We have proceeded to due diligence with four applications for nuclear loan guarantees that are farthest along in the [Nuclear Regulatory Commission] application process, the spokeswoman said. We have not made any final decisions and have not eliminated any of the applicants.
As per the loan guarantee program, the US government promises to assume the companies’ debt obligations if they default on loans for the nuclear projects.
The guarantees are a key step for energy companies which aspire to be on the forefront of a US nuclear renaissance. The projects are planned to cost several billion dollars apiece – up to $10 billion for a single reactor, financing may be hard to come by.
Federal loan backing is a critical step right now to the extent that anyone who thought they could move forward with a plant outside of the federal loan guarantee environment is now going to have to rethink that process, David Crane, NRG Energy Inc.’s chief executive officer, said.
According to spokeswoman of DOE, the department has no timetable for issuing the loan guarantees. Spokespeople for NRG Energy and for Santee Cooper that intends to own a stake in the Summer plant expansion, confirmed that the companies’ projects had made the final four. While a spokeswoman for Constellation Energy said the company has yet to receive official notification from the DOE.
According to a plan by Energy Futures Holdings Corp., for two new reactors at its Comanche Peak nuclear power plant in Texas was not among the projects in the final four. This project was one of the five on a short list for federal loan guarantees revealed in February 2009.
We’re early in the application process, and we did not expect to be awarded a loan guarantee at this stage, said Ashley Monts, a spokeswoman for Luminant, a subsidiary of Energy Future Holdings Corp. The DOE has informed Luminant that Comanche Peak is in the first alternate position for a loan guarantee, Monts said.
Since 2007, 17 US companies have sought federal approval to construct and operate 26 new nuclear reactors. The first new reactors are not likely to be operational before 2014, the companies have said.
The loan guarantee might prove mainly beneficial to NRG Energy. The federal loan backing for the South Texas project could prove to investors that NRG Energy doesn’t need Exelon’s balance sheet to fund large capital projects.
Exelon tries to persuade people that because they’re big, that’s going to help with nuclear development, Crane said. There’s no factual basis for believing that.
