UPDATE:US Government Loan Guarantees For New Nuclear Too Small-NRC

March 10, 2008
(Updates with more comments, details, background.)
By Selina Williams

LONDON -(Dow Jones)- The U.S. government's $18.5-billion federal loan guarantees falls short of the $500 billion needed to build the country's next generation of nuclear powered reactors over the next decade, the commissioner of the U.S. Nuclear Regulatory Commission said Monday.

The loan guarantees would only be enough to finance two to three nuclear reactors and could ultimately hinder companies from building all the new units they apply for, said the NRC's Gregory Jaczko in London.

"It's a far cry from what's needed," said Jaczko. "Congress is supportive, but have decided not to provide more federal loan guarantees - there's a disconnect there, so financing would have to happen without federal loan guarantees," he added.

The U.S. is on the verge of a nuclear power revival after 30 years of no new build and companies say the loan guarantees are crucial to get the first wave of new plants up and running.

"That first wave of new nuclear would need assistance as there's no commercially available financing now because of the uncertainties and because it's been 30 years since one was built," said Michael Wallace, CEO of Constellation Energy Group Inc. (CEG).

"But once we demonstrate that, we should be able to finance the next wave with commercial loans," Wallace told Dow Jones Newswires on the sidelines of a utilities conference.

Constellation Energy hopes to break ground on a new nuclear power reactor at its Calvert Cliffs plant in Maryland at the end of this year following a final decision in November. The company plans for the 1.6-gigawatt reactor to come on line in 2015.

To date, the NRC has received five complete applications and one partial application for licenses to operate and construct a nuclear power plant, Jaczko said. He expects to receive 17 applications for 30 nuclear power reactors with around 45 GW of capacity over the next two to three years. It's not yet clear how many licenses will be approved, Jaczko said.

Some construction, such as site clearing, can begin before a company receives a license, he added.

The NRC is likely to settle on three new reactor designs out of the five it is currently evaluating so as to simplify the licensing process and encourage standardization across the industry, he said.

Nuclear power is on the verge of a revival in the U.S. due to efforts to reduce greenhouse-gas emissions, reversing three decades of stagnation following the 1979 disaster at the Three Mile Island nuclear power plant. Last September, NRG Energy Inc. (NRG) became the first company in 30 years to file an application to build new nuclear power plants.

Jaczko said around 50 new nuclear reactors would be needed to replace the country's aging plants and keep the amount of electricity produced from nuclear steady at 20%.

-By Selina Williams, Dow Jones Newswires, +44 207 842 9262; selina.williams@dowjones.com
(END) Dow Jones Newswires; 03-10-08 1249ET
Copyright (c) 2008 Dow Jones & Company, Inc.

Source: SmartMoney.com