Loan Guarantees
With the private sector unwilling to take on the risk of building new reactors, the energy bill forces taxpayers to become the silent investors in the next generation of nuclear power plants. Title XIV of the Senate energy bill, the so-called “Incentives Title,” offers federally-backed loan guarantees covering up to 80 percent of the cost of building new reactors. This title, which authorizes the Department of Energy to provide loan guarantees to a wide range of energy projects, is tailor-made for the nuclear industry.

But when these projects fail, as some surely will, taxpayers will have to pick up the tab. The Congressional Budget Office estimates that the risk of loan default in the nuclear industry is “well above 50 percent,” potentially leaving taxpayers on the hook for billions of dollars for each plant.

To find out more about some specific companies that may benefit from the energy bill’s loan provisions, go to Public Citizen’s analysis at http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/energybill/2005/articles.cfm?ID=13547

The Congressional Budget Office scoring of the Senate Energy Bill is located at http://www.cbo.gov/ftpdocs/64xx/doc6423/s10.pdf

NY Times, “Interest in Reactors Build, but Industry is Still Cautious.” http://www.nytimes.com/2005/05/02/politics/02nuke.html

Production Tax Credit
Not only does the Senate bill subsidize nuclear power at the front-end with loan guarantees but the bill also subsidizes plants at the back-end. The Senate bill includes a nuclear power production tax credit that gives new reactors a 1.8-cent/kWh tax break for their first eight years of operation. Thanks to the Senate Finance Committee’s budgetary sleight-of-hand, the Joint Committee on Taxation scores the production tax credit at only $278 million in foregone revenue over the next ten years; but the credit, which doesn’t expire until 2021, could cost taxpayers up to $6 billion over its life. Even the pork-packed House version of the energy bill did not include this audacious hand-out.

To read the Joint Committee on Taxation scoring and explanation of the nuclear power production tax credit go to http://www.house.gov/jct/x-51-05.pdf and http://www.house.gov/jct/x-44-05.pdf

For analysis of the Senate energy bill’s tax title, visit: http://newenergyfuture.com/factsheets/senateenergy.pdf
http://www.taxpayer.net/energy/pdf/taxtitleanalysis.pdf

Price-Anderson Act
Originally enacted by Congress in 1957 as a temporary shield to protect the fledgling nuclear power industry, the Price-Anderson Act has become a fixture of the federal government’s support of nuclear power. Price-Anderson limits the nuclear industry’s liability in the case of a catastrophic accident to only $10 billion, providing victims with no guarantee that they will be compensated beyond that amount. Given that a serious nuclear accident could cost as much as $600 billion in damages, Price-Anderson leaves citizens unprotected while significantly undercutting the industry’s costs.

The federal energy bill includes a 20-year extension of the Price-Anderson Act, allowing all new reactors to be covered through 2025. Even the nuclear insiders agree that Price-Anderson allows the industry to skimp on safety. David Baldwin, a Senior Vice President at General Atomics, stated at a recent hearing that “the Price-Anderson Act provides a disincentive to safe reactor designs and should be phased out.” “If the plants are inherently safe,” Baldwin added, “the nuclear liability insurance system established under Price-Anderson would not be needed.”

To learn more about the Price-Anderson Act, see:
http://www.taxpayer.net/energy/priceanderson.htm
http://www.citizen.org/documents/priceandersonbackgrounder.pdf
http://www.cato.org/pub_display.php?pub_id=902&full=1

Idaho Reactor
As if these giveaways to the nuclear industry were not enough, the Senate bill also includes open-ended funding for a classic government boondoggle: a nuclear reactor in Idaho which will attempt to co-generate hydrogen. The bill authorizes $1.25 billion for the plant over the next decade, and “such sums as are necessary” over the following five years for what will likely be a prohibitively expensive project. While billed as a boon to the burgeoning “hydrogen economy,” this reactor is little more than a giveaway to the nuclear industry, which has long been looking to get the federal government to foot the bill for a new reactor.

Not to be outdone, the House version of the energy bill goes even further. In addition to authorizing more than $1.3 billion for the reactor in Idaho, the House bill provides another $1.2 billion to build a second nuclear reactor geared to assisting the industry with deploying new technologies. If the nuclear industry believes that a next generation plant is economically viable, it should be able to finance it on its own.

For a comparison of the spending in the House and Senate bills, visit:
http://www.taxpayer.net/energy/pdf/Jun24Analysis.pdf (Senate)
http://www.taxpayer.net/energy/pdf/HouseAnalysis.pdf (House)

The Green Scissors Campaign, led by Friends of the Earth, Taxpayers for Common Sense and U.S. Public Interest Research Group, is dedicated to protecting taxpayers and the environment. For more information about the Green Scissors Campaign, please contact:

Erich Pica, Friends of the Earth (202) 222-0739
Franz Matzner, Taxpayers for Common Sense (202) 546-8500 x127
Navin Nayak, U.S. Public Interest Research Group (202) 546-9707

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