Hoyer: Calvert Cliffs first in line for nuclear loan guarantee
Constellation Energy Group’s joint venture with a French company to build a new nuclear reactor at Calvert Cliffs is now “first in line” for a federal loan guarantee, according to an influential lawmaker from Maryland.
Democratic Rep. Steny Hoyer, the House majority leader, said in an interview Thursday that he has been informed by senior administration officials that the Calvert Cliffs project is further along in the loan-guarantee process than competing projects in Texas and South Carolina.
That’s potentially significant because, at the moment, the Department of Energy has only enough loan authority to offer one project a federal guarantee.
Hoyer, whose southern Maryland district includes Calvert Cliffs, site of two existing nuclear units on the western shore of the Chesapeake Bay, said company officials were informed about two weeks ago that their application is nearly ready to be reviewed by the credit board that makes loan guarantee recommendations to the Energy secretary.
He emphasized that the Maryland project still has not received final approval for a loan guarantee. Hoyer said he had been in touch with top officials at the White House and the Department of Energy on the issue.
"I have been pushing very hard to get an approval of loan guarantees from the Department of Energy for Constellation's third plant," he said. "And we're making progress."
Comments by Constellation executives during a conference call with financial analysts in April led some investors to conclude that the company's loan guarantee application had already been approved. That apparent misinterpretation caused the price of the company’s stock to drop, analysts said at the time, because of a belief that the relatively low price of electric power does not justify the risk of building a new nuclear plant.
President Barack Obama has made increased nuclear power an important element of his energy strategy. Nuclear plants currently generate about one-fifth of the electricity used in the United States.
Earlier this year, during a visit to Maryland, Obama announced the first conditional loan guarantee for a new nuclear project. It went to a joint venture that plans to add two nuclear units to an existing plant in Georgia.
Under the federal program, the U.S. government agrees to repay the loans for nuclear plant construction if a company defaults on the debt.
The Department of Energy has already obligated more than $10 billion of the $18.5 billion in loan guarantee authority for 2010. Obama has requested an additional $35.5 billion in his 2011 budget and is asking Congress to advance $9 billion immediately, which would allow more than one new project to gain loan guarantee approval.
On Thursday evening, the House of Representatives is scheduled to vote on additional nuclear loan guarantee funding as part of a war supplemental measure. The Senate would need to act before the administration could use the expanded authority.