Energy and Water Development and Related Agencies Appropriation Act, 2013

Floor Speech

BREAK IN TRANSCRIPT

Mr. KUCINICH. My amendment would put a moratorium for fiscal year 2013 on any new loan guarantees under what is now known as the section 1703 loan guarantee program. To offset the loss of administrative revenue that would no longer come to the Department of Energy if the amendment passes, the amendment cuts $33 million from administrative costs that will not be necessary if the program is suspended. This program, originated in the Energy Policy Act of 2005, offers a guarantee for the loans that finance an energy project. With that kind of guarantee, the risk for the loaning entity is considered lower, which means they can charge a lower interest rate to the people initiating the energy project. In other words, it saves the project money. But it also puts the taxpayers on the hook if the project defaults.

Section 1703 projects cover nuclear, coal, and even renewable energy. The closer we look at the guarantees, the less they seem like a worthwhile investment for the American taxpayer. Let me give you an example.

Some of the biggest guarantees are for nuclear power. One of the first and biggest loans the Department of Energy is considering is one that is not necessary. That's not my assessment; it's the assessment of Kevin Marsh, the president of South Carolina Electric & Gas Company, which is attempting to build a new nuclear power plant. He said on a call to analysts and investors:

We're confident in our ability to finance this project without a loan guarantee.

This program stands to give him and his project, which could be in the $8 billion to $11 billion range, a preemptive bailout that is not even needed.

Here's another example. A loan guarantee that is most likely to be awarded is for a new nuclear plant called Vogtle. That loan guarantee is for $8.3 billion. For those of you who displayed a great deal of concern about Solyndra's loan guarantee, this one is 15 times the size. With a project that big, it makes sense to look closely at the odds of this project going into default, leaving the taxpayers with the price tag. Well, Vogtle already has $913 million in cost overruns, and their SEC filings indicate more overruns can be expected. That, of course, is not at all unusual for a nuclear power plant project. Construction cost overruns are the rule, not the exception.

Maybe that's why the CBO had this to say about nuclear loan guarantees:

CBO considers the risk of default on such a loan guarantee to be very high--well above 50 percent.

Or maybe they said that because there is another reason to expect nuclear power plants will continue to struggle financially: that reason is the low cost of natural gas that makes it far more attractive than taking multiple risks by going with nuclear power. Dale Klein, a former chairman of the NRC, cautioned that nuclear plants will not move off the blackboard and into construction, not as long as natural gas remains as cheap and plentiful as it is today.

Nuclear power is not the only recipient of government largess under the section 1703 loan guarantee. Even if you are a nuclear power plant supporter, there are plenty of other boondoggles that are covered by this program that I don't have time to go into. That's why Members of Congress on both sides of the aisle can get behind this amendment, which is supported by a bipartisan coalition of groups, including Taxpayers for Common Sense, Friends of the Earth, National Taxpayers Union, and Physicians for Social Responsibility. It is for those who are concerned about wasteful government spending. This program alone will cost the taxpayers over $500 million--not including any defaults the taxpayers may have to cover. This amendment is for those who have concerns about deficit spending. It's for those with free market concerns about an energy technology that is not financially viable even after tens of billions of dollars in subsidies and decades of opportunities to mature to the point where subsidies are not needed. It is for those who are concerned about the effects of these energy technologies on our drinking water, on clean air, on healthy soil, and on climate change. It is for those who have concerns as ratepayers that they'll get stuck holding the bill when an energy project fails and their electricity rates go up. It is for those who found the Solyndra default to be outrageous.

There's a little something for everyone with this amendment. I urge my colleagues to support it, and I yield back the balance of my time.

BREAK IN TRANSCRIPT

Source