February 18, 2009 / 7:27 PM / in 10 years

Five U.S. nuclear plants on DOE loan short list

HOUSTON (Reuters) - The field of U.S. companies competing for $18.5 billion in government-backed loans to build new nuclear plants has narrowed to five from about 14 last year, company sources said.

Officials with projects in Texas, Maryland and South Carolina confirmed they were still in the running for a piece of U.S. Energy Department loan backing, which could be crucial to spurring the first round of nuclear plant building in more than 30 years.

NRG Energy’s South Texas Project units 3 and 4; Unistar Nuclear’s Calvert Cliffs 3 reactor in Maryland; and SCANA Corp/Santee Cooper’s two-unit expansion at the Summer station in South Carolina are among five projects still under DOE consideration, company officials said.

George Vanderheyden, president of Unistar Nuclear Energy, a joint venture of Constellation Energy and EDF Group of France, said the DOE notified the company this month that it was one of five projects in the running.

“We were quite excited to reach that next step,” Vanderheyden said.

Last year, developers of 14 new nuclear plants requested DOE guarantees totaling $122 billion, far exceeding the program’s budget, the agency said. Several companies dropped out of the running in December, leaving at least 10 projects seeking federal support.

Nuclear power generates about 20 percent of U.S. electricity and proponents say nuclear energy is attractive because it emits none of the heat-trapping carbon dioxide and other gases spewed by fossil-fuel plants, such as coal.

“We have been notified that we are still in the running,” said Mollie Gore, spokeswoman for Santee Cooper, a state-owned electric and water utility, and partner in the Summer expansion with SCANA’s South Carolina Electric & Gas unit.

The Summer project got a boost last week when state regulators approved SCE&G’s $9.8 billion plan for two reactors.

Federal loan guarantees are expected to jump-start interest in building new reactors, after massive cost overruns during the last construction boom and the 1979 Three Mile Island accident in Pennsylvania left utilities hesitant to build new plants.

With a cost of $5 billion to $12 billion for each new reactor, depending on size and design, the DOE program is expected to fund only a few projects, but the guarantee is seen as critical to obtaining financing.

The DOE process will determine which new reactors get built, NRG Chief Executive David Crane said last week. “Only two or three projects will qualify. We fully expect to be one,” Crane said of the $8 billion South Texas expansion.

NRG, Unistar and SCANA are pursuing three different nuclear designs, a key objective of the DOE program.

Vanderheyden said DOE’s next step would be to evaluate the technology to determine which project “can best meet the needs of the country for building a new nuclear facility and getting it online in the quickest time possible and with the least risk to the government, the sponsors or the ratepayers.”

The DOE will then negotiate with a few developers and issue “loan commitments” that will allow the companies to move forward to finance major equipment purchases and massive construction budgets.

Energy Secretary Stephen Chu has said he will move quickly to get the loan guarantee program up and running this year.

“If the DOE could make a commitment to our project by the end of this year, that allows us to feel even better about our ability to execute on the project,” said Vanderheyden. “It would be a strong statement to set up the financing structure and we would literally start accelerating this project even more.”

Editing by Walter Bagley

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