DOE’s desperation to give Vogtle loan now made clear

Southern Company's Vogtle site in March 2014, with two reactors under construction and two operating in the background. A lot of work remains to be done.

Southern Company’s Vogtle site in March 2014, with two reactors under construction and two operating in the background. A lot of work remains to be done. Photo provided by Tom Clements of Savannah River Watch.

Now we know just how desperate the Department of Energy was to give a taxpayer loan to Southern Company and others for construction of two new reactors at the Vogtle site in Georgia.

Like a car dealer trying to sweep unsold autos off the lot, DOE gave Southern Co. the loan with nothing down. Nada. Zero.

Hannah Northey at E&E Publishing broke the story late yesterday, based on documents she received from DOE under the Freedom of Information Act.

Those documents indicated that the credit subsidy fee Southern and its partners had to pay to obtain the loan was zero. “The credit subsidy fee payable to DOE in connection with its execution of the loan guarantee agreement dated Feb. 20, 2014, between DOE and [Oglethorpe], pursuant to which DOE will guarantee a federal financing bank loan to OPC [for $3 billion, including estimated capitalized interest] is $0,’ Davison [DOE Loan Program Office Executive Director Peter] wrote in one letter to Higgins,” the article states.

Think of the “credit subsidy fee” as the down payment on a loan. If you buy a house, these days the bank is likely to require that you pay 20% of the mortgage up front–they want you to have a serious stake in the property. Apparently, when it comes to nuclear power, DOE decided that normal banking practices could be thrown out the window. What is surprising is that the White House’s Office of Management and Budget (OMB) signed on to the deal. For years, the rumors and chatter coming out of the notoriously tight-lipped OMB were that it regarded the project as risky and that it would require a meaningful credit subsidy fee. But OMB obviously backed down.

The terms of the $6.5 Billion (with another $1.8 Billion still to come to other project partners) loan–and it is a direct taxpayer loan from the Federal Financing Bank, not just a loan guarantee–clearly vindicated the strategy Southern and its partners used to obtain it. The loan was announced personally by President Obama in February 2010. Then, for four years, the utilities, DOE, and OMB squabbled over the terms of the loan. Southern executives frequently said they didn’t need the loan in any case, so wouldn’t take a deal that didn’t benefit them.

So, Southern didn’t need the loan–they’ve been building the reactors anyway paying off bank loans, some apparently coming from Europe, with money collected in advance from ratepayers. But DOE wanted to give a loan so badly that it gave Southern and its partners everything they wanted. Sweet deal.

For comparison, the loan DOE/OMB offered to Constellation Energy for the Calvert Cliffs-3 reactor included a credit subsidy fee of $880 million. Admittedly, Calvert Cliffs-3 was always a riskier project financially, and by then Constellation was souring on it anyway, but that provided all the excuse Constellation needed to drop out of it altogether. That left Electricite de France holding the bag, and eventually it was denied a license under the Atomic Energy Act’s prohibition against foreign ownership, control or domination of a U.S. reactor. Apparently DOE was loath to even potentially endanger another nuclear project, even one that proudly stated it didn’t need the loan.

Interestingly, the Southern Alliance for Clean Energy (SACE) has been filing FOIA requests with DOE for years for information about the Vogtle loan, including about the credit subsidy fees, most recently in February. Twice SACE had to go to court to force DOE to divulge the information. In 2012, SACE finally received some documents indicating the credit subsidy fees DOE was then considering: “these documents showed that Georgia Power’s fee was 0.5-1.5% for a range of $17-52 million and Oglethorpe’s was 2.5-4.3% for a range of $70-132 million.”  At the time, clean energy advocates said those fees were far too low. Yet DOE went lower.

Said Sara Barczak of SACE in response to yesterday’s stunning revelation: “We are astonished that utility giant Southern Company is getting an amazing sweetheart deal with basically no protections for taxpayers. It is outrageous that the Department of Energy and Office of Management and Budget somehow determined that the two reactors under construction at Plant Vogtle pose less of a risk of default today than they did four years ago. Have these agencies been living under a rock? Fukushima has happened, natural gas prices have fallen, nearly all other new reactor projects have vanished and, most importantly, the Vogtle expansion is 21 months behind schedule, well over $1 billion over budget and has a large outstanding lawsuit of nearly another billion dollars between Southern Company and Westinghouse. How that together doesn’t constitute an unacceptable risk to taxpayers is baffling.”

Note that SACE’s press release includes a link to thousands of pages of documents on the Vogtle loans received by the group from its various lawsuits.

More than $10 Billion remains in the DOE’s fund for nuclear construction loans. While most projects that applied several years ago for loans have since been abandoned, could seeing sweetheart terms like this could make some utilities revive their failed and risky projects? In the meantime, SACE already has called for a Congressional investigation into the DOE’s nuclear loan program (a call NIRS heartily endorses).

Michael Mariotte

April 22, 2014


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14 thoughts on “DOE’s desperation to give Vogtle loan now made clear

    1. Michael Mariotte Post author

      We need a little more information. Did it say the e-mail worked, and it didn’t arrive? Or was there a different problem and the e-mail wasn’t sent? If the former, did you check the spam filter? If the latter, can you tell us what the screen said?

    2. Sara Barczak

      E&E News requires a paid subscription so you cannot access it in full and that’s probably why you weren’t able to email it (a paywall came up). There have been some other stories that are fully accessible, such as The Washington Examiner (, SNL ( and (

  1. Peter Sipp

    Just as sure as gravity of the SUN is holding all the planets in orbit… what now appears to be a sweetheart loan to a couple of utilities will… as time goes by… turn out to be the opposite for the WHOLE state of Ga.
    The rate charged to customers can only go up.I know. I was in that state for 21 years.When the first two reactors went “on line”. Businesses will not want to pay high electric rates. They will locate else where. In states that uses renewable energy as the major generator of electricity.

    1. Leonard Suschena

      Do any of you know the difference between a “LOAN” and a “LOAN GUARANTEE”? A loan would have been if the Government actual cut a check to Vogtle, but no checks were written and no funds were transferred. It’s a loan guarantee, which mean the Government is backing Vogtle’s credit worthyness and can then get lower rater for the money they borrow, which saves the rate payers in the end.

      1. Michael Mariotte Post author

        Actually, you are entirely wrong. It was not a loan guarantee, it was an actual taxpayer loan with the money coming out of the Federal Financing Bank–not a private bank. Whether it will save money for ratepayers in the end remains to be seen; but it’s clear to us that the project itself will cost ratepayers far more than if Southern Company engaged in strong energy efficiency and renewable energy programs. Already, those renewable projects Southern has been forced by the Georgia PSC to pursue are coming in cheaper than Vogtle.

      2. Michael Mariotte Post author

        We keep saying that because it was, in fact, an actual loan from the Federal Financing Bank, which the federal government is guaranteeing will be paid back to itself. The loan did not come from the commercial banking sector, it came from taxpayers.

  2. Aletha

    “While most projects that applied several years ago for loans have since been abandoned, could seeing sweetheart terms like this could make some utilities revive their failed and risky projects?”
    I think that is precisely the plan of the President and DOE. Obama and Energy Secretary Moniz are fervent supporters of a nuclear renaissance, and they will do anything to make that happen, consequences be damned.

  3. Rob Rowen

    Nuclear power is not a cost saving environmentally friendly option as a means to produce electricity. Regardless of claims being made by those in the industry, any time profit is involved safety is at risk. Humboldt Bay nuclear power plant was the first commercial nuclear power plant west of the Mississippi in Eureka, CA. and it is still costing rate payers and it has been decommissioned for almost 40 years. There is no place in the nation that wants the spent fuel and radioactive waste, which will be a major problem if and when we decide to add more plants around the country. Yucca Mountain was supposed to be an option in Nevada, they spent billions of tax dollars, then the people of Nevada said “not in my backyard”. Wind, solar, and natural gas are our best option at the present time. Maybe someday someone will figure out how to harness and control fusion, then we will have an energy source with water as its byproduct.

  4. Alan Medsker

    Those of you that are staunchly anti-nuclear are trying to throw out the best zero carbon, highly-scaleable, SAFEST method we have of generating electricity. With demands growing worldwide, 10’s of thousands premature deaths in the US just due to coal plants and climate change looming, we can’t afford to leave clean, proven nuclear energy behind. New reactor designs offer significant improvements over the current ones, and we should be pursuing those in addition to replacing every single fossil fuel plant we can with new nuclear construction. We KNOW what we can do with the waste (put it in Yucca Mountain, reprocess it to reclaim the 99.5% of energy still in it, or burn it in new reactors to create electricity), and nobody is safer than people that work at a nuclear plant. Check out the deaths per gigawatt-hour generated statistics sometime. And regarding cost, yes, these are big projects. ALL big projects have significant risks of going over time and budget, nuclear or otherwise. Once its built, a single Vogtle reactor can provide well over a gigawatt of ultra-reliable power 90%+ of the time, safely, and in any weather. Nuclear plants saved us from some significant blackouts during last winter’s polar vortex. Wind and solar have their place, but not as primary sources of grid electricity. They are just too unreliable (and any time you build some, you also build one or more fossil-fueled plant to back it up).

    If you want clean, safe, reliable, scaleable electricy, you need to be willing to pay for it.

    So you are hurting us all with your dogmatic opposition to one of the best sources of electricity that we have. Please stop!


    1. Michael Mariotte Post author

      Congratulations! You’ve managed to memorize nearly all of Nuclear Energy Institute’s talking points and condense them into a single paragraph! However, every single point already has been rebutted–most of them numerous times–on GreenWorld. And we will continue to rebut them all as we move along with our coverage of the ups and downs in building a nuclear-free, carbon-free energy system.

      1. Alan Medsker

        Michael, what is the purpose of your response? To convince me that I’m wrong? To shed more light on the subject for me or other readers? To show other readers that you are confident in your position? To help any of us see things from another point of view? Seriously, I wish we could have a discussion about this without knee-jerk reactions. I’m pretty confident that I have some things to say that could help you understand better the issues we face when it comes to energy policy and the larger issue of climate change. I’m equally sure that you all could tell me some things that would increase my understanding of your positions on these things. However, if the response to a challenge such as mine is only refers us to the GreenWorld “echo chamber”, I don’t think we’ll be able to make any progress with each other.

        I’m a really left-leaning liberal. I am a man of faith. I care deeply about this world, both the planet that is its core and the living things that are along for the ride. I especially care about people, including those billions that still live in poverty day-in and day-out. I love science also, and science and math tell me that affordable, clean, plentiful energy is the single biggest factor in raising people out of poverty. And I believe that nuclear energy, which has been running more safely now for decades than virtually any other form of electricity production, and which along is massively scalable, among clean energy sources, is a necessary component to a solution set that addresses pollution, climate change and poverty. If there are other solutions that can match these capabilities, I’m all ears, but there really aren’t. I will absolutely agree that there is a place for solar and wind power, but I’m convinced (so far) that those are not reliable, scalable or energy-dense enough to power even a smart grid (which we don’t have, and which will cost a lot). Certainly they can be used to provide solutions in niche situations, and those should be pursued. But you are not going to run an aluminum plant on solar cells or wind turbines, without backing it up with lots of fossil-fuel burning power plants.

        I would encourage you and other readers here to read David MacKay’s excellent book “Sustainability without the hot air”, which is also available for free viewing on his web site here; He certainly is not a shill for any of the energy sectors — he simply does the math and helps make it approachable to lay people, and provides a realistic view of the capabilities of the different energy sources out there.

        For the record, I couldn’t have told you if my post topics matched those of the NEI, although I guess I’m not surprised if that were to turn out to be the case (forgive me for not just taking your word for it, I just haven’t looked to see). I do believe that our current LWR fleet, which have served us reasonably well, can be improved upon significantly, and that newer designs based on molten salt/liquid fuel cores, which can breed new fuel from depleted uranium (which we have a lot of) and thorium (of which there is a lot) promise better economics, walk-away safety, better flexibility, better efficiency and better proliferation resistance. In the meantime, any time you shut down a nuclear plant today, you’re keeping a coal plant or two, or more, online for a longer time, and you’re very likely going to have to burn a lot more natural gas as well, to make up for it. So, from my perspective, our current reactors are the best source we currently have, and we should leverage them for as long as we can do so safely (according to engineers and scientists, not politicians, or environmentalists or accountants). And we should pursue newer designs that are better in so many ways, aggressively, to allow ourselves the best chance to beat our common foes, climate change and fossile-fuel-sourced polution.

        Can we work together on that, maybe?

      2. Michael Mariotte Post author

        1. This site is not a debating society. I don’t get why pro-nukers think they can go to anti-nuke sites and constantly put forth their opinions and presume that we should just accept that and give them the space to do so. Happens constantly here–we get comments like yours almost every day, we just don’t publish most of them; happens constantly on our Facebook page. We don’t have time to respond to every pro-nuke comment, especially when there are so many. And, my impression at least, is that our side doesn’t go on pro-nuke blogs en masse and put up assertions and expect those to get published. I know I don’t do that and I’ve seen no evidence of that.

        2. If you want to write broad comments, we’d appreciate it if you’d actually read the blog so you’re not bringing up points we’ve already refuted time and time again. If you want to leave comments, write them about what we actually publish, not–as above, a broad and completely wrong diatribe on how wonderful nuclear power is.

        3. To correct just a couple things: history and current reality indicates clearly that nuclear power is not easily scaleable. It takes many years to license and build nuclear reactors. Case in point: Vogtle, which just announced another 18-month delay and is now nearly four years behind schedule, despite taxpayer loans and CWIP that were supposed to speed the process. And, of course, the experience with the EPRs in France and Finland is even worse. Moreover, as all of these project indicate, nuclear power is simply too expensive. Georgia Power even now is producing solar power cheaper than Vogtle will produce power–and the gap will widen. Renewables are dropping in costs; nuclear, as has been the case throughout its history, continues to increase in cost. And renewables, which take very little time to install, actually are scaleable. As is, of course, energy efficiency and all the other components of the 21st century electricity system. Relying on nuclear power to deal with climate change would be global suicide.

        Just today, a new analysis published in The Ecologist argues that nuclear is not carbon-free–which hopefully everyone knows by now–but that it doesn’t even qualify as a low-carbon source:

        Unfortunately, nuclear power and renewables do not mix well. As we’ve been saying in these pages since our inception, the 20th century practice of “baseload” power plants, whether nuclear or coal, are not compatible with the 21st century grid. If we haven’t explained that well enough (though more likely you just haven’t bothered to read GreenWorld), here’s an article posted yesterday on this subject:

        The choice is not nuclear or coal; that’s a false dichotomy. In reality, there is no difference between nuclear utilities and fossil fuel utilities: they are one and the same. The choice is nuclear/fossil fuels vs renewables. Some nuclear enthusiasts don’t understand that, since they’re enamored with the technology and not its practical application. But the utilities do. That’s why, as we’ve been reporting for a year now, they provide lip service to renewables but in reality are attacking them and trying to end the renewables revolution. Midwest Energy News picked up on that in a long, very good article today: And a nicely complementary piece yesterday points out how the fossil fuel interests are going after solar:

        Why can’t an aluminum factory be powered by wind or solar? Of course it can. Apple just signed a contract for a 70MW solar plant to power a server farm. How is that different? Solar and wind can be scaled for both large-scale needs like that, and, unlike nuclear, for small-scale needs like rooftop solar for everything from homes to big box stores.

        I could go on, but I’d rather people who want to comment actually read GreenWorld before doing so. And we’re just not going to accept any more of these kind of broad-based pro or anti-nuke comments. If people want to comment on articles we’ve written, that’s one thing. But it’s pointless and a waste of time, for us at least (the nuclear industry seems to have an endless supply of trolls willing to try to waste our time) for us to “debate” our underlying principles.

        We believe in a nuclear-free, carbon-free energy system. That means no nuclear, no fossil fuels. That shouldn’t be hard to understand. It is, in our view, the only sensible energy system. It effectively addresses our climate crisis and also prevents generation of lethal radioactive waste, routine releases of toxic radiation, constant threat of meltdown, environmental devastation of uranium mining and the nuclear fuel chain, and the proliferation of nuclear materials for weapons. And, as an increasing number of serious studies show (some of them are on this page: it’s achievable and affordable–indeed more affordable than a nuclear future. If all this sounds like a win-win situation, it’s because it is.

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