Hopes for a nuclear-power revival, fanned by fears of global warming and a changing political climate in Washington, are running into new obstacles over a key element — money.
A new approach for easing the cost of new multibillion-dollar reactors, which can take years to complete, has provoked a backlash from big-business customers unwilling to go along.
Financing has always been one of the biggest obstacles to a renaissance of nuclear power. The plants are expensive, and construction tends to run late and over budget. The projected cost for a pair of proposed Georgia plants would be $14 billion; the Obama administration last month pledged to provide them $8.3 billion in federal loan guarantees.
So utilities have turned to state legislators and regulators to help contain capital costs. In states such as Georgia, Florida and South Carolina, utilities have won permission to charge customers for some of the cost of new reactors while construction is still in progress — a financing technique that would save utilities a couple of billion dollars for each reactor. Previously, utilities had to wait until power plants were in operation before raising rates, as they still do in most states.
“We tell people it’s like paying off the interest on your credit card as you go along, rather than letting it compound,” said Suzanne Grant, a spokeswoman for Progress Energy.
But businesses and other electricity users in those states aren’t buying that argument. Instead, they are saying utilities are pawning off much of the projects’ risks on customers because bank lenders and investors will not take the risks.
“It’s a terrible idea,” said Jim Clarkson, a consultant with Resource Supply Management, a Georgia firm that advises companies how to reduce electricity use. “We’ve had decades of subsidies for nuclear plants and all sorts of preferential treatment. They still require loan guarantees because the smart money won’t touch them.”
“Nuclear power is very important,” says John McWhirter, who represents the Florida Industrial Power Users Group. “We just wish consumers could be protected.”
The reaction of big businesses, as well as other consumers, has turned states that were bastions of support for nuclear power into hazardous territory. And it could thwart the Obama administration’s efforts to jump-start nuclear reactor construction by handing out chunks of the $18.5 billion in federal loan guarantees Congress authorized in 2005.
Thirty to 40 years ago, expensive nuclear plants drove some utilities into bankruptcy. That has made banks gun-shy about lending and investors wary about buying bonds.
