WASHINGTON, D.C.—The U.S. Department of Energy today released a fiscal year 2012 budget request that increases to $54.5 billion, from $18.5 billion currently allotted, the amount of federal loan guarantees to be accessed by companies planning to build new nuclear power plants. The budget request also includes funding to support development of small reactors—typically with an electric generating capacity of less than 350 megawatts—that may serve important domestic and international markets.
This is the second consecutive year that the Obama administration has sought to triple the loan guarantee volume for new nuclear plants in recognition that nuclear energy is a proven, reliable, carbon-free source of power. Nuclear power plants operating in 31 states provide 20 percent of all U.S. electricity, and 70 percent of the electricity that comes from low-carbon sources.
“We greatly appreciate the administration’s continued commitment to nuclear energy as an important part of a clean energy portfolio,” said Alex Flint, the Nuclear Energy Institute’s senior vice president for governmental affairs. “The R&D investment in small reactor development and the higher loan guarantee volume for the new nuclear energy facilities that our nation needs are immensely important undertakings.
“Loan guarantees will serve as a catalyst to accelerate construction of new nuclear plants, creating thousands of high-paying, long-term jobs in the process. By supporting new reactors, loan guarantees also will reinvigorate U.S. manufacturing capability for nuclear energy components.”
If all the proposed facilities under review are built, tens of thousands of new jobs would be created to build and operate them.
Loan guarantees are designed to boost investor confidence and allow worthy projects to move ahead with debt financing on more reasonable terms that ultimately will lower the overall cost of electricity generated by those projects. Loan guarantees for nuclear plants are issued only after applicants pay fees of millions of dollars to the Department of Energy to cover the cost of the guarantees.
The increase in loan guarantee volume will raise the number of nuclear plant projects that can participate in the federal government’s clean-energy loan guarantee program.
The administration’s commitment to nuclear energy is further evidenced by the $853 million request to support nuclear energy, including research and development of a variety of nuclear energy technologies, including small reactors, Flint said.
The president’s budget also indicates that, in separate legislation, the administration will propose to reinstate the Uranium Enrichment Decontamination and Decommissioning tax. The industry has successfully opposed reinstatement of the tax—which would increase government coffers by $200 million annually—in recent years and will continue to do so, Flint said.
The D&D program was established to decommission Department of Energy uranium enrichment facilities in three states. This would mark the third time that the industry has been taxed for this effort, even though it met its $2 billion-plus obligation under a 1992 statute, and the fund has a balance of $4.6 billion. Conversely, the federal government has yet to meet its initial funding requirements for this program.
The budget continues the President’s efforts to terminate the Yucca Mountain, Nev., nuclear waste repository program despite DOE’s legal obligations in that regard and even though a license application for the facility is pending with the NRC. The repository program would not receive any funds in the fiscal year that begins Oct. 1. However, DOE still will require consumers of nuclear-generated electricity to pay a surcharge on their monthly electric bills into the federal Nuclear Waste Fund to support the program—yielding an additional $778 million in revenues, according to the budget request.
“Budgetary and political pressures have led DOE to propose some activities that are patently unfair to the industry and its customers and that we vehemently oppose,” Flint said. “The two proposals that we again will work to defeat are the reinstitution of the uranium enrichment D&D fund—a program for which industry met its financial obligation even though the federal government has not—and the continued collection of consumer money for the Nuclear Waste Fund.”
Under the terms of the Nuclear Waste Policy Act, electric utilities and users of nuclear-generated electricity since the early 1980s have supplied more than $30 billion to the federal government for the disposal of used nuclear fuel from commercial nuclear power plants. The Nuclear Waste Fund has a $26 billion surplus and earns annual interest in excess of $1 billion. The proposed repository also would house high-level radioactive waste from U.S. defense programs.
“The industry does not support the termination of the Yucca Mountain program but believes that, if it is going to happen, it should occur in an orderly manner to permit the licensing process to be restarted if ever warranted,” Flint said.