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289 comments on DrumBeat: September 5, 2007

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LevinK on September 5, 2007 - 5:33pm Permalink | Subthread | Parent | Comments top

You are right that the risk is high based on past experience. This does not change that there were no taxpayer money ever payed for that. True TVA probably covered the costs in their rates, but this is different - a bad management decision in bad time could result in losses. BTW TVA has a history of that not only in the nuclear sector, check out the Tellco Dam.

It is true that loan guarantees saves money to utilities by saving them the risk premium. But as far as it does not increase my tax bill I don't consider it a subsidy. Actually I consider it a positive and necessary step to help kick start a dormant or developing industry - including wind which is also provided loan guarantees. Which reminds me that loan guarantees are provided for renewable power projects. Why are the double standards?

Take a look here:

Within DOE's FY'08 budget request to guarantee up to $9 billion in loans, DOE has proposed to guarantee $4 billion in loans for central power generation facilities such as nuclear facilities or carbon sequestration optimized coal power plants; $4 billion in loans for projects that promote biofuels and clean transportation fuels; and $1 billion in loans for projects using new technologies for electric transmission facilities or renewable power generation systems.

http://energy.gov/news/5045.htm

IMO what is outragious here is the 4bln.for biofuels but nobody is ranting about those.

The ratio of nuclear + clean coal vs renewables is 4 : 1. Compare that to the ration of energy produced by the two, which is something like 50 : 1.

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NZSanctuary on September 5, 2007 - 7:51pm Permalink | Subthread | Parent | Comments top

"IMO what is outragious here is the 4bln.for biofuels but nobody is ranting about those."

Nobody is ranting about bio-fuels? Do you read anything not related to nuclear on this forum?

"You can never solve a problem on the level on which it was created."
Albert Einstein

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LevinK on September 5, 2007 - 8:01pm Permalink | Subthread | Parent | Comments top

Nobody is ranting specifically about the loan guarantees for biofuels. At least I haven't seen it, but I may be missing something.

Please don't misinterpret me.

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AlanfromBigEasy on September 5, 2007 - 9:05pm Permalink | Subthread | Parent | Comments top

I am NOT against loan guaranties for nukes, but I expect those guaranties to cost tax payers quite a few billion $ in the end for economically failed nukes (half of them ? fourth of them ?). And I do NOT want to see ethanol loans.

I did NOT see any loan guaranties for wind turbines (they do not need them and would provide very little benefit since WTs are so low risk), but sauce for the goose ...

Many other worthwhile programs (some more worthwhile than new nukes) could also benefit from federal loan guaranties.

Alan

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LevinK on September 5, 2007 - 9:43pm Permalink | Subthread | Parent | Comments top

Wind energy is present in the 2006 DOE loan guarantee program.

But I could not find any numbers of how much is applied for and how much is granted. Anyway it is pointless to continue arguing this since we largely agree.

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AlanfromBigEasy on September 5, 2007 - 8:55pm Permalink | Subthread | Parent | Comments top

TVA issues state income tax free bonds, so no state taxes are paid on the interest on $28.3 billion; much of which is a residue from the failed nuclear program.

Municipal electric utilities, rural electric cooperatives, the four PMAs, and the TVA are exempt from Federal income tax; this type of support is addressed, but only indirectly
from a GAO report.

So taxpayers have paid a heavy price for the failure of the TVA nuclear program. Figure lost taxes on the interest of $6 billion over the 30 year payout of those bonds just for Bellafonte.

Alan

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LevinK on September 5, 2007 - 11:28pm Permalink | Subthread | Parent | Comments top

Figure lost taxes on the interest of mortgage payments. Think we should be talking trillions. With "tr".

I think you are nitpicking here. This was money that was left to taxpayers, so effectively nobody "lost" them but the government coffers. TVA still payed it's bills it's just the govt that decided to yield part of them to taxpayers - which I can only applaud in principle.

Now after dicounting for 30 years etc. we should be talking maybe around hundred million... Hardly a lump change but obviously nothing of significance. The gov machine lost the chance to waste one more $100mln. in Iraq for a single day... I'm shocked, so shocked.

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TnGranny on September 5, 2007 - 9:49pm Permalink | Subthread | Parent | Comments top

TVA decided to build those 23 nuclear plants based on the demand history it had at the time. Electricity use in its service area had grown steadily ever since TVA's inception and the board considered that this would continue just as many now assume that oil demand will continue to increase at the same rate in the future as it has for the past twenty or so years. They just didn't forecast the dislocations in the economy that happened due to oil peaking in the US and the oil embargo. The biggest factor in the cancellation of those plants was the sudden leveling off of electricity demand that occured then. True there were cost overruns and construction problems, but even without those TVA would have been in trouble because the demand for that much power just didn't materialize as expected.
TVA financed the debt incurred by this fiasco in the rates but also by issuing bonds. No 'taxpayer' bailout occured.
The Tellico dam is another matter since I grew up about ten miles from Fort Loudon and it is still a bitter topic in my home area. But to say that TVA is subject to lots of pressure from political entities is an understatement. One needs to look at TN politics, not TVA management, to determine how the Tellico Dam came to be.

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LevinK on September 5, 2007 - 11:41pm Permalink | Subthread | Parent | Comments top

I think this answer should be directed to Alan. He uses the failure of TVA plans as an argument that nuclear power is a risky investment and dismisses all political factors into play.

In fact both are equaly important factors that could fail any kind of investment, not only nuclear. You have to have both preconditions, only one will not work. With oil and NG obviously near peak and coal on the GHG crosshair I think the economics of nuclear power are covered. What is left is the political will to go for it and loan guarantees are... well guaranteeing for it.

IMO if we add to this electric rail, plug-in hybrids and some wind we will have PO and GW solved by the middle of the century. So... why is all this fuss about? :)

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