"Burning Money" image by Gene Case, Avenging AngelsThe Inter Press Service has reported that President Barack Obama's U.S. Department of Energy has offered Southern Company a "sweetheart deal" on federal nuclear loan guarantees for the Plant Vogtle Units 3 & 4 proposed new atomic reactors: a 0.5 to 1.5% credit subsidy fee, lower than college students pay on their federal student loans. These facts came to light thanks to a courtroom victory by the Southern Alliance for Clean Energy (SACE), which won a Freedom of Information Act (FOIA) ruling from a federal judge who ordered DOE to divulge the terms of the first and only federal taxpayer-backed nuclear loan guarantee yet conditionally awarded.
Remarkably, Southern Co. has been asked for a mere $17 to $52 million of "skin in the game," in exchange for $8.3 billion in federal taxpayer-backed nuclear loan guarantees for Vogtle Units 3 & 4 -- proposed Toshiba-Westinghouse AP1000s (1,100 Megawatt-electric "Advanced Passive" pressurized water reactors). If Southern and its partners default on their loan repayments, the federal taxpayer will be left holding the bag. To make matters worse, taxpayers are not only guaranteeing the loans, they are also providing the loans. The source of the loans, the U.S. Finance Bank, is federal taxpayer funded. Despite the nuclear loan guarantees, private investment banks have not touched the financially risky project.
The "moral hazard with a radiological twist" represented by this risky financial scheme puts 15 times more taxpayer funding at risk than was lost in the Solyndra solar loan guarantee scandal ($535 million); NIRS executive director Michael Mariotte pegs the default risk of Vogtle 3 & 4 as some 50 times higher than Solyndra's.
Despite such favorable terms, President Obama's Office of Management and Budget is still wary of the deal, offering opponents an opportunity to kill it. The "sweetheart deal" revealed by the unearthed documents has prompted Harvey Wasserman of Nukefree.org to ask, "Why should nuke loan guarantees cost less than student or home loans?"