Update: DOE Trims List Of Nuclear Plants For Loan Backing

May 07, 2009: 05:24 PM ET

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- The Department of Energy has narrowed the list of proposed new nuclear power plants it is considering for $18.5 billion in federal loan guarantees down to four from five, a spokeswoman said.

"We have proceeded to due diligence with four applications for nuclear loan guarantees that are farthest along in the [Nuclear Regulatory Commission] application process," the spokeswoman said. "We have not made any final decisions and have not eliminated any of the applicants."

New reactors at Southern Co.'s (SO) Vogtle plant in Georgia, Scana Corp.'s ( SCG) Summer plant in South Carolina, Constellation Energy Group's (CEG) Calvert Cliffs plant in Maryland and NRG Energy Inc.'s (NRG) South Texas plant are among the projects still in the running for federal loan backing. Under the loan guarantee program, the government promises to assume the companies' debt obligations if they default on loans for the nuclear projects.

Constellation is developing the Calvert Cliffs reactors as part of UniStar Nuclear Energy, a joint venture between Constellation and Electricite de France SA (EDF.FR).

The guarantees are a key step for energy companies that aim to be on the forefront of a U.S. nuclear renaissance. The projects are slated to cost several billion dollars apiece - up to $10 billion for a single reactor, according to some estimates - and amid global economic downturn, financing may be hard to come by.

Federal loan backing is "a critical step right now to the extent that anyone who thought they could move forward with a plant outside of the federal loan guarantee environment is now going to have to rethink that process," NRG Chief Executive David Crane said.

The DoE spokeswoman said the department has no timetable for issuing the loan guarantees. Spokespeople for NRG and for Santee Cooper, a South Carolina state- owned utility that intends to own a stake in the Summer plant expansion, confirmed that the companies' projects had made the final four. A spokeswoman for Southern's nuclear business declined to comment, while a spokeswoman for Constellation said the company has yet to receive official notification from the DoE.

A plan by the former TXU Corp., Energy Futures Holdings Corp., for two new reactors at its Comanche Peak nuclear power plant in Texas wasn't among the projects in the final four. The project was one of the five on a short list for federal loan guarantees revealed in February.

"We're early in the application process, and we did not expect to be awarded a loan guarantee at this stage," said Ashley Monts, a spokeswoman for Luminant, Energy Future Holdings' power-producer subsidiary. The Department of Energy has informed Luminant that Comanche Peak is in the "first alternate position" for a loan guarantee, Monts said.

Since late 2007, 17 U.S. companies have sought federal approval to construct and operate 26 new nuclear reactors. The first new reactors aren't likely to be operational before 2014, the companies have said.

The loan guarantee could prove particularly beneficial to NRG, an independent power producer that has been attempting to fend off a takeover attempt by Exelon Corp. (EXC). Federal loan backing for the South Texas project could prove to investors that NRG doesn't need Exelon's balance sheet to fund large capital projects.

"Exelon tries to persuade people that because they're big, that's going to help with nuclear development," Crane said. "There's no factual basis for believing that."

An Exelon spokesman didn't immediately return a call for comment.

-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@ dowjones.com

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