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GEORGIA | VOGTLE LOAN GUARANTEES
Energy Secretary Urged to Cease Negotiation, Withdraw Controversial Vogtle Loan Guarantees
ATLANTA 1/28/14 — Nuclear Watch South joins several citizens groups in submitting a letter to U.S. Department of Energy (DOE) Secretary Ernest Moniz today flagging new, and chronic, problems which show that two reactors already under construction at Georgia Power’s Vogtle nuclear plant are a risky investment for U.S. taxpayers.
The letter to Moniz, which is also being sent to the White House Office of Management and Budget states: “We request that federal loan guarantees for construction of Plant Vogtle reactors 3 and 4 be denied and that further negotiations with Southern Company and its subsidiaries and partners cease. In four years of negotiation no agreement has been reached on the $8.3 billion in tax-funded loan guarantees for Vogtle. Indeed, even as DOE has extended the deadline for a sixth time to January 31, 2014, Vogtle partner Municipal Electrical Association of Georgia (MEAG) is undergoing last-minute corporate structural changes, license amendment requests from the Nuclear Regulatory Commission, and contracting to sell power from Vogtle in Florida and Alabama.”
Congress included tax-funded loan guarantees in its 2005 Energy Policy Act to jumpstart a “nuclear renaissance,” subsequently appropriating $18 billion for new nuclear construction. In 2010, with the issuance of a license by the U.S. Nuclear Regulatory Commission (NRC), $8.3 billion was promised to a Georgia consortium for two additional reactors at Vogtle near Augusta on the Savannah River. The short-lived nuclear heyday has shriveled to only four reactor construction starts, two at Vogtle in Georgia and two in South Carolina. Vogtle partners are Southern Company/Georgia Power (45.7%), MEAG Power (22.7%), Oglethorpe Power (30%) and City of Dalton (1.6%).
The latest concern about Vogtle came to light last week when a request from Municipal Electric Association of Georgia (MEAG Power) to amend the Vogtle nuclear license was published in the Federal Register Notice. In the document, MEAG seeks a nuclear license transfer to several “shell corporations” it has set up, in part to broker a percentage of the projected power from its share of Vogtle 3 and 4 to electricity suppliers in Florida and Alabama. This is a startling admission that energy from Vogtle, being underwritten largely by Georgia electricity customers’ power bills, could be sold in other states.
“The contracts which MEAG has with Jacksonville (Florida) Electric Authority and Power South in Alabama prove that Vogtle is not needed by Georgians who are already paying a 7% tax on their power bills and watching their rates skyrocket for Vogtle construction,” says Glenn Carroll, coordinator of Nuclear Watch South, an environmental organization based in Atlanta. “Loan guarantees are an unfortunate raid on U.S. taxpayers’ hard-earned dollars for a project that is too risky to get traditional financing.”
Since major Vogtle construction started two years ago the project has already fallen two years behind schedule and is $1.6 billion over budget. Vogtle partners are embroiled in a $900 million lawsuit with construction contractors and the reactors’ designers. Recent economic analysis of Georgia Power’s annual report data filed with the SEC from 2002-2012 shows that 4.1% annual growth forecasts have failed to materialize and retail and wholesale electricity sales are flat for the 10-year period. The annual reports also reveal that Georgia Power is overbuilt by 46% — more than twice the national standard.
Southern Alliance for Clean Energy (SACE), one of the groups signing the letter, has filed numerous Freedom of Information requests with DOE and learned at one point that the Vogtle partners had been offered a very low “credit subsidy” fee of 0.5 to 1.5 percent. Southern Company, parent company of Georgia Power, has balked at agreeing to the small credit subsidy which, as the letter states “would be insufficient to cover the risks the tax-paying citizens of the United States are being asked to take.” Georgia Power has repeatedly said it does not need the loan guarantees to complete Vogtle and the letter points out it is therefore “unnecessary to commit the taxpayer to a project with a troubled past and continued inherent risks.”
The groups describe several ways that the climate for nuclear energy has changed since the decision was taken to pursue nuclear. The market for suppliers of nuclear parts is much smaller than anticipated so economies of scale are giving way to ballooning costs. Renewable energy sources such as solar and wind energy have far exceeded expectations, recently enjoying 200% annual growth and rapidly falling prices which are below nuclear costs.
“Georgia Power could walk away from the tax-backed loan and cancel Vogtle,” says Ms. Carroll. “It has absolutely nothing to lose since ratepayers have covered its investment so far. If it wants to risk going forward with building an expensive power plant it doesn’t need, it should invest in itself in the grand old business tradition,” she concludes.
The Vogtle reactors are being funded in part by a controversial accounting mechanism called Construction Work In Progress (CWIP) by which Georgia Power is collecting money from its residential and small business customers in advance. CWIP was legalized by the Georgia General Assembly's 2009 "Nuclear Energy Financing Act" and enacted by the Georgia Public Service Commission (PSC) in 2010. So far, Georgia Power has collected almost $1.5 billion through CWIP. The other partners are not regulated by the PSC and may pass their costs directly to their customers.
The 13 groups signing the letter to Secretary Moniz are: ~ Alliance for Nuclear Accountability ~ Blue Ridge Environmental Defense League ~ Center for a Sustainable Coast ~ Coastal Group of the Georgia Chapter of the Sierra Club ~ Friends of the Earth ~ Georgia Women's Action for New Directions ~ Nuclear Energy Information Service ~ Nuclear Information & Resource Service ~ Nuclear Watch South ~ Public Citizen ~ San Luis Obispo Mothers for Peace ~ Southern Alliance for Clean Energy ~ Sun Day Campaign
RESOURCE LINKS:
Group Letter to Secretary of Energy Moniz
Georgia Power Key Financial & Operating Data 2002-2012
Vogtle Budget / Break Even Analysis
MEAG License Transfer Request to NRC, 12/2/13
SACE Vogtle Loan Guarantee FOIA Information
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Taxpayers Kept in the Dark as Deadline Looms to Finalize $8.3 Billion Nuclear Loan Guarantees for Vogtle Reactors
Recently released documents fail to disclose details of risky deal with Southern Company and partners for new reactors in Georgia
1/16/14 ATLANTA — Taxpayer-backed federal loan guarantees of over $8 billion that were offered nearly four years ago by the Obama Administration to utility giant Southern Company and its partners pursuing new nuclear reactors at Plant Vogtle in Georgia remain shrouded in secrecy. Despite the deadline to finalize the deals by the end of this month, the Department of Energy (DOE) and Office of Management and Budget (OMB) continue to withhold key information as revealed in recently released documents by DOE to the Southern Alliance for Clean Energy (SACE). Over the past several years, the organization has filed numerous Freedom of Information Act (FOIA) requests to unearth important details on the risks posed to U.S. taxpayers if the more-than $15 billion nuclear project should default. Today, SACE filed an Administrative Appeal with the DOE given its recent, unacceptable response.
SACE’s most-recent FOIA request filed in September 2013 to the DOE was finally addressed on December 18, 2013 and the two documents that were released are almost entirely redacted, providing little useful information. A similar FOIA request simultaneously filed with the OMB remains entirely unanswered even though the statutory deadline for response has long since lapsed. These FOIA requests were filed just prior to the government shutdown over budget concerns, and just days before the DOE extended the deadline to finalize the loan guarantees to the end of 2013. Late last month, the DOE extended the deadline for the sixth time, to the end of January 2014. The loan guarantee offer was originally made in February 2010 and the initial acceptance deadline was in May 2012.
“It is extremely unfortunate that the Department of Energy continues to move forward with this troubled loan guarantee program without providing the full details and terms of the guarantees in a timely manner. This is corporate welfare for one of the largest power companies in the country and a bad deal for U.S. taxpayers,” said Sara Barczak, high risk energy choices program director with the Southern Alliance for Clean Energy. “With only days left before this will supposedly be finalized, we encourage the utilities involved to walk away – which would reduce the risk to taxpayers.”
SACE’s recent FOIA requests focused on the credit subsidy fee, which represents the “price tag” a utility must pay to the federal government for the loan guarantee, and is calculated based on the borrower’s risk of default. In previously released documents that SACE acquired due to successful FOIA litigation, the fee ranges appeared to be too low to protect taxpayers. In the latest two documents received from DOE, any mention of the credit subsidy fee and related costs is wholly redacted. Additionally, despite continuing changes to the loan terms, the significant delays and cost overruns facing the Vogtle project and a $900 million lawsuit between the utility and the lead contractor, Westinghouse, there is no indication that DOE has adjusted the credit subsidy fees to reflect these new realities. The deteriorating power market over the past few years and the ongoing Fukushima nuclear accident in Japan that is impacting the nuclear industry worldwide are also factors that were not present when the loan guarantee was first offered.
“It is difficult to understand why DOE continuously refuses to be transparent in its decision making. Despite repeated requests from SACE, the agency won’t disclose to the public the full terms and conditions of the deal,” said Mindy Goldstein, Director of the Turner Environmental Law Clinic at Emory University’s School of Law, who filed today’s Administrative Appeal on behalf of SACE and has successfully represented the organization in previous FOIA litigation. “Taxpayers are essentially being forced to underwrite an $8.3 billion deal whose terms they cannot assess before their money is committed.”
There has been significant public interest in and opposition to the controversial loan guarantee program. In May 2011, over 180 organizations and businesses including Nuclear Watch South urged Congressional appropriators to end the nuclear loan guarantee program. In 2012, over 17,000 petitions were sent to then-Energy Secretary Steven Chu opposing the Vogtle loan. Last November,Nuclear Information and Resource Service (NIRS) attempted to hand deliver nearly 23,000 petitions to DOE, but were informed the agency’s security process for mail and deliveries would not permit receipt.
“American taxpayers don’t want billions of their dollars spent on the unnecessary and wasteful Vogtle nuclear project,” said Tim Judson, Acting Executive Director of NIRS. “Already, nearly 40,000 people have signed petitions to the Department of Energy calling for cancellation of the $8.3 billion loan, with no response. We know the agency is rightly concerned about the high probability that Southern Company will default on the taxpayers, but further waiting is not going to change that. DOE should simply cancel the loan now.”
For additional background, please view a report analyzing some of the loan guarantee documents SACE received from previous FOIA litigation here and the supplemental memo. The group has made thousands of pages of documents received publicly available through an online library, which includes the recent FOIA requests to DOE and OMB that were essentially ignored by the agencies. For a summary of the Vogtle loan guarantee, view this factsheet from Taxpayers for Common Sense and summary of risks with the loan guarantee program.
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ANOTHER NUCLEAR DEBACLE: Vogtle nuclear loan guarantee drags into fifth round of delays
12/31/13 WASHINGTON, D.C. — According to a report by Platts, the deadline to finalize the Department of Energy loan guarantee to the Plant Vogtle Nuclear Generating Station has been extended from December 31, 2013 to January 31, 2014. This new one-month extension marks the fourth year in a row that the Department of Energy (DOE) has been unable to finalize an $8.3 billion loan guarantee to build two new reactors at the nuclear generating station near Waynesboro, Georgia.
Throughout the planning and construction process, the $14 billion Vogtle project has faced myriad design changes and quality assurance problems. While Southern Company insists that they do not need the federal loan guarantee to complete construction, they continue to pursue it.
Despite reports that Oglethorpe Power, one of the partners* in the new reactor project, has agreed to terms on its loan guarantee with DOE, Georgia Power, the largest of the Vogtle partners, has yet to reach agreement with the federal government on the terms of its loan guarantee. The specific terms of the loan guarantees are shrouded in secrecy. However, Freedom of Information Act requests and litigation revealed that the credit subsidy fee offered to Southern Company ranged from 0.8 to 1.5 percent. The credit subsidy fee is supposed to insulate against default, but the fee offered to Southern Company is woefully inadequate to cover the risks involved in major nuclear construction. Historically, according to the Nuclear Regulatory Commission, 32 percent of new reactor construction is cancelled before any electricity is produced.
Cost overruns and schedule delays have plagued the Vogtle reactors from day one, drawing criticism from independent monitors, sparking lawsuits among contractors and driving credit downgrades for the Vogtle partners. Quality assurance problems persist with Chicago Bridge and Iron Company’s construction of the modular components for the new AP1000 design being used at Vogtle.
Friends of the Earth has been closely monitoring problems with Vogtle construction and anticipates more problems will come to light as piping and wiring begin to be installed in the new reactors and ancillary buildings.
Friends of the Earth’s nuclear subsidies campaigner Katherine Fuchs commented on the missed loan guarantee deadline saying, “The Department of Energy has offered Georgia Power, a subsidiary of the energy giant Southern Company, a sweetheart deal, and it’s still not enough. Georgia Power has stated that it doesn’t need the loan guarantee to continue expansion of the Vogtle reactors, so the government should walk away from this boondoggle and let the private market determine the future of this risky reactor project.”
*Georgia Power (Southern Company subsidiary) owns 45.7 percent of Vogtle units 3 & 4; Oglethorpe Power Corporation 30 percent; Municipal Electric Authority of Georgia (22.7 percent); City of Dalton, Ga. 1.6 percent.
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"To the village square
we must carry the facts
of atomic energy.
From there must come America's voice."
ALBERT EINSTEIN
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HOT REPORTS
WORLD NUCLEAR INDUSTRY STATUS REPORT 2013
by Mycle Schneider and Antony Froggatt
July 2013
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by Dr. Mark Cooper
July 2013
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LET THE VOGTLE DOE LOAN VANISH
by Kennedy Maize
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ACTIVISTS SEE U.S. NUCLEAR INDUSTRY BEGINNING TO CRUMBLE
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IPS News Agency
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KNOW ABOUT IT
Breakthrough study by IEER proves we can get off coal, oil and nuclear by 2040
FREE DOWNLOAD
READ THE SUMMARY
VISIT THE WEBSITE
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RADIOACTIVE
TEA PARTY!
ALICE is none other than Nuclear Watch South's Leslie Minerd who is joined by White Rabbit Tom Clements (Friends of the Earth), Red Queen and SC Sierra Club Chair Susan Corbett, and Tea Party Host Extraordinaire, the Mad Hatter, Tim Liszewski of Carolina Peace Resource Center. Alice and Crew crashed the 2008 Tea Party rally in Columbia, SC, and put tax-funded nuclear loan guarantees in front of the Tea Partiers and the local media.