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U.S. Nuclear Projects Tied Up Awaiting Federal Loan Guarantees

The so-called nuclear renaissance that was supposed to boost U.S. capacity to generate emissions- free power may stall as developers await decisions from the Obama administration on federal aid.

The Energy Department in Washington needs to review proposed loan guarantees “thoroughly,” and a decision on at least one of three pending projects on its short list may be announced by the end of this year, spokeswoman Ebony Meeks said. The department increased the number of people working on the proposals to more than 120 from 10 in March 2009, she said.

“We need to make sure we review all of these projects very carefully and very thoroughly,” Meeks said today in a telephone interview.

Southern Co., the second-largest U.S. power producer, is the only plant developer to get a government loan guarantee to help make construction of new reactors possible. Two other groups that made the short list are seeing delays after previously expecting decisions earlier this year.

“Time is running out,” Constellation Energy Group Inc. Chief Executive Officer Mayo Shattuck III told investors yesterday on a conference call. “We definitely can’t keep spending without a near-term commitment in the form of a loan guarantee.”

Constellation, NRG

The department has about $10 billion left for guarantees after it awarded $8.33 billion to Atlanta-based Southern and its partners in an expansion of the utility owner’s Vogtle power station in Georgia. There will only be enough money left to back financing for one more project unless and until Congress provides additional funding, Meeks said.

Constellation, a Baltimore-based utility owner, is working with Electricite de France SA to expand its Calvert Cliffs nuclear plant in Maryland. The company, which previously spent $1 million a day on the new project, cut spending by a third because of the delay, company spokeswoman Claire Buchan said.

NRG Energy Inc., which seeks money for new reactors at a plant in Texas, expected to hear a decision on a loan guarantee by the end of June, Chief Executive Officer David Crane said in February. The Princeton, New Jersey-based company lost a partner on the project earlier this year, when San Antonio’s municipal power producer pulled out.

The U.S., which hasn’t licensed any new reactors since the 1979 accident at Three Mile Island in Pennsylvania, is trying to revive nuclear-power construction to meet power demand without increasing greenhouse-gas emissions. The last new plant to be licensed opened in 1987.

South Carolina’s Scana Corp. leads the other project that the Energy Department is considering. The company expects to see terms of a government loan guarantee later this year, utility President Kevin Marsh said today on a conference call.

To contact the reporter on this story: Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net.

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