of the bill circulated Tuesday by the House Majority Whip's Office, all funding above levels in the Senate-passed version will be offset over 10 years.

House Majority Leader Hoyer said Tuesday that he expects to bring the bill to the floor this week, but that no decisions have been made as to exactly when.

Reportedly, the House Supplemental bill contains $9 billion for nuclear loan guarantees and a matching $9 billion for renewable loan guarantees.

Townhall will closely follow developments.