CPS/NRG Settlement Shows Nuclear Power Too Costly, Too Risky

[bananas]

http://texasvox.org/2010/02/17/cpsnrg-settlement-shows-nuclear-power-too-costly-too-risky/

CPS/NRG Settlement Shows Nuclear Power Too Costly, Too Risky
February 17, 2010 by citizensarah

Statement of Tom “Smitty” Smith, Director, Public Citizen’s Texas Office

Today’s announcement that as a part of a settlement with NRG Energy, CPS Energy will withdraw its application for a federal loan guarantee for the South Texas (Nuclear) Project (STP) expansion and end further investment in the project demonstrates nuclear plants are too costly and too risky to build.

CPS Energy and the San Antonio City Council have signaled their desire to stop throwing good money after bad at STP, a message we hope will tell the U.S. Department of Energy that this plant is a poor candidate for federal loan guarantees. This debacle should show the federal government that nuclear loan guarantees are a fundamentally flawed and wasteful use of taxpayer money.

At $18.2 billion, the cost of STP has already tripled in just a year. When STP 1 and 2 were built, they ended up being six times over-budget and eight years behind schedule, and STP 3 and 4 look like they are on track to beat out that poor performance record.

Today’s announcement is a victory for the many citizens of San Antonio that have worked so hard in the last year to bring openness and accountability to the city’s participation in this project. We applaud CPS for wisely seeing the futility of wasting more time and energy on this flawed nuclear endeavor. We hope that they will be satisfied with the deal they’ve gotten and avoid the temptation to increase their ownership in the project. CPS has finally reached a settlement that shields San Antonio ratepayers from the financial risks of yet another nuclear deal gone wrong. Any future investment would throw that protection to the wind.

On Thursday, the City Council will vote on a proposed rate increase for CPS. The City Council should put a firewall in that proposal to ensure that no unauthorized money will be siphoned off to buy a bigger stake in STP. San Antonio can’t afford to let this rate increase become a back door to continued nuclear investment.

We also have to wonder how NRG will move forward, without another clearly delineated partner in the project. Less than a month ago, NRG announced that if CPS “does not meet future obligations representative of its ownership interest in the site”, they “will wind down the project as quickly and as economically as possible.” We certainly hope that NRG CEO David Crane will remain true to that expressed intent to protect his shareholders from the next financial failure in a long historic line of overly expensive, poorly executed nuclear projects.

[amborin]

1. k and r

[kristopher]

10. kick

[kristopher]

2. "At $18.2 billion, the cost of STP has already tripled in just a year."

Wow...

[OKIsItJustMe]

3. Ouch!

(Of course) it's not without precedent.

[kristopher]

4. Unfortunately true. nt

[kristopher]

5. Some further reading on nuclear costs:

Posted with permission:

http://www.vermontlaw.edu/it/Documents/Cooper%20Report%20on%20Nuclear%20Economics%20FINAL%5B1%5D.pdf

FINDINGS
Within the past year, estimates of the cost of nuclear power from a new generation of
reactors have ranged from a low of 8.4 cents per kilowatt hour (kWh) to a high of 30 cents. This
paper tackles the debate over the cost of building new nuclear reactors, with the key findings as
follows:
• The initial cost projections put out early in today’s so-called “nuclear renaissance” were about
one-third of what one would have expected, based on the nuclear reactors completed in the
1990s.
• The most recent cost projections for new nuclear reactors are, on average, over four times as
high as the initial “nuclear renaissance” projections.
• There are numerous options available to meet the need for electricity in a carbon-constrained
environment that are superior to building nuclear reactors. Indeed, nuclear reactors are the worst
option from the point of view of the consumer and society.
• The low carbon sources that are less costly than nuclear include efficiency, cogeneration,
biomass, geothermal, wind, solar thermal and natural gas. Solar photovoltaics that are presently
more costly than nuclear reactors are projected to decline dramatically in price in the next
decade. Fossil fuels with carbon capture and storage, which are not presently available, are
projected to be somewhat more costly than nuclear reactors.
• Numerous studies by Wall Street and independent energy analysts estimate efficiency and
renewable costs at an average of 6 cents per kilowatt hour, while the cost of electricity from
nuclear reactors is estimated in the range of 12 to 20 cents per kWh.
• The additional cost of building 100 new nuclear reactors, instead of pursuing a least cost
efficiency-renewable strategy, would be in the range of $1.9-$4.4 trillion over the life the
reactors.

Whether the burden falls on ratepayers (in electricity bills) or taxpayers (in large subsidies),
incurring excess costs of that magnitude would be a substantial burden on the national economy and
add immensely to the cost of electricity and the cost of reducing carbon emissions.

APPROACH
This paper arrives at these conclusions by viewing the cost of nuclear reactors through four
analytic lenses.
• First, in an effort to pin down the likely cost of new nuclear reactors, the paper dissects three
dozen recent cost projections.
• Second, it places those projections in the context of the history of the nuclear industry with a
database of the costs of 100 reactors built in the U.S. between 1971 and 1996.
• Third, it examines those costs in comparison to the cost of alternatives available today to meet
the need for electricity.
• Fourth, it considers a range of qualitative factors including environmental concerns, risks and
subsidies that affect decisions about which technologies to utilize in an environment in which
public policy requires constraints on carbon emissions.

The stakes for consumers and the nation are huge. While some have called for the
construction of 200 to 300 new nuclear reactors over the next 40 years, the much more modest task
of building 100 reactors, which has been proposed by some policymakers as a goal, is used to put
the stakes in perspective. Over the expected forty-year life of a nuclear reactor, the excess cost
compared to least-cost efficiency and renewables would range from $19 billion to $44 billion per
plant, with the total for 100 reactors reaching the range of $1.9 trillion to $4.4 trillion over the life
the reactors.

[kristopher]

6. kick

[joshcryer]

7. Kicking month old articles buries other environmental postings here.

It'd be nice if you didn't do that.

[kristopher]

8. Thanks but

that isn't your decision to make. If you want to tell someone how to post, I'd suggest the others in their nearby cubicles at the nuclear industry PR firm you work for.

[joshcryer]

11. You just fail at common netiquette.

[ConcernedCanuk]

18. Actually, I think kicking old posts is a GOOD thing . .

.
.
.

Wake some people up,

get a different crowd viewing it . .

I've kicked posts over 6 months old

AND I NEVER GOT ANYONE TO SUGGEST I DIDN'T DO THAT . . .

yet;

ANYHOO,

I've seen increased participation and interest in the thread that they missed in the past.

I could be rude and tell you where to put your idea of "common netiquette"

But I won't

[kristopher]

9. More information

http://journals.democraticunderground.com/kristopher/427

[bananas]

13. Good info - thanks.

CPS has pulled out of this turkey as far as it can.

[kristopher]

15. My pleasure...

[joshcryer]

12. This shows nothing since no new nuclear has been built in the United States.

[kristopher]

14. Tell that to the ratepayers who got a 3.5% rate increase in 2008 based on a lie

They are going to be paying that 3.5% for a long, long time to come. And they will also have to pay for the electricity the plant if/when it finally starts generating electricity.

It also shows that this FULLY MATURE technology CANNOT be cost competitive with other sources of generation when there is a level playing field.

[bananas]

16. Kick! nt

[kristopher]

17. Numerous studies by Wall Street...

"• Numerous studies by Wall Street and independent energy analysts estimate efficiency and
renewable costs at an average of 6 cents per kilowatt hour, while the cost of electricity from
nuclear reactors is estimated in the range of 12 to 20 cents per kWh.
• The additional cost of building 100 new nuclear reactors, instead of pursuing a least cost
efficiency-renewable strategy, would be in the range of $1.9-$4.4 trillion over the life the
reactors.

Whether the burden falls on ratepayers (in electricity bills) or taxpayers (in large subsidies),
incurring excess costs of that magnitude would be a substantial burden on the national economy and
add immensely to the cost of electricity and the cost of reducing carbon emissions."

- Cooper

[kristopher]

19. A 2008 cost analysis by independent researcher predicted the cost problems...

Prior to the revelation that CPS had been deliberately withholding information on another price increase, this time $4 billion, this open access, independent analysis of the cost claims of the project were released. Time has validated the findings.


Assessing Nuclear Plant Capital Costs for the Two Proposed NRG
Reactors at the South Texas Project Site

Arjun Makhijani, Ph.D.1

March 24, 2008
A. Main Findings and Recommendations

NRG, a merchant electricity generating company, proposes to build two new nuclear power
reactors, totaling 2,700 megawatts at the South Texas Project site near Bay City, Texas. NRG
owns a part of the two units that already exist at that site. CPS Energy, San Antonio’s electricity
and gas municipal utility, which owns a 40 percent share of the two existing units proposes to
purchase a 40 percent share of the proposed new reactors. This analysis is a preliminary report
on the likely capital costs of the two reactors, as best they can be determined at the present time.
It also contains some preliminary observations regarding efficiency and distributed renewable
energy sources to put the CPS decision that might be made regarding investment in the NRG
plant into context.

Central conclusion and recommendation

The overall finding of this report is that NRG’s range of $6 billion to $7 billion is obsolete.
The best available estimates indicate that capital costs would likely be about a factor of two
or more higher, even without taking into account the potential for real cost escalations
during construction, delays, and other risks. The risks to CPS, as a municipal utility and to
its ratepayers as well as to the taxpayers of San Antonio are great. Due diligence demands
that CPS participation in the project should not be pursued until an independent, detailed
study with current cost estimates of the plants and alternatives to it are complete and have
been publicly disclosed and discussed.


1. Main Findings

Careful industry analysis of new nuclear power plant costs indicates that the NRG
estimate of $6 billion to $7 billion for the cost of the two new nuclear units proposed to
be built at the South Texas Project site is obsolete and likely incomplete. The best
currently available analyses indicate that it is a serious underestimate of the capital costs
of the project.

An analysis of new nuclear power plant costs filed by Florida Power & Light (FPL) with
the Florida Public Service Commission is the most complete and rigorous analysis of new
nuclear power plant capital costs publicly available to date. The FPL analysis is based on
the same reactors, G.E. Advanced Boiling Water Reactors (ABWRs) as the proposed
NRG project. Using this analysis, we find that the all-in total capital cost of the proposed
NRG two-reactor project would be in the $12 billion to $17.5 billion range. This range is
two to three times the lower NRG value of $6 billion and 1.7 to 2.5 times NRG’s higher
estimate of $7 billion. Moody’s October 2007 estimates are within this range, as is the
Progress Energy’s March 2008 estimate. Even these estimates do not take into account
higher imported component cost risks created by a falling dollar or possible continued
real cost escalation due to rising global demand for raw materials and skilled labor.

A 40 percent CPS’ share of the project would make its likely investment in the project in
the $4.8 billion to $7 billion range. Even the lower end of this range is considerably
higher than the total net value of CPS’s total electric plants of $3.9 billion as of the end of
its 2007 fiscal year. The high end would make CPS’s share equal to the high end of the
total NRG cost estimate.

As a municipal utility partnering with a merchant generator, the risks to CPS ratepayers
and San Antonio taxpayers of a large, long-lead time, capital intensive project in a time
of financial turbulence are considerable and need to be carefully evaluated. They should
be publicly disclosed and discussed.

CPS completed its own study of the costs of the proposed project and compared it to
some alternatives in 2007. This study has not been made public; it is being updated.

CPS has made a commendable commitment to the concept that efficiency should be
treated on a par with new investments in coal or nuclear plants. However, this
commitment is only in the very initial stages of operationalization and is at very low
levels of implementation relative to economic potential. The efficiency study of 2004
commissioned by CPS did not cover some technical elements and did not include
combined heat and power or distributed renewable energy sources within its scope. It is
also in urgent need of a financial update in light of increased costs of new coal and
nuclear plants.

An early decision to invest in the nuclear units would pre-empt and possibly even
foreclose full operationalization of the concept that efficiency, distributed generation, and
distributed renewables should be treated on a par with central station investments. This
could result in needless rate increases and financial risk. Additional financial risk may
accrue due to NRG’s approach to the project. For instance, NRG filed an incomplete
Combined Operating License Application with the Nuclear Regulatory Commission, a
fact that has could result in delays in the licensing process.


2. Recommendations

The CPS study of the costs of new nuclear units and alternatives should be made public.
An independent review of this study would benefit the public and reduce the risks
associated with an investment decision that is likely to be larger than the new value
CPS’s entire electricity system.

The City Council should commission a fully independent study of the NRG’s project’s
capital costs, including risks not quantified in this preliminary report. The study should
also consider other cost elements such as fuel costs, potential consequences of a lack of
federal contracts for spent fuel disposal for new reactors, opportunity costs of water that
would be used by the plants, and reliability of nuclear power plants in times of extreme
heat and drought that may become more common in a warming world.

A study of efficiency, distributed generation, distributed renewables, solar thermal power
plants, large scale wind, and intermediate scale (greater than 100 kW) solar PV on
commercial rooftops and parking lots needs to be completed. This would provide a basis
for deciding a future course of action by comparing combinations of alternative options
for cost and reliability comparison with the proposed nuclear investment.

CPS should work with Arizona Public Service, Austin Energy, regional electric
cooperatives, and other utilities to develop a financial model for treating efficiency,
distributed generation, and distributed renewables on a par with central station
generation. This is necessary for economical operation, the health of the utility, and
achieving least cost solutions within any given set of environmental and reliability
constraints.

NRG emerged from bankruptcy as recently as December 2003. It’s license application
was deemed to be incomplete by the NRC. Its public capital cost estimates for the
project are obsolete. These facts should elicit special due diligence examination on the
part of CPS, its governing board and the City Council prior to a commitment of
partnership in the proposed project.

A decision on any rate increase associated with an investment in the new nuclear units
should be postponed until a sound basis for comparison as described above is developed.
A decision to invest in this project should also be postponed until the studies discussed
above have been completed and publicly discussed.

1
Arjun Makhijani is president of the Institute for Energy and Environmental Research, and Fellow of the American
Physical Society.

Full report can be downloaded with this link: http://www.ieer.org/reports/nuclearcosts.pdf

[joshcryer]

20. CPS chickened out because of special interests, NINA is going through with construction on own dime.

See here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x237141

[kristopher]

23. No they aren't. Public risk - private profit.

Since private capital will not touch these projects, they are shifting ALL the risk to the taxpayer/ratepayer.

[Statistical]

24. Just a reminder $1.23 billion private capital in the Vogtle project so far.

That should double to about $2.4 billion by end of month.

[kristopher]

25. The ratepayers are locked into repayment even if project goes bankrupt.

[Statistical]

26. Not true.

The ratepayers have agreement with utility for locked in rates which existed before and will exist after this reactor.

Many non-nuclear utilities have the same arrangement.

Still the bonds can fail. If the cost overuns are as high as you claim the utility could fail to meet is obligations and raise more revenue to finish project. In which case the bonds would be wiped out in Bankruptcy.

The prospectus is available for the bonds. They are clearly not secured. The are senior debt, they have guaranteed cashflow which reduces risk but doesn't make them no risk.

Private capital is risking money on new reactors for first time in 30 years. It must suck to be an anti-nukker today.

[kristopher]

27. Private capital isn't risking anything.

The article you originally posted to document this sale included a statement from one of the buyers about how the lock-in against the ratepayers made the transaction tolerable. If it were not in place, there wouldn't have been any takers.

BTW, the ratepayers have been paying a 3.5% rate hike specifically for this project since 2008. In the event of bankruptcy that cash flow is one of the assets available to the courts to offset the losses of debtors. While not a specific guarantee against any given loan, that is only a semantic game you are playing for it does provide a guaranteed stream of capital to offset obligations.

There are two other factors at work that fuck the public -
One is that the taxpayers have no priority on such assets. In all other programs, the government is first in line for repayment under a bankruptcy, but not with this new round of nuclear funding. Apparently it wasn't possible to get the funding you are bragging about unless the investors had a guarantee their access to that cash stream wouldn't be impeded by the taxpayer.
Second is that the amount of guaranteed funds by the taxpayer is at an all time high of 80%. Even BUSH only had the balls to put up 50% of the funds.

So when you say "Private capital is risking money on new reactors for first time in 30 years." it is absolutely crystal clear that you have a very freaking Wall Street definition of "risk" as it applies to corporate money.

[Statistical]

31. The bonds are not guaranteed.

Even IF and it is highly unlikley in BK the judge will allow future cashflow to bailout bondholders they will be taking a massive hit. Lucky to get 50 cents on the dollar.

If it is so risk free then why is it higher than a T-bond.

T-bond is yielding <4%. These sold for 6.6%. You can't have your cake and eat it to.

They are being sold at a risk premium to T-bonds. It just happens to be less of a risk premium than most anticipated. If they were risk free as you suggest they should sell at comparable rate to T-bonds.

Personally I honestly thought rates would be higher. Nuclear doesn't need ultra low cost of capital just reasonable ones. I thought I could lock in a 40 year bond at 7.5% to 8.5% given the nuclear hysteria ("50% failure rates", nuclear is DOOOMED, Chernobyl, etc). Turns out a LOT of big investors are more logical and less emotional.

Basically kris you aren't shilling hard enough. Get out there and trump up some real hysteria. I want to lock in some higher rates. I promise a finders fee.

[kristopher]

33. That isn't the sentiment expressed by the quote Stat's provided.

The investor specifically cited the cash stream as a reason to buy interest at that rate.

[Statistical]

35. exactly "at that rate".

The spread between T-bond and this bond indicate there is some risk to the investor.

Money is fungible. An investor can put money anywhere. The spread between any bond and T-bond (the "risk free" investment indicates the markets assessment of risk.

A 2.26% risk premium indicates the bond is not risk free. It isn't high risk. It is comparable to other low risk long term capital projects.

[joshcryer]

37. NINA is taking no risk! They are covering 92.375% of the costs but they have no risk!

The taxpayers are paying for it!

Oh fuck, that's right, CPS just fucking settled with NINA to take taxpayer risk from 50% to 7.625%. Woo.

[kristopher]

41. This project is dead without federal guarantees and loans; taxpayers are taking the risk.

[joshcryer]

46. They have to pay back those loans.

It's not free money like you're pretending.

[bananas]

55. No, they don't. - taxpayers will have to pay for it

NINA LLC "Limited Liability Company" was created two years ago to Limit the Liability of NRG etc.
NINA LLC doesn't have the money to pay back the loans.
When NINA LLC goes bankrupt, they CAN'T pay back the loans, THEY DON"T HAVE THE MONEY.
But the loans are federally insured, so taxpayers will pay back the loans.

[joshcryer]

68. You don't know what you're talking about.

http://www.lgprogram.energy.gov/press/100407.html

[joshcryer]

50. LOL! Federal loans are free money!

:rofl:

[kristopher]

39. And the fact that it isn't higher is a product of the cash stream of the ratepayers.

The risk to the investors is virtually non-existent not because the project is a good bet, but because they have been immunized against the extremely high probability of default.

Based on current industry practices, CBO expects that any new nuclear construction project
would be financed with 50 percent equity and 50 percent debt. The high equity participation
reflects the current practice of purchasing energy assets using high equity stakes, 100 percent
in some cases, used by companies likely to undertake a new nuclear construction project.
Thus, we assume that the government loan guarantee would cover half the construction cost
of a new plant, or $1.25 billion in 2011.
CBO considers the risk of default on such a loan guarantee to be very high—well above
50 percent. The key factor accounting for this risk is that we expect that the plant would be
uneconomic to operate because of its high construction costs, relative to other electricity
generation sources. In addition, this project would have significant technical risk because
it would be the first of a new generation of nuclear plants, as well as project delay and
interruption risk due to licensing and regulatory proceedings.


And things have only gotten worse since this evaluation was delivered.

[joshcryer]

51. In what world does defaulting on a loan mean you don't pay it back?

NRG will be bankrupted and Toshiba will be in a fucking shitload of hurt if they default. Defaulting doesn't mean "free money" contrary to your fantasy view of the world.

NINA is taking the vast brunt of the risk here.

[bananas]

56. No, Toshiba is not responsible for the loans, nor is NRG, only NINA LLC is

and NINA LLC doesn't have the money to pay to back the loans,
so when they default, taxpayers will have to pay.

[bananas]

57. "Defaulting on a loan" by definition means you don't pay it back

http://en.wikipedia.org/wiki/Default_%28finance%29

A default is the failure to pay back a loan.<1>

1. ^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 261. ISBN 0-13-063085-3. http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.

The stupid! It burns!

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[joshcryer]

63. Read the rest of your link.

[bananas]

58. Here's how the game is played

A different nuclear project, but the same financial games:

http://www.world-nuclear-news.org/NN-First_loan_guarantee_applications_for_new_US_facilities-0808084.html

First loan guarantee applications for new US facilities
08 August 2008

<snip>

The actual application for the new Calvert Cliffs plant was filed by Calvert Cliffs-3 Nuclear Project LLC, which is a subsidiary of UniStar Nuclear Energy (UNE), Constellations' 50-50 joint venture with Electricité de France (EdF). UniStar is based on a business framework developed jointly by France's Areva and Constellation Energy exploring how to build at least four of Areva's advanced US EPR nuclear units in the USA. In mid-2007, UNE was launched to proceed with plans to build, own and operate a fleet of US EPR units in the USA and Canada.

<snip>

When "Calvert Cliffs-3 Nuclear Project LLC" defaults on its federally-insured loans, taxpayers pay for it, not Areva or Constellation.

[joshcryer]

65. So you're saying loan guarantees = free money?

:rofl:

The United States government would sue and you know it, and they would win.

[bananas]

60. "Defaulting on a loan" by definition means you don't pay it back

You asked, "In what world does defaulting on a loan mean you don't pay it back?"
The answer is the real world.
The definition of defaulting on a loan means you don't pay it back:

http://en.wikipedia.org/wiki/Default_%28finance%29

A default is the failure to pay back a loan.<1>

1. ^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 261. ISBN 0-13-063085-3. http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.

[Name removed]

64. Deleted message

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[Name removed]

89. Deleted message

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[Name removed]

91. Deleted message

Message removed by moderator. Click here to review the message board rules.

[joshcryer]

78. This dishonest report is from 2003 and does not take into consideration EPact 2005.

"This is a 7 year old analysis of legislation that was never enacted, and it is not germane to the current project—which has undergone rigorous financial analysis, is conditioned on regulatory approval, uses proven technology, and sets strict financial requirements to protect taxpayers. Further, the project already has power purchasing agreements in place. In other words, utilities have signed contracts agreeing to buy power from the plant for many years into the future, ensuring a stream of revenue."

You've gotte be fucking kidding me, no wonder Statistical gets upset with this dishonest disinformation.

http://motherjones.com/blue-marble/2010/02/chu-not-aware-nuclear-default-rates

EPact 2005 makes major assurances that loans will be repaid, giving complete authority to the Energy Sec. to do so. The Application requirements are insurmountable, $800,000 non-refundable, hundreds if not thousands of pages of financial requirements.

[kristopher]

80. The economic conditions have only gotten worse.

The price of nuclear has tripled since the CBO report was written. That's why they had to up the loan guarantees to 80% AND provide most of the funding from GOVERNMENT LOAN PROGRAMS even then.

Citibank (2008/2009) predicts even worse numbers facing new nuclear generation. In the most cheerful, everything goes perfect scenario, the default rate is about 57% and when they include even modest cost overruns and construction delays of less than 2 years, the default rate rises to about 72%.

It's the economics, not the bias. Renewables and energy efficiency are forecast to reduce the operational load factor for nuclear plants to less than 60% - BECAUSE THEY ARE LESS EXPENSIVE.

[joshcryer]

85. Read the link.

http://cboblog.cbo.gov/?p=478

[joshcryer]

79. BTW

http://cboblog.cbo.gov/?p=478

(Just so google can see that you are the single person on this forum, Taos Eddy, who is making these dishonest claims.)

[joshcryer]

36. God the hypocrasy.

It's OK when people pay feed in tarrifs (which make some parts of EU have the highest rates in the world), it's not OK when you get a rate hike.

Both clean energy, one is evil the other is to be shilled for.

[kristopher]

42. One has had 50 years of getting 96% of all "clean energy" subsidies and still can't survive.

And while nuclear is on an upwards trend, the renewable technologies are all on a downward price trajectory and are already less expensive than nuclear:

[joshcryer]

47. We'll see.

[Nederland]

21. One has to wonder

...why Japan and France are able to build nuclear reactors for less than half of what it costs in the US.

[kristopher]

22. How do you know what it costs in France or Japan?

Neither country publish the numbers related to costs in any form that is subject to independent scrutiny. What you have are governmental/industry CLAIMS about the costs.

Just look at the shenanigans taking place here and now with the "free money" from the government. By shifting the risk to the public sector you effectively remove that cost from the accounting process. The risks that caused the financing to cost so much are still present, and the cost of those risks will eventually be paid by the taxpayers/ratepayers. BUT when the nuclear industry calculates the "cost" of the nuclear plant, those taxpayer funded liabilities will not be included.

If that is going on here, WTF do you think is going on behind the wall of secrecy on cost numbers that exists in Japan and France?

[Nederland]

28. Incorrect

Neither country publish the numbers related to costs in any form that is subject to independent scrutiny.

This is incorrect.

[kristopher]

29. No it isn't incorrect.

[Nederland]

30. Yes it is

The MIT study on the economics of nuclear power contains an analysis of the cost of constructing reactors in Japan. Since you have quoted from this report in the past, it's only fair to assume that you believe it is an accurate, independent source of unbiased information. If you've suddenly changed your mind about the independence of the MIT group, I'd like to know why.

[kristopher]

32. That isn't a critical analysis of the cost claims; they take them at face value.

Second, I have quoted the MIT report in a number of ways, one of the most frequent is as a demonstration of the way that the financial evaluation process is corrupted by lack of independent analysis and an over-reliance on industry generated cost estimates. That is the core finding of the Cooper Report:

From the first fixed price turnkey reactors in the 1960s to the May 2009 cost projection of
the Massachusetts Institute of Technology, the claim that nuclear power is or could be cost
competitive with alternative technologies for generating electricity has been based on hope and
hype. In the 1960s and 1970s, the hope and hype analyses prepared by reactor vendors and parroted
by government officials helped to create what came to be known as the “great bandwagon market.”
In about a decade utilities ordered over 200 nuclear reactors of increasing size.

Unfortunately, reality did not deliver on the hope and the hype. Half of the reactors ordered
in the 1960s and 1970s were cancelled, with abandoned costs in the tens of billions of dollars. Those
reactors that were completed suffered dramatic cost overruns (see Figure ES-1). On average, the
final cohort of great bandwagon market reactors cost seven times as much as the cost projection for
the first reactor of the great bandwagon market. The great bandwagon market ended in fierce
debates in the press and regulatory proceedings throughout the 1980s and 1990s over how such a
huge mistake could have been made and who should pay for it.

In an eerie parallel to the great bandwagon market, a series of startlingly low-cost estimates
prepared between 2001 and 2004 by vendors and academics and supported by government officials
helped to create what has come to be known as the “nuclear renaissance.” However, reflecting the
poor track record of the nuclear industry in the U.S., the debate over the economics of the nuclear
renaissance is being carried out before substantial sums of money are spent. Unlike the 1960s and
1970s, when the utility industry, reactor vendors and government officials monopolized the
preparation of cost analyses, today Wall Street and independent energy analysts have come forward
with much higher estimates of the cost of nuclear reactors.

The most recent cost projections are, on average, over four times as high as the
initial nuclear renaissance projections.

Even though the early estimates have been subsequently revised upward in the past year and
utilities offered some estimates in regulatory proceedings that were twice as high as the initial
projections, these estimates remain well below the projections from Wall Street and independent
analysts. Moreover, in an ominous repeat of history, utilities are insisting on cost-plus treatment of
their reactor projects and have steadfastly refused to shoulder the responsibility for cost overruns.
One thing that utilities and Wall Street analysts agree on is that nuclear reactors will not be
built without massive direct subsidies either from the federal government or ratepayers, or from
both.

...The highly touted renaissance of nuclear power is based on fiction, not fact. It got a
significant part of its momentum in the early 2000s with a series of cost projections that vastly
understated the direct costs of nuclear reactors. As those early cost estimates fell by the wayside and
the extremely high direct costs of nuclear reactors became apparent, advocates for nuclear power
turned to climate change as the rationale to offset the high cost. But introducing environmental
externalities does not resuscitate the nuclear option for two reasons. First, consideration of
externalities improves the prospects of non-fossil, non-nuclear options to respond to climate
change. Second, introducing externalities so prominently into the analysis highlights nuclear power’s
own environmental problems. Even with climate change policy looming, nuclear power cannot
stand on its own two feet in the marketplace, so its advocates are forced to seek to prop it up by
shifting costs and risks to ratepayers and taxpayers.

The aspiration of the nuclear enthusiasts, embodied in early reports from academic
institutions, like MIT, has become desperation, in the updated MIT report, precisely because their
reactor cost numbers do not comport with reality. Notwithstanding their hope and hype, nuclear
reactors are not economically competitive and would require massive subsidies to force them into
the supply mix. It was only by ignoring the full range of alternatives -- above all efficiency and
renewables -- that the MIT studies could pretend to see an economic future for nuclear reactors, but
the analytic environment has changed from the early days of the great bandwagon market, so that it
is much more difficult to get away with passing off hope and hype as reality.

The massive shift of costs necessary to render nuclear barely competitive with the most
expensive alternatives and the huge amount of leverage (figurative and literal) that is necessary to
make nuclear power palatable to Wall Street and less onerous on ratepayers is simply not worth it
because the burden falls on taxpayers. Policymakers, regulators, and the public should turn their
attention to and put their resources behind the lower-cost, more environmentally benign alternatives
that are available. If nuclear power’s time ever comes, it will be far in the future, after the potential
of the superior alternatives available today has been exhausted.

Full report download:
http://www.vermontlaw.edu/it/Documents/Cooper%20Report%20on%20Nuclear%20Economics%20FINAL%5B1%5D.pdf

[Nederland]

34. Your post doesn't say anything about costs outside the US

So you have done nothing to dispute my original assertion that US costs are twice as high as elsewhere.

[kristopher]

40. You have no substantiation for that assertion except suspect industry data.

You are making a faith based statement based on information from entities that retain close control of the cost data and who are ACTIVELY ENGAGED IN TRYING TO SELL A PRODUCT AND APPEASE TAXPAYERS.

[Nederland]

44. Yours is the faith based statement

You have absolutely no evidence that the numbers are wrong, you just assume they are wrong because you oppose nuclear.

[kristopher]

45. It is reasonable to assume that cost numbers with their basis hidden behind a wall of secrecy

...are suspect, yes. When a government blends itself with an industry such as happened with nuclear power globally, and when the basis for the cost numbers are state secrets that cannot be confirmed, and when those same government/industrial complexes are intent on gaining global market share and driving a market, YES I AM SUSPICIOUS.

Absolutely.

Guilty as Hell.

The real question, however, is why aren't you?

[joshcryer]

49. You are "suspicious" without cause. Just like denialists...

...who say things like "oh that report on climate was suspicious."

New nuclear has yet to be tested in the United States. However, we do see that new nuclear worldwide is coming in under the cost estimates that you exaggerate. It then becomes suspect which sources you are choosing and whether or not it's pure confirmation bias.

You want nuclear to fail so you find reports that say nuclear is failing.

[joshcryer]

38. A critical analysis is that NINA is going forward with construction on their own dime.

So if CPS's / City of Austin's bullshit cost projections (likely made up by Texas energy interests who are threatened by nuclear) are real, then NINA won't be able to build the reactors.

[kristopher]

43. Do you understand any of the nonsense you spout?

NINA is dead in the water without loan guarantees and loans from the US taxpayer. The only way to finance these projects worldwide is for the public to assume the risk since private capital will not touch it.

CitiGroup's assessment of the move by the drill baby drill crowd in England to build more nuclear power:


* No where else in the world — Government policy remains that the private sector
takes full exposure to the three main risks; Construction, Power Price and
Operational. Nowhere in the world have nuclear power stations been built on this
basis.

* Nor will they be built in the UK — We see little if any prospect that new nuclear
stations will be built in the UK by the private sector unless developers can lay off
substantial elements of the three major risks. Financing guarantees, minimum
power prices, and / or government-backed power off-take agreements may all be
needed if stations are to be built.


9 November 2009
New Nuclear – The Economics Say No

Citi Investment Research & Analysis is a division of Citigroup Global Markets Inc.

[joshcryer]

48. They must pay back the loans. Therefore the risk is on NRG/Toshiba.

The misleading posts that you are making are despicable.

[kristopher]

52. Not if they go bankrupt.

And CBO estimated that the economics predict a better than 50% default rate on government backed loans using better economic conditions than now exist.

[joshcryer]

53. NRG *would* go bankrupt, proving that they are *taking all of the risk*.

Now you're finally fucking getting it dude.

[kristopher]

54. You're like the kid with a cosigner on an auto loan

You (NRG) don't pay your bill and they (creditors) go after your cosigner (US taxpayer) to make good on what you borrowed.

Who loses?

The co-signer and the lender.

Except in this case the taxpayer is both the co-signer and, to a large extent, the lender.

NRG does nothing but use other people's money.

Are you "finally fucking getting it dude"? Have I found a level that is suited to your mental outlook?

[bananas]

61. I admire the time and effort you put into trying to explain these things

I don't have the time to read all the posts.
I'm just going through this thread, and I'm astonished.
Is it really possible that they don't understand the meaning of "default on a loan"?
Or are they just trolling?
With financial defaults making headline news every day for the past several years,
how could they not understand what it means?

[kristopher]

62. The more disinformation they put out, the stronger my commitment becomes...

Pure cussed hillbilly stubbornness.

[joshcryer]

70. If anyone is spreading disinformation here it is you. Loan guarantees are not free money.

[joshcryer]

69. It's so amazing to learn that loan guarantees are free money!

I wish I could get a loan guarantee!

[joshcryer]

67. Man I wish I could use a word here, but certain words are banned. You are being dishonest.

That makes you something but I can't say it because I will get my comment deleted.

The Title XVII loan guarantee program will be implemented through a series of solicitations. The solicitations may target specific technology areas or be general;

Eligible projects must employ new or significantly improved technologies that avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases as compared to commercial technologies in service in the United States at the time the loan guarantee agreement is executed;

The guaranteed portion of a partially guaranteed loan may be separated from or "stripped" from the non-guaranteed portion, except in cases where the guarantee exceeds 90% of the loan amount;

In the event of a loan default, DOE will have a superior lien on all project assets pledged as collateral for the guaranteed loan; however, the final rule allows for the possibility in a default situation that lenders and holders of the non-guaranteed debt could share proportionately with the Department in proceeds from the sale of project assets pledged as collateral. A pari passu structure will not be permitted to override the Department's superior right to project assets;

The Secretary of Energy must determine that there is a "reasonable prospect" of repayment of the guaranteed debt before a loan guarantee may be issued;

DOE must charge and collect fees sufficient to cover applicable administrative expenses;

Borrower-paid Credit Subsidy Costs and administrative fees paid to DOE may not be included within total project costs for the purposes of determining the amount of guarantees that DOE can issue for a project;

A project's receipt of other governmental assistance does not disqualify a project from receiving a Title XVII loan guarantee; however, when evaluating a project's application for a Title XVII loan guarantee, DOE will consider the extent to which a project will receive other governmental assistance, (e.g., grants, tax credits, other loan guarantees);

The borrower must have a significant equity stake in a project, and proceeds from guaranteed or non-guaranteed debt, and the value of government grants and other assistance, will not be counted as "equity."

http://www.lgprogram.energy.gov/press/100407.html

The first bolded part is why CPS bailed out. OK, good for them.

[joshcryer]

72. Text of XVII. I trust Chu to give out credible loan guarantees.

If the $18 billion estimate you guys keep throwing around (with no link to direct sources, just blogs and the City of Austin making stuff up) is real, then Chu won't give them the loan.

TITLE XVII—INCENTIVES FOR
INNOVATIVE TECHNOLOGIES
SEC. 1701. DEFINITIONS.
In this title:
(1) COMMERCIAL TECHNOLOGY.—
(A) IN GENERAL.—The term ‘‘commercial technology’’
means a technology in general use in the commercial
marketplace.
(B) INCLUSIONS.—The term ‘‘commercial technology’’
does not include a technology solely by use of the technology
in a demonstration project funded by the Department.
(2) COST.—The term ‘‘cost’’ has the meaning given the
term ‘‘cost of a loan guarantee’’ within the meaning of section
502(5)(C) of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a(5)(C)).
(3) ELIGIBLE PROJECT.—The term ‘‘eligible project’’ means
a project described in section 1703.
(4) GUARANTEE.—
(A) IN GENERAL.—The term ‘‘guarantee’’ has the
meaning given the term ‘‘loan guarantee’’ in section 502
of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
(B) INCLUSION.—The term ‘‘guarantee’’ includes a loan
guarantee commitment (as defined in section 502 of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a)).
(5) OBLIGATION.—The term ‘‘obligation’’ means the loan
or other debt obligation that is guaranteed under this section.
SEC. 1702. TERMS AND CONDITIONS.
(a) IN GENERAL.—Except for division C of Public Law 108–
324, the Secretary shall make guarantees under this or any other
Act for projects on such terms and conditions as the Secretary
determines, after consultation with the Secretary of the Treasury,
only in accordance with this section.
(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.—No guarantee
shall be made unless—
(1) an appropriation for the cost has been made; or
22 USC 16512.
22 USC 16511.
22 USC 7901
note.
22 USC 7908.
22 USC 7907.
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119 STAT. 1118 PUBLIC LAW 109–58—AUG. 8, 2005
(2) the Secretary has received from the borrower a payment
in full for the cost of the obligation and deposited the payment
into the Treasury.
(c) AMOUNT.—Unless otherwise provided by law, a guarantee
by the Secretary shall not exceed an amount equal to 80 percent
of the project cost of the facility that is the subject of the guarantee,
as estimated at the time at which the guarantee is issued.
(d) REPAYMENT.—
(1) IN GENERAL.—No guarantee shall be made unless the
Secretary determines that there is reasonable prospect of repayment
of the principal and interest on the obligation by the
borrower.
(2) AMOUNT.—No guarantee shall be made unless the Secretary
determines that the amount of the obligation (when
combined with amounts available to the borrower from other
sources) will be sufficient to carry out the project.
(3) SUBORDINATION.—The obligation shall be subject to the
condition that the obligation is not subordinate to other
financing.
(e) INTEREST RATE.—An obligation shall bear interest at a
rate that does not exceed a level that the Secretary determines
appropriate, taking into account the prevailing rate of interest
in the private sector for similar loans and risks.
(f) TERM.—The term of an obligation shall require full repayment
over a period not to exceed the lesser of—
(1) 30 years; or
(2) 90 percent of the projected useful life of the physical
asset to be financed by the obligation (as determined by the
Secretary).
(g) DEFAULTS.—
(1) PAYMENT BY SECRETARY.—
(A) IN GENERAL.—If a borrower defaults on the obligation
(as defined in regulations promulgated by the Secretary
and specified in the guarantee contract), the holder
of the guarantee shall have the right to demand payment
of the unpaid amount from the Secretary.
(B) PAYMENT REQUIRED.—Within such period as may
be specified in the guarantee or related agreements, the
Secretary shall pay to the holder of the guarantee the
unpaid interest on, and unpaid principal of the obligation
as to which the borrower has defaulted, unless the Secretary
finds that there was no default by the borrower
in the payment of interest or principal or that the default
has been remedied.
(C) FORBEARANCE.—Nothing in this subsection precludes
any forbearance by the holder of the obligation for
the benefit of the borrower which may be agreed upon
by the parties to the obligation and approved by the Secretary.
(2) SUBROGATION.—
(A) IN GENERAL.—If the Secretary makes a payment
under paragraph (1), the Secretary shall be subrogated
to the rights of the recipient of the payment as specified
in the guarantee or related agreements including, where
appropriate, the authority (notwithstanding any other
provision of law) to—
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PUBLIC LAW 109–58—AUG. 8, 2005 119 STAT. 1119
(i) complete, maintain, operate, lease, or otherwise
dispose of any property acquired pursuant to such
guarantee or related agreements; or
(ii) permit the borrower, pursuant to an agreement
with the Secretary, to continue to pursue the purposes
of the project if the Secretary determines this to be
in the public interest.
(B) SUPERIORITY OF RIGHTS.—The rights of the Secretary,
with respect to any property acquired pursuant
to a guarantee or related agreements, shall be superior
to the rights of any other person with respect to the property.
(C) TERMS AND CONDITIONS.—A guarantee agreement
shall include such detailed terms and conditions as the
Secretary determines appropriate to—
(i) protect the interests of the United States in
the case of default; and
(ii) have available all the patents and technology
necessary for any person selected, including the Secretary,
to complete and operate the project.
(3) PAYMENT OF PRINCIPAL AND INTEREST BY SECRETARY.—
With respect to any obligation guaranteed under this section,
the Secretary may enter into a contract to pay, and pay, holders
of the obligation, for and on behalf of the borrower, from funds
appropriated for that purpose, the principal and interest payments
which become due and payable on the unpaid balance
of the obligation if the Secretary finds that—
(A)(i) the borrower is unable to meet the payments
and is not in default;
(ii) it is in the public interest to permit the borrower
to continue to pursue the purposes of the project; and
(iii) the probable net benefit to the Federal Government
in paying the principal and interest will be greater than
that which would result in the event of a default;
(B) the amount of the payment that the Secretary
is authorized to pay shall be no greater than the amount
of principal and interest that the borrower is obligated
to pay under the agreement being guaranteed; and
(C) the borrower agrees to reimburse the Secretary
for the payment (including interest) on terms and conditions
that are satisfactory to the Secretary.
(4) ACTION BY ATTORNEY GENERAL.—
(A) NOTIFICATION.—If the borrower defaults on an
obligation, the Secretary shall notify the Attorney General
of the default.
(B) RECOVERY.—On notification, the Attorney General
shall take such action as is appropriate to recover the
unpaid principal and interest due from—
(i) such assets of the defaulting borrower as are
associated with the obligation; or
(ii) any other security pledged to secure the obligation.
(h) FEES.—
(1) IN GENERAL.—The Secretary shall charge and collect
fees for guarantees in amounts the Secretary determines are
sufficient to cover applicable administrative expenses.
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119 STAT. 1120 PUBLIC LAW 109–58—AUG. 8, 2005
(2) AVAILABILITY.—Fees collected under this subsection
shall—
(A) be deposited by the Secretary into the Treasury;
and
(B) remain available until expended, subject to such
other conditions as are contained in annual appropriations
Acts.
(i) RECORDS; AUDITS.—
(1) IN GENERAL.—A recipient of a guarantee shall keep
such records and other pertinent documents as the Secretary
shall prescribe by regulation, including such records as the
Secretary may require to facilitate an effective audit.
(2) ACCESS.—The Secretary and the Comptroller General
of the United States, or their duly authorized representatives,
shall have access, for the purpose of audit, to the records
and other pertinent documents.
(j) FULL FAITH AND CREDIT.—The full faith and credit of the
United States is pledged to the payment of all guarantees issued
under this section with respect to principal and interest.

[kristopher]

81. Govt DOES NOT have superior lien on assets

They have changed that provision.

[kristopher]

83. That has nothing to do with why CPS sued them

First, the provision was changed for the nuclear program, we do not have first lien on assets.

Second, CPS quit the project and sued to get their money back when the price TRIPLED from the original quote.

[joshcryer]

86. Cite the provision change.

CPS made up price tripling. There's no way NINA gets a loan guarantee if the price is what CPS claims.

[joshcryer]

93. NINA cannot get a loan if CPSs price estimates are anywhere near reality.

[Name removed]

59. Deleted message

Message removed by moderator. Click here to review the message board rules.

[joshcryer]

66. You're being dishonest, an LLC does not preclude companies from being sued.

[bananas]

88. You're being dishonest, I didn't say an LLC does not preclude companies from being sued.

I said it Limits their Liability, which it does, which is why they call it a Limited Liability Company.

http://en.wikipedia.org/wiki/Limited_liability

Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. In other words, if a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. A shareholder in a limited company is not personally liable for any of the debts of the company, other than for the value of his investment in that company. This usually takes the form of that person's dividends in the company being zero, since the company has no profits to allocate. The same is true for the members of a limited liability partnership and the limited partners in a limited partnership.

[joshcryer]

92. The point is that until you see the provisions of the loan guarantees, you don't know what you're...

...talking about. You're making stuff up.

No loan guarantee for nuclear has been written up. This is fact. Until that is the case whatever you say is dishonest fearmongering.

[joshcryer]

71. If the cost estimates are bullshit, and if NINA cannot convince Chu that they can pay it back...

...then they won't get the guarantee. Grasp it?

TITLE XVII—INCENTIVES FOR
INNOVATIVE TECHNOLOGIES
SEC. 1701. DEFINITIONS.
In this title:
(1) COMMERCIAL TECHNOLOGY.—
(A) IN GENERAL.—The term ‘‘commercial technology’’
means a technology in general use in the commercial
marketplace.
(B) INCLUSIONS.—The term ‘‘commercial technology’’
does not include a technology solely by use of the technology
in a demonstration project funded by the Department.
(2) COST.—The term ‘‘cost’’ has the meaning given the
term ‘‘cost of a loan guarantee’’ within the meaning of section
502(5)(C) of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a(5)(C)).
(3) ELIGIBLE PROJECT.—The term ‘‘eligible project’’ means
a project described in section 1703.
(4) GUARANTEE.—
(A) IN GENERAL.—The term ‘‘guarantee’’ has the
meaning given the term ‘‘loan guarantee’’ in section 502
of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
(B) INCLUSION.—The term ‘‘guarantee’’ includes a loan
guarantee commitment (as defined in section 502 of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a)).
(5) OBLIGATION.—The term ‘‘obligation’’ means the loan
or other debt obligation that is guaranteed under this section.
SEC. 1702. TERMS AND CONDITIONS.
(a) IN GENERAL.—Except for division C of Public Law 108–
324, the Secretary shall make guarantees under this or any other
Act for projects on such terms and conditions as the Secretary
determines, after consultation with the Secretary of the Treasury,
only in accordance with this section.
(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.—No guarantee
shall be made unless—
(1) an appropriation for the cost has been made; or
22 USC 16512.
22 USC 16511.
22 USC 7901
note.
22 USC 7908.
22 USC 7907.
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119 STAT. 1118 PUBLIC LAW 109–58—AUG. 8, 2005
(2) the Secretary has received from the borrower a payment
in full for the cost of the obligation and deposited the payment
into the Treasury.
(c) AMOUNT.—Unless otherwise provided by law, a guarantee
by the Secretary shall not exceed an amount equal to 80 percent
of the project cost of the facility that is the subject of the guarantee,
as estimated at the time at which the guarantee is issued.
(d) REPAYMENT.—
(1) IN GENERAL.—No guarantee shall be made unless the
Secretary determines that there is reasonable prospect of repayment
of the principal and interest on the obligation by the
borrower.
(2) AMOUNT.—No guarantee shall be made unless the Secretary
determines that the amount of the obligation (when
combined with amounts available to the borrower from other
sources) will be sufficient to carry out the project.
(3) SUBORDINATION.—The obligation shall be subject to the
condition that the obligation is not subordinate to other
financing.
(e) INTEREST RATE.—An obligation shall bear interest at a
rate that does not exceed a level that the Secretary determines
appropriate, taking into account the prevailing rate of interest
in the private sector for similar loans and risks.
(f) TERM.—The term of an obligation shall require full repayment
over a period not to exceed the lesser of—
(1) 30 years; or
(2) 90 percent of the projected useful life of the physical
asset to be financed by the obligation (as determined by the
Secretary).
(g) DEFAULTS.—
(1) PAYMENT BY SECRETARY.—
(A) IN GENERAL.—If a borrower defaults on the obligation
(as defined in regulations promulgated by the Secretary
and specified in the guarantee contract), the holder
of the guarantee shall have the right to demand payment
of the unpaid amount from the Secretary.
(B) PAYMENT REQUIRED.—Within such period as may
be specified in the guarantee or related agreements, the
Secretary shall pay to the holder of the guarantee the
unpaid interest on, and unpaid principal of the obligation
as to which the borrower has defaulted, unless the Secretary
finds that there was no default by the borrower
in the payment of interest or principal or that the default
has been remedied.
(C) FORBEARANCE.—Nothing in this subsection precludes
any forbearance by the holder of the obligation for
the benefit of the borrower which may be agreed upon
by the parties to the obligation and approved by the Secretary.
(2) SUBROGATION.—
(A) IN GENERAL.—If the Secretary makes a payment
under paragraph (1), the Secretary shall be subrogated
to the rights of the recipient of the payment as specified
in the guarantee or related agreements including, where
appropriate, the authority (notwithstanding any other
provision of law) to—
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PUBLIC LAW 109–58—AUG. 8, 2005 119 STAT. 1119
(i) complete, maintain, operate, lease, or otherwise
dispose of any property acquired pursuant to such
guarantee or related agreements; or
(ii) permit the borrower, pursuant to an agreement
with the Secretary, to continue to pursue the purposes
of the project if the Secretary determines this to be
in the public interest.
(B) SUPERIORITY OF RIGHTS.—The rights of the Secretary,
with respect to any property acquired pursuant
to a guarantee or related agreements, shall be superior
to the rights of any other person with respect to the property.
(C) TERMS AND CONDITIONS.—A guarantee agreement
shall include such detailed terms and conditions as the
Secretary determines appropriate to—
(i) protect the interests of the United States in
the case of default; and
(ii) have available all the patents and technology
necessary for any person selected, including the Secretary,
to complete and operate the project.
(3) PAYMENT OF PRINCIPAL AND INTEREST BY SECRETARY.—
With respect to any obligation guaranteed under this section,
the Secretary may enter into a contract to pay, and pay, holders
of the obligation, for and on behalf of the borrower, from funds
appropriated for that purpose, the principal and interest payments
which become due and payable on the unpaid balance
of the obligation if the Secretary finds that—
(A)(i) the borrower is unable to meet the payments
and is not in default;
(ii) it is in the public interest to permit the borrower
to continue to pursue the purposes of the project; and
(iii) the probable net benefit to the Federal Government
in paying the principal and interest will be greater than
that which would result in the event of a default;
(B) the amount of the payment that the Secretary
is authorized to pay shall be no greater than the amount
of principal and interest that the borrower is obligated
to pay under the agreement being guaranteed; and
(C) the borrower agrees to reimburse the Secretary
for the payment (including interest) on terms and conditions
that are satisfactory to the Secretary.
(4) ACTION BY ATTORNEY GENERAL.—
(A) NOTIFICATION.—If the borrower defaults on an
obligation, the Secretary shall notify the Attorney General
of the default.
(B) RECOVERY.—On notification, the Attorney General
shall take such action as is appropriate to recover the
unpaid principal and interest due from—
(i) such assets of the defaulting borrower as are
associated with the obligation; or
(ii) any other security pledged to secure the obligation.
(h) FEES.—
(1) IN GENERAL.—The Secretary shall charge and collect
fees for guarantees in amounts the Secretary determines are
sufficient to cover applicable administrative expenses.
VerDate 14-DEC-2004 22:00 Sep 08, 2005 Jkt 039139 PO 00058 Frm 00527 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL058.109 APPS24 PsN: PUBL058
119 STAT. 1120 PUBLIC LAW 109–58—AUG. 8, 2005
(2) AVAILABILITY.—Fees collected under this subsection
shall—
(A) be deposited by the Secretary into the Treasury;
and
(B) remain available until expended, subject to such
other conditions as are contained in annual appropriations
Acts.
(i) RECORDS; AUDITS.—
(1) IN GENERAL.—A recipient of a guarantee shall keep
such records and other pertinent documents as the Secretary
shall prescribe by regulation, including such records as the
Secretary may require to facilitate an effective audit.
(2) ACCESS.—The Secretary and the Comptroller General
of the United States, or their duly authorized representatives,
shall have access, for the purpose of audit, to the records
and other pertinent documents.
(j) FULL FAITH AND CREDIT.—The full faith and credit of the
United States is pledged to the payment of all guarantees issued
under this section with respect to principal and interest.

Unless you have evidence that Chu (Sec. of Energy) is an idiot and likes to give away free money, your stantments are dishonest innuendo.

[joshcryer]

73. What's hilarious here is that it is *you* who are making claims about loan guarantees.

[joshcryer]

74. Without seeing one contract. Basically, you are making fantasy claims about something nonexistent.

[joshcryer]

75. Until an actual loan guarantee is signed, and we can read the details...

[joshcryer]

76. ...your comments are complete heresay.

[joshcryer]

77. The Loan Guarantee Application is telling:

Reasonable Assurance of Repayment and Sufficiency of Financing to Carry Out Project

Applicants are reminded that the loan guarantee program is not a federal procurement (e.g., government contracts) or assistance program (e.g., grants and cooperative agreements) and that DOE is mandated by Title XVII to ensure that projects financed have a reasonable assurance of repayment and that the guaranteed portion of the Guaranteed Obligation, together with amounts available to the applicant from other sources, will be sufficient to carry out the project. DOE is prepared to consider a variety of financing structures as presented by applicants as long as the proposed structure provides DOE with a reasonable assurance of repayment and that the guaranteed portion of the Guaranteed Obligation, together with amounts available to the applicant from other sources, will be sufficient to carry out the project. Loan guarantee structures that fall outside the classical limited recourse project finance approach, described below, but that meet the above criteria and assist both DOE and the applicant in efficiently meeting the objectives of Title XVII, are encouraged. Included in such loan structures is the potential for the utilization of parallel loan structures with credit support provided by third parties with interest in supporting the project, or from credit markets traditionally used by the applicant that may require some level of direct or indirect DOE support. DOE is assuming a classical limited recourse project finance (“LRPF”) approach where DOE takes minimal pre-completion risks, which are expected to be shared among the appropriate project participants.

Include a credit history of the applicant and any party owning or controlling, by itself and/or through individuals in common or affiliated business entities, a five percent or greater interest in the project or the applicant. Provide their full names (including middle name or initial), home or business address as appropriate (including zip code), date of birth and taxpayer identification/social security number. DOE will use such information to verify the credit history of such applicant and party. DOE may also request additional documentation as part of the project evaluation process.

I like that the application fee is $800,000 non-refundable.

[kristopher]

82. Govt DOES NOT have superior lien on assets for nuclear loan guarantees

They have changed that provision.

Taxpayers are now just another creditor in the herd.

[joshcryer]

84. Cite or STFU.

[kristopher]

87. Google AND stfu.

[joshcryer]

90. You're the one making a claim, it's up to you to prove it.

[kristopher]

94. It isn't a "claim" it is a fact.

Only a person of singularly low intelligence would think that childish games about "prove it" would have any effect on the underlying truth.

And that is really the issue, isn't it? You have no desire to know the real truth, you just want to spin things to your desired outcome.

The DOE amended the regulations, deal with it.

[Dogmudgeon]

95. Are you talking about 10 CFR Part 609?

Title 10: Energy
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr;sid=d16ed67ce1de670f96d3b11ff1cd4b4d;rgn=div5;view=text;node=10%3A4.0.1.3.15;idno=10;cc=ecfr">PART 609—LOAN GUARANTEES FOR PROJECTS THAT EMPLOY INNOVATIVE TECHNOLOGIES

Section Contents

§ 609.1 Purpose and scope.
§ 609.2 Definitions.
§ 609.3 Solicitations.
§ 609.4 Submission of Pre-Applications.
§ 609.5 Evaluation of Pre-Applications.
§ 609.6 Submission of Applications.
§ 609.7 Programmatic, technical and financial evaluation of Applications.
§ 609.8 Term sheets and conditional commitments.
§ 609.9 Closing on the Loan Guarantee Agreement.
§ 609.10 Loan Guarantee Agreement.
§ 609.11 Lender eligibility and servicing requirements.
§ 609.12 Project Costs.
§ 609.13 Principal and interest assistance contract.
§ 609.14 Full faith and credit and incontestability.
§ 609.15 Default, demand, payment, and collateral liquidation.
§ 609.16 Perfection of liens and preservation of collateral.
§ 609.17 Audit and access to records.
§ 609.18 Deviations.

Authority: 42 U.S.C. 7254, 16511–16514.

Source: 74 FR 63549, Dec. 4, 2009, unless otherwise noted.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr;sid=d16ed67ce1de670f96d3b11ff1cd4b4d;rgn=div5;view=text;node=10%3A4.0.1.3.15;idno=10;cc=ecfr">Link to "Part 609—Loan Guarantees For Projects That Employ Innovative Technologies" at The Electronic Code of Federal Regulations (e-CFR)

I have not read through it in the detail required to argue this in a court of law, but it looks as though the Government, as loan guarantor, through its agent(s), MAY waive the right of first lien, but the agent(s) MUST otherwise impose strict terms, and is/are subject to Executive and CBO oversight. Waiving the requirement is likely done for a few high-priority projects with substantial private funding; the history of such loan guarantee activity may show a particular pattern of loan guarantee term modifications.

If you have a different take on this -- or were talking about another law -- please point it out. I'm interested in how this process works, myself.

--d!

[kristopher]

96. Yes that is a reference to it.

It was in a NOPR published in the Fed Register last August and it is amended interpretation of the language on loan guarantees in the 2005 Energy Bill as published in DOE's 2007 rules.

The fact that the government *has elected* to not claim a first lien on the nuclear programs they are supporting is prominent in the financial pages.

[joshcryer]

98. Your claim that "the government has elected to not claim a first lien" is not established.

[joshcryer]

99. And now we know why you didn't provide the cite.

[joshcryer]

101. He's making claims about loan guarantees when none have been signed in to law.

Basically he's telling untruths.

(a) In the event that the Borrower has defaulted in the making of required payments of principal or interest on any portion of a Guaranteed Obligation, and such default has not been cured within the period of grace provided in the Loan Guarantee Agreement and/or the Loan Agreement, the Eligible Lender or other Holder, or nominee or trustee empowered to act for the Eligible Lender or other Holder (referred to in this section collectively as “Holder”), may make written demand upon the Secretary for payment pursuant to the provisions of the Loan Guarantee Agreement.

(b) In the event that the Borrower is in default as a result of a breach of one or more of the terms and conditions of the Loan Guarantee Agreement, note, mortgage, Loan Agreement, or other contractual obligations related to the transaction, other than the Borrower's obligation to pay principal or interest on the Guaranteed Obligation, as provided in paragraph (a) of this section, the Holder will not be entitled to make demand for payment pursuant to the Loan Guarantee Agreement, unless the Secretary agrees in writing that such default has materially affected the rights of the parties, and finds that the Holder should be entitled to receive payment pursuant to the Loan Guarantee Agreement.

(c) In the event that the Borrower has defaulted as described in paragraph (a) of this section and such default is not cured during the grace period provided in the Loan Guarantee Agreement, the Secretary shall notify the U.S. Attorney General and, subject to the terms of any applicable Intercreditor Agreement, may cause the principal amount of all Guaranteed Obligations, together with accrued interest thereon, and all amounts owed to the United States by Borrower pursuant to the Loan Guarantee Agreement, to become immediately due and payable by giving the Borrower written notice to such effect (without the need for consent or other action on the part of the Holders of the Guaranteed Obligations) and may exercise any other remedies available under the applicable agreements. In the event the Borrower is in default as described in paragraph (b) of this section, where the Secretary determines in writing that such a default has materially affected the rights of the parties, the Borrower shall be given the period of grace provided in the Loan Guarantee Agreement to cure such default. If the default is not cured during the period of grace, the Secretary may, subject to the terms of any applicable Intercreditor Agreement, cause the principal amount of all Guaranteed Obligations, together with accrued interest thereon, and all amounts owed to the United States by Borrower pursuant to the Loan Guarantee Agreement, to become immediately due and payable by giving the Borrower written notice to such effect (without any need for consent or other action on the part of the Holders of the Guaranteed Obligations) and may exercise any other remedies available under the applicable agreements.

(d) No provision of this regulation shall be construed to preclude forbearance by any Holder with the consent of the Secretary for the benefit of the Borrower.

(e) Upon the making of demand for payment as provided in paragraph (a) or (b) of this section, the Holder shall provide, in conjunction with such demand or immediately thereafter, at the request of the Secretary, the supporting documentation specified in the Loan Guarantee Agreement and any other supporting documentation as may reasonably be required to justify such demand.

(f) Payment as required by the Loan Guarantee Agreement of the Guaranteed Obligation shall be made 60 days after receipt by the Secretary of written demand for payment, provided that the demand complies with the terms of the Loan Guarantee Agreement. The Loan Guarantee Agreement shall provide that interest shall accrue to the Holder at the rate stated in the Loan Guarantee Agreement until the Guaranteed Obligation has been fully paid by the Federal government.

(g) The Loan Guarantee Agreement shall provide that, upon payment of the Guaranteed Obligations, the Secretary shall be subrogated to the rights of the Holders. The Holder shall transfer and assign to the Secretary all rights held by the Holder of the Guaranteed Obligation. Such assignment shall include all related liens, security, and collateral rights to the extent held by the Holder.

(h) Where the Loan Guarantee Agreement or any applicable Intercreditor Agreement so provides, the Eligible Lender or other Holder, or other agent or servicer, as appropriate, and the Secretary may jointly agree to a work-out strategy and/or a plan of liquidation of the assets pledged to secure the Guaranteed Obligation and other applicable debt.

(i) Where payment of the Guaranteed Obligation has been made (or at any such earlier time as may be permitted by applicable agreements), the Secretary, acting through the U.S. Attorney General, in accordance with the rights received through subrogation or other applicable agreements, subject to any applicable Intercreditor Agreement, may seek to foreclose on the collateral assets and/or take such other legal action as necessary for the protection of the Government.

(j) If the Secretary (or an agent acting for the benefit of the Secretary) is awarded title to collateral assets pursuant to a foreclosure proceeding, the Secretary may take action to complete, maintain, operate, or lease such assets, or otherwise dispose of any such assets or take any other necessary action which the Secretary deems appropriate (and consistent with any applicable Intercreditor Agreement), in order that the original goals and objectives of the project will, to the extent possible, be realized.

(k) In addition to foreclosure and sale of collateral pursuant thereto, the U.S. Attorney General shall take appropriate action in accordance with rights contained in the Loan Guarantee Agreement and any applicable Intercreditor Agreement to recover costs incurred by, and other amounts owed to, the Government as a result of the defaulted loan or other defaulted obligation. Any recovery so received by the U.S. Attorney General on behalf of the Government shall be applied in the following manner: First to the expenses incurred by the U.S. Attorney General, DOE and any agent acting for the benefit of DOE in effecting such recovery; second, to reimbursement of any amounts paid by DOE, and to pay any other amounts owed to DOE, as a result of the defaulted obligation; third, to any amounts owed to DOE under related principal and interest assistance contracts; and fourth, to any other lawful claims held by the Government on such process. Any sums remaining after full payment of the foregoing shall be available for the benefit of other parties lawfully entitled to claim them.

(l) If there was a partial guarantee by DOE of the Guaranteed Obligation or if any other creditors are secured by a lien on collateral pledged to secure the Guaranteed Obligation, the proceeds received by the collateral agent or other responsible party as a result of any liquidation or sale of, collection from or other realization on any such collateral may, if so agreed in advance or unless otherwise agreed in the applicable agreements, be applied as follows (with any money distributed to the Federal Government to be further distributed according to §609.15(k)):

(1) First, to the payment of reasonable and customary fees and expenses incurred in the liquidation or sale, collection or other realization (including without limitation any fees and expenses that the Attorney General of the United States is lawfully entitled to claim in connection with such action);

(2) Second, distributed among the Holders of the Guaranteed Obligation (including DOE, as subrogee) and the other creditors entitled to share in such proceeds on no greater than a pro rata share basis; and

(3) Third, as otherwise provided in the applicable agreement or agreements.

(m) No action taken by the Eligible Lender or other Holder or other agent or servicer in respect of any pledged assets will affect the rights of any party, including the Secretary, having an interest in the loan or other debt obligations, to pursue, jointly or severally, to the extent provided in the Loan Guarantee Agreement or other applicable agreement, legal action against the Borrower or other liable parties, for any deficiencies owing on the balance of the Guaranteed Obligations or other debt obligations after application of the proceeds received upon liquidation.

(n) In the event that the Secretary considers it necessary or desirable to protect or further the interest of the United States in connection with the liquidation or sale of, collection from or other realization on the collateral or recovery of deficiencies due under the loan, the Secretary will take such action as may be appropriate under the circumstances.

(o) Nothing in this part precludes the Secretary from purchasing any Holder's or other person's interest in the project upon liquidation or sale of, collection from or other realization on the collateral.

(a) The Loan Guarantee Agreement and other documents related thereto shall provide that:

(1) The Eligible Lender, or DOE in conjunction with the Federal Financing Bank where the loan is funded by the Federal Financing Bank, or other Holder or other agent or servicer will take those actions necessary or appropriate to perfect and maintain liens, as applicable, on assets which are pledged as collateral for the Guaranteed Obligation; and

(2) Upon default by the Borrower, the holder of pledged collateral shall take such actions as the Secretary (subject to any applicable Intercreditor Agreement) may reasonably require to provide for the care, preservation, protection, and maintenance of such collateral so as to enable the United States to achieve maximum recovery from the pledged assets. The Secretary shall reimburse the holder of collateral for reasonable and appropriate expenses incurred in taking actions required by the Secretary (unless otherwise provided in applicable agreements). Except as provided in §609.15, no party may waive or relinquish, without the consent of the Secretary, any collateral securing the Guaranteed Obligation to which the United States would be subrogated upon payment under the Loan Guarantee Agreement.

(b) In the event of a default, the Secretary may enter into such contracts as the Secretary (subject to any applicable Intercreditor Agreement) determines are required or appropriate to care for, preserve, protect or maintain the collateral. The cost of such contracts may be charged to the Borrower.

[joshcryer]

97. You are using a denialist tactic, making a claim without supporting it.

It's still unclear if the below stuff is actually what you say is supporting your claim.

[kristopher]

100. Everything is unclear to you.

That is a function of your comprehension level.

[joshcryer]

102. No, if you make a claim, you support that claim, you don't sit around acting ambigious.

[joshcryer]

103. It's a 100% denialist tactic.

Denialists use it because people like me actually read the cites.

[kristopher]

104. You don't have a clue about what is going on, why would I waste my time?

You don't understand the concept of limited corporate liability; you don't understand the fundamental ideas of taxpayer risks associated with loan guarantees.

It doesn't matter what data you have, you are clearly incapable of USING it.

If you don't believe me and it is important to you, look it up. I really don't give a fuck what *you* think, I just care about your attempts to obfuscate valid information.

[joshcryer]

105. I do know that you keep trying to mislead me.

And you have been doing this for months. This is not new for you Taos Eddy.

[joshcryer]

106. You have provided no valid information, it came from a third party.

And if he'd posted the wrong information you would have berated him, just like a denialist would do.

[joshcryer]

107. The information provided does not support your dishonest claim.