Feds plan to back loans to Georgia nuke plants
Energy Secretary Rick Perry took sweeping steps Friday to buttress a pair of financially-strapped nuclear plants under construction and redefine how coal and nuclear plants are compensated for the electricity that they provide — a move that, if agreed to by independent federal energy regulators, could tilt some of the nation’s complex power markets away from renewables and natural gas.
Perry announced that the Energy Department would provide $3.7 billion in loan guarantees to three Georgia utilities struggling to complete a pair of nuclear reactors at the Alvin W. Vogtle generating plant. These loan guarantees come on top of $8.3 billion in loans the department has already given to the project, but they still might fall short of what will be required to complete the costly reactors.
The nuclear project has been running far overbudget and behind schedule, and the utilities have been scrambling to come up with financing after the main engineering company, Westinghouse, declared bankruptcy earlier this year.
The aid for Vogtle partners would be issued by the Energy Department’s loan guarantee program, which President Donald Trump’s 2018 budget proposal would abolish.
Many Republicans have criticized the Energy Department’s loan guarantees, often citing a loan given to Solyndra, a photovoltaic panel manufacturer that went bankrupt. But defenders of the program say that the loan guarantee program’s failure rate is well below the level Congress anticipated when it created the program.
Critics of the loan guarantees say that the construction of the Vogtle reactors is risky and that there is a strong possibility that they will not be repaid. The Georgia Public Utilities Commission must review the utilities’ financial plans and construction progress regularly because the utilities have already been passing along costs to consumers.
Perry also moved Friday to help nuclear and coal plants competing in regional electricity markets.
Citing his department’s recent, contested study about the workings of the electric grid, Perry asked the independent Federal Energy Regulatory Commission, or FERC, to adopt new regulations that would ensure that coal and nuclear plants that add to the grid’s reliability can “(recover) fully allocated costs and thereby continue to provide the energy security on which our nation relies.”
Perry’s letter to FERC, and the proposed regulation, argue that these socalled “baseload” plants provide critical stability and reliability to the electric grid and should be compensated accordingly.
FERC now has 60 days to decide what action to take.If FERC agrees, the result could potentially mean reducing the use of solar, wind and natural gas by key grid operators in favor of coal and nuclear.
Mark Kresowik, a deputy regional director for the northeast with the Sierra Club, said he thought that if FERC actually adopted the proposed policy, it would lead to lawsuits or even states dropping out of certain regional electricity markets that would be affected, which primarily lie in the Northeast, Mid-Atlantic and Midwest.