Loan Guarantee Program Winners – Prediction by the Wall Street Journal
The Wall Street Journal has made a prediction that the $18.5 billion in loan guarantees first authorized by the Energy Policy Act of 2005 will soon be awarded to the following companies – Unistar Nuclear, NRG, Scana and Southern Company. The biggest beneficiary of the decision could very well be Toshiba since they are the main reactor supplier for three of the above. (Disclosure: I have owned Toshiba stock for several years, since they first purchased Westinghouse.)
In what should be no surprise to folks that troll through the nuclear blogosphere, Dan Yurman at Idaho Samizdat could have written the Wall Street Journal story more than a month ago – he had the same four winners on his list on May 11, 2009.
The article also talks a bit about the companies and the projects that will not be getting any loan guarantees from the federal government during the first round new nuclear plant construction. When there is a limited amount of money available the decisions get made by a bureaucratic process that enables the government to pick winners and losers. That is the case even in a situation where the government is not really spending any money, just enabling the financing for some capital investments for good credit risks that simply do not have the capital capacity on their own.
One more somewhat troubling aspect of the report is that the bureaucrats apparently determined that it was a plus for the suppliers to be from foreign countries that may also kick in additional support and financing authority. Of course, that is understandable, especially since the US, which first developed atomic fission as a reliable source of heat for electrical power generation, no longer has much of a domestic fission industry.
Oh well, I guess it is good news that the decision has finally been made and will soon be announced so that the next stage of the revival will begin in earnest. I tried to make a comment on the Wall Street Journal article, but either my browser or my connection yielded a failed attempt. Just in case you are interested, here is what I tried to share with other WSJ readers.
The loan guarantee program could have been three times as large with a very small increase in the DOE’s obligation authority. The Senate version of the stimulus package initially contained an additional $50 billion in guarantee authority for the program that allows emission free nuclear plants to compete. Instead of enabling an enormous outburst of manufacturing capacity and new job creation, the congress allowed focused anti-nuclear organizations to strip that provision from the bill.
Nearly all of the costs of the program would have been born by the investors, not the taxpayers. For well run projects, loans get paid and no backer has to bail anyone out. If nothing else, during the lean years of nuclear power, the company leaders learned how to make very conservative investments that returned a great deal of money over time.
It is too bad that the government has put itself into a position of picking winners and losers and in slowing the only real competition that the coal, oil and gas industry has. Could that be the real reason that the nuclear loan guarantees were removed from the stimulus package?
