Biggest US Utility Takes US Taxpayers For a Ride
So Nuke Guarantees Cost Less than Student Loans!?!
Can bad subsidies become good? Or should subsidies be replaced altogether? We trim, blend, and append two 2012 articles on two southern US electrical utilities from (1) EcoWatch, Jly 3, on nuclear power subsidies by H. Wasserman, and (2) National Legal and Policy Center, Jly 9, on solar power subsidies by P. Chesser.
by Harvey Wasserman and by Paul Chesser
Why Should Nuke Guarantees Cost Less than Student Loans?
The Department of Energy (DOE) wants to give the Southern Company a nuclear power loan guarantee at better interest rates than you can get on a student loan. And unlike a home mortgage, there may be no down payment.
The terms DOE is offering the builders of the Vogtle atomic reactors have only become partially public through a Freedom of Information Act lawsuit filed by the Southern Alliance for Clean Energy (SACE).
SACE has challenged the $8.33 billion loan guarantee package announced by President Obama in 2010.
The documents show the DOE has intended to charge Southern a credit subsidy fee of 1 to 1.5 percent, far below the rates you would be required to pay for buying a house or financing an education.
Furthermore, since a primary lender would be the Federal Financing Bank, the taxpayer is directly on the hook. Guaranteed borrowings are not supposed to exceed 70 percent of the project’s projected costs, but the public has been given no firm price tag on the project.
There is apparently no cash down payment being required of Southern as it seems the loan is designed to be secured with the value of the reactors themselves, in the unlikely event they are finished.
Liability from any catastrophe will revert to the public once a small private fund is exhausted.
Construction at the Vogtle site has already brought on delays due to the use of sub-standard concrete and rebar steel. The projected price tag has risen as much as $900 million in less than a year.
Georgia ratepayers have already been stuck with $1.4 billion in advance payments being charged to their electric bills. More overruns are on their way.
Two older reactors now licensed at the Vogtle site were originally promised to cost $150 million each, but came in at $8.9 billion for the pair.
Before politicians finance any more nukes, have them drop student loan rates to 1 percent, and drop down payments to buy a home down to zero, just like they’re offering the reactor pushers.
To read more
JJS: The author above wants subsidies to be redirected from nuclear to solar. Below is what we now get for our solar subsidy money.
Jim Rogers Grabs Largesse For Duke Energy
CEO Jim Rogers is a schmoozer. He committed Duke Energy to guarantee a $10 million loan to the Democratic National Committee to host its 2012 convention in Charlotte NC, the utility’s hometown. He ingratiated himself with the Obama administration and Democrat Senate and House (when Nancy Pelosi was still in control).
Now the largest public utility in the nation, Duke pursues carbon-free or -restrained power projects -- and the government grants, incentives, and tax breaks that go with them. Hence Duke developed the costly Edwardsport coal-gasification plant in Indiana, which was to include a carbon-capture and storage component. The venture ran at least $1.4 billion over budget, so Duke sought a taxpayer bailout. Instead, the Indiana Utility Regulatory Commission forced ratepayers to cover $2.6 billion of the boondoggle’s cost. Edwardsport has been marred by an ethics scandal that implicated Rogers himself, has cost three top Duke officials their jobs, and the head of the IURC was fired by Indiana Gov. Mitch Daniels as well.
To fulfill the requirements of various state renewable energy mandates, Duke has been building wind and solar power plants. The company earns a bundle on them, thanks to taxpayers. Generous federal and state programs provide tax breaks, subsidies, and the ability to shelter profits from taxation. Duke receives a 17 to 22 percent return on equity for wind and solar projects.
Duke was also able to tap stimulus funds for projects like the $22 million grant from the Department of Energy for its Notrees Windpower Project in Texas, more than half the estimated $43.6 million cost for the 20-megawatt energy storage experiment. DOE also came through with $204 million under ARRA for Duke’s smart grid projects in the Midwest and in the Carolinas.
Last year Duke got wood classified as “biomass” under North Carolina’s renewable mandate, thus enabling the utility to clear-cut forests to meet the renewable target.
To read more
JJS: Some people think subsidies can be fixed. They believe they can pick just the right technology, the right amount of permitted profit, of emitted pollution; they want to have stricter laws, more inspectors, prevent inspectors from coming from or going to the corporations they inspect, etc. Others think subsidies can not be fixed. They believe in repealing limited liability for polluters so they have to buy insurance, when there’s a violation, taking not just abstract companies but individual managers to court, and also charge businesses for even ordinary use of Earth, such as occupying a parcel of land. Getting rid of subsidies should save governments bundles of money, should liberate utilities to switch to the most efficient -- and thus cleanest -- power sources, and should reduce their impact on the environment to an amount so small that nature could handle it.
The key to abolishing subsidies and the parasitical relationship between business and government is the part above where people who use land must pay land dues to their society. Land dues or land taxes create a whole different kind of economy, indeed, a geonomy, that lets people both prosper and conserve. To explore that policy and the economics behind it, here's a course to check out:
Sustainable Economics Teleseminar
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