Obama Gets Nukey

In its keenness to woo Republicans with nuclear-friendly policies, the Obama administration plans to hand out $54.5 billion in government-backed loans to jump-start a nuclear renaissance. On Tuesday, it announced the first beneficiary of this munificence—and apparently the best candidate it could find was a proposed plant that has been put on hold by federal regulators because of serious safety concerns.

The Department of Energy (DOE) will underwrite a loan of $8.3 billion to Southern Company‘s two planned reactors at Plant Vogtle in Burke County, Georgia.

Last October, federal regulators discovered significant safety concerns in the design proposal for the Westinghouse AP1000 reactors that are scheduled to be used for the Georgia project and six others around the country. The Nuclear Regulatory Commission (NRC) rejected the proposal after determining that the shield design would not protect the reactor from earthquakes, tornadoes, hurricanes, and airplane crashes.

Westinghouse says it will submit a new design this month. But it is unclear when the NRC would even review the do-over. The loan guarantee is conditional upon NRC approval.

But if the project ever takes off, there are multitudinous red flags signaling that it’s a very bad investment for the good taxpayers. The nuclear loan guarantees are intended to finance up to 80% of the total project cost for new reactors. Southern Company’s most recent estimate for the two reactors is $14 billion, though according to independent projections the real cost of a single reactor is probably closer to $12 billion. That means that the government could pour money into a new plant, only to see construction halt when the price tag rises and there are not sufficient funds to finish it.

Opponents of the loan guarantees cite Long Island’s now infamous case of Shoreham Nuclear Power Plant, which took 20 years and cost $6 billion to build, but was never put into commercial operation. Two decades after the troubled project was finally closed, ratepayers are still dishing out the funds.

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