Energy Department to give loans for up to 80 percent of construction cost of new nuclear reactors

U.S. will guarantee loans for up to 80 percent of the total construction cost of new nuclear reactors.

Photo: Energy Department to give loans for up to 80 percent of construction cost of new nuclear reactors

Because of budget constraints, the earliest any company proposing to build a new reactor could benefit is 2009.

The nuclear power industry had been critical of earlier plans for a loan guarantee program passed as part of the 2005 energy bill, saying the guarantees were not generous enough and would stall the burgeoning development of new reactors.

Under the old plan, the Energy Department would have only guaranteed loans for about two thirds of total construction costs of new nuclear reactors and other projects.

Sen. Pete Domenici, who had been critical of the agency's initial proposal for the loan guarantees, said he was pleased by the final regulations.

"At last, we now know that the program will proceed in a way consistent with our intent," he said in a prepared statement.

Earlier this summer, six Wall Street investment banks - including Goldman Sachs Group Inc., Morgan Stanley and Lehman Brothers Holdings Inc. - sent a letter to the Energy Department criticizing the earlier loan guarantee plan.

At a nuclear power conference Thursday, Energy Secretary Samuel Bodman said he would seek "substantial increases" in the 2009 federal budget for loan guarantees - enough to provide support for seven to eight nuclear plants.

Nuclear power, Bodman said in prepared remarks, "is the only mature, emissions-free technology that can supply the power America will need to meet the projected increase in demand for electricity over the next 25 years."

The announcement came as the Energy Department invited 16 projects around the U.S. - none of which used nuclear technology - to submit applications for loan guarantees. Selected from 143 applicants, they plan to use advanced coal technologies, solar power, hydrogen fuel cells and biomass among others.

Consumer advocates, however, say government backing for multibillion-dollar nuclear and advanced coal plants could wind up causing huge losses.

"I just see enormous risk to the taxpayer for some projects that have dubious environmental and consumer benefit," said Tyson Slocum, director of the energy program at consumer group Public Citizen.

NRG Energy Inc. last month submitted the first application for a new nuclear reactor in the U.S. in nearly 30 years for two new units about 90 miles southwest of Houston.

Constellation Energy Group Inc. has filed a partial application with the Nuclear Regulatory Commission, which expects up to six more requests this year from Duke Energy Corp., Dominion Resources Inc. and others.