Markey wants license obtained before granting loan guarantees

Katherine Ling, Energy and Environment Daily reporter

11/9/09

The Energy Department should not award loan guarantees to new nuclear power plants until they have received a combined construction and operating license from the Nuclear Regulatory Commission, a key House Democrat said Friday.

"I believe it is critical that this important step be completed before the department offers a loan guarantee for a new nuclear power plant," Rep. Ed Markey (D-Mass.), chairman of the Energy and Environment Subcommittee wrote in a letter to Energy Secretary Steven Chu. "Otherwise valuable taxpayer support would be set aside for a project that may not pass regulatory review."

Markey asked DOE whether the decision by NRC to halt review of the amendment to the AP1000 design certification, as well as other design flaws that have recently surfaced, would affect the agency's timeline and decisions about $18.5 billion in loan guarantee authority.

Early last month Chu said the nuclear loan guarantees would be awarded "very soon."

But only a few days later, NRC announced the shielding building on the Toshiba-Westinghouse Electric Co.'s AP1000 reactor amended design was seriously flawed and needed to be redesigned and tested before staff could proceed with the review (Greenwire, Oct. 16).

Two of the four reported finalists for the loan guarantees rely on the AP1000 design: Scana Corp.'s Summer site in Fairfield County, S.C., and Southern Co.'s Vogtle site near Augusta, Ga. A total of seven of the 17 license applications for new reactors rely on the AP1000 reactor.

Chu told reporters the issues with the AP1000 has not altered DOE's plans.

"That won't affect our timeline for loan guarantees," Chu said. "My understanding of that is they asked a question that the AP1000 it has to do with the water storage above the reactor ... and so that's what I would say."

Westinghouse did not return a request for comments on its timeline to respond to NRC. In a statement after the NRC announcement Chu said it has "already begun to address certain portions of the design."

But Chu said, "it could be months of delay. It is a concern and now Westinghouse just has to respond and do those things. I don't know what timescale they have in terms of that," he said.

Chu has also suggested to Sen. Lindsey Graham (R-S.C.) that the amount of loan guarantees for nuclear energy should at least be doubled in the Senate climate bill.

More trouble

The AP1000 design is not the only reactor that has been under criticism recently. Regulators in the United Kingdom, France and Finland last week questioned the interconnectivity between the EPR's control and safety systems. Areva promised to submit suggested design improvements by the end of the year (Greenwire, Nov. 3).

Another reported loan guarantee finalist, the Constellation Energy-Électricité de France Calvert Cliff site near Lusby, Md., relies on Areva's EPR advanced reactor design. NRC is reviewing the EPR application for design certification.

Markey's letter asks DOE to what extent the AP1000 and EPR design issues affect the agency's consideration of the loan guarantee applicants, especially as the designs are not finalized.

The lawmaker also asks DOE if it will put a "firm sunset clause" on any conditional loan guarantees; if a company will have to pay the subsidy cost at the time of the conditional loan guarantee or not; and, if it does pay a subsidy upfront if it will be reassessed over the life of the conditional award.

Finally, Markey asks when DOE plans to offer the loan guarantee commitments. "When tax dollars are on the line supporting important projects, citizens should know they are getting the best deal possible for their money," he said.

"Withholding loan guarantee commitments until a project obtains regulatory approval ensures that   taxpayers do not assume the financial risk of new reactor construction unless the loan guarantee applicants have demonstrated with certainty that their reactor designs are safe, effective and meet applicable NRC regulations," Markey said.

Click here to view the letter.