Many loans will result in default

One of the reasons that private lenders won’t fund new plants is that such loans often result in default – which happens when the plant’s operation does not produce enough revenue to pay off loans for construction.  That’s why the industry wants Congress to back such loans.  But according to a May 2003 Congressional Budget Office report, the risk of default on loan guarantees for new nuclear plants is “very high – well above 50 percent.”  That means that taxpayers could be stuck with the bill for more than half of the loans we guarantee—a risky proposition indeed.

The nuclear industry is already heavily subsidized

The nuclear power industry has already benefited from taxpayers’ generosity.  Indeed, for too long, government subsidies have been the only thing keeping the industry afloat.   A full 59 percent of all research dollars in the energy sector from 1948 to 1998 were spent on nuclear research—money that could have encouraged energy conservation or sped our conversion to energy sources such as wind and solar.  Congress should not now be considering an additional $50 billion dollars to subsidize nuclear plant construction, when priorities such as wind and solar remain underfunded (wind and solar tax credits in 2006 totaled less than $1 billion).

A blank check for fiscal irresponsibility

Congress is considering enacting loan guarantee language that would give the Department of Energy, which has mismanaged similar programs in the past, a blank check to award loan guarantees to nuclear construction projects without congressional oversight.  Without Congressional oversight that can guarantee money is being well spent, the Department of Energy could hand out loans to projects that are likely to fail—increasing the already-high risk of default.  Removing Congress from this process is a bad idea and just increases the financial risk to taxpayers and the potential subsidies for the nuclear industry.