By Eileen O'Grady
HOUSTON, July 30 (Reuters) - Two companies leading the U.S. nuclear power revival may curb spending on the next generation of reactors due to delays in federal loan support, officials said.
The Energy Department has had little to say in the five months since President Barack Obama announced the first nuclear loan commitment of $8.3 billion to a Southern Co-led consortium for two new reactors to be built in Georgia.
The U.S. House of Representatives has approved the Obama administration's request to add $36 billion to the loan guarantee fund as part of the president's goal to reduce U.S. dependence on foreign oil, create jobs and pare greenhouse gas emissions. The Senate has not acted on the request for new money yet.
Still, the DOE still has $10 billion in existing funds it can allocate. Three project hopefuls remain on the DOE loan short-list -- Constellation Energy Group's Calvert Cliffs expansion in Maryland, NRG Energy's South Texas Project two-unit addition and SCANA Corp's Summer project in South Carolina.
The waiting game 'has begun to affect the prospects for the Calvert Cliffs project,' Constellation Energy Chief Executive Officer Mayo Shattuck told investors and analysts this week.
'As a result of this delay and uncertainty, we have begun reducing our spend rate on the project, impacting jobs,' Shattuck said.
Constellation officials had hoped to obtain a loan commitment by the end of 2009 for the Calvert Cliffs project, which it is developing with EDF Group through a partnership called UniStar Nuclear Energy.
Executives with NRG Energy's nuclear joint venture with Toshiba Corp warned they might stop spending without a a DOE loan decision in the first half of 2010 after settling an ownership dispute with a Texas municipal utility and signing an agreement with a new partner.
Tokyo Electric Power Co. agreed to invest $125 million in NRG's Texas project, but the investment is contingent on DOE loan support.
'My message today is a mixed one,' Shattuck said. 'We remain interested and focused on pursuing this project. However, time is running out. We definitely can't keep spending without a near-term commitment in the form of a loan guarantee.'
NRG Chief Executive David Crane is expected to update information about its Nuclear Innovation North America (NINA) venture Monday when second-quarter earnings are released.
'We are always adjusting our spending but we are working to keep the permitting of the project on schedule,' said NRG spokesman David Knox.
Because their plants will operate in deregulated electric markets in Maryland and Texas, Constellation and NRG executives have warned that success in obtaining federal backing is critical to advance the projects.
A federal loan is an option rather than a necessity for SCANA Corp, which is working with a state-owned power utility, Santee Cooper, to build two new reactors in South Carolina, SCANA spokeswoman Rhonda O'Banion said.
Early construction activity has begun at the Summer nuclear site in Fairfield County, including excavation work and construction of roads and some support buildings. 'It is very much an active site,' O'Banion said.
Even though progress seems slow, the nuclear revival is moving forward, said RBC Capital Markets analyst Lasan Johong.
'There are a lot of reasons to believe the U.S. has no choice but to go down the nuclear road,' Johong said. 'Things are going to be much better than people's expectations at this time.'
Southern Co CEO David Ratcliffe said this week he expects design certification issues to be resolved next year so the Nuclear Regulatory Commission can issue a construction license for the Vogtle expansion in Georgia by year end. Southern plans to get the first new reactor in operation in 2016.
(Editing by David Gregorio)
((eileen.ogrady@thomsonreuters.com; +1 713 210 8522; Reuters Messaging: eileen.ogrady.reuters.com@reuters.net)) Keywords: UTILITIES NUCLEAR/SLOWDOWN (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HOUSTON, July 30 (Reuters) - Two companies leading the U.S. nuclear power revival may curb spending on the next generation of reactors due to delays in federal loan support, officials said.
The Energy Department has had little to say in the five months since President Barack Obama announced the first nuclear loan commitment of $8.3 billion to a Southern Co-led consortium for two new reactors to be built in Georgia.
The U.S. House of Representatives has approved the Obama administration's request to add $36 billion to the loan guarantee fund as part of the president's goal to reduce U.S. dependence on foreign oil, create jobs and pare greenhouse gas emissions. The Senate has not acted on the request for new money yet.
Still, the DOE still has $10 billion in existing funds it can allocate. Three project hopefuls remain on the DOE loan short-list -- Constellation Energy Group's Calvert Cliffs expansion in Maryland, NRG Energy's South Texas Project two-unit addition and SCANA Corp's Summer project in South Carolina.
The waiting game 'has begun to affect the prospects for the Calvert Cliffs project,' Constellation Energy Chief Executive Officer Mayo Shattuck told investors and analysts this week.
'As a result of this delay and uncertainty, we have begun reducing our spend rate on the project, impacting jobs,' Shattuck said.
Constellation officials had hoped to obtain a loan commitment by the end of 2009 for the Calvert Cliffs project, which it is developing with EDF Group through a partnership called UniStar Nuclear Energy.
Executives with NRG Energy's nuclear joint venture with Toshiba Corp warned they might stop spending without a a DOE loan decision in the first half of 2010 after settling an ownership dispute with a Texas municipal utility and signing an agreement with a new partner.
Tokyo Electric Power Co. agreed to invest $125 million in NRG's Texas project, but the investment is contingent on DOE loan support.
'My message today is a mixed one,' Shattuck said. 'We remain interested and focused on pursuing this project. However, time is running out. We definitely can't keep spending without a near-term commitment in the form of a loan guarantee.'
NRG Chief Executive David Crane is expected to update information about its Nuclear Innovation North America (NINA) venture Monday when second-quarter earnings are released.
'We are always adjusting our spending but we are working to keep the permitting of the project on schedule,' said NRG spokesman David Knox.
Because their plants will operate in deregulated electric markets in Maryland and Texas, Constellation and NRG executives have warned that success in obtaining federal backing is critical to advance the projects.
A federal loan is an option rather than a necessity for SCANA Corp, which is working with a state-owned power utility, Santee Cooper, to build two new reactors in South Carolina, SCANA spokeswoman Rhonda O'Banion said.
Early construction activity has begun at the Summer nuclear site in Fairfield County, including excavation work and construction of roads and some support buildings. 'It is very much an active site,' O'Banion said.
Even though progress seems slow, the nuclear revival is moving forward, said RBC Capital Markets analyst Lasan Johong.
'There are a lot of reasons to believe the U.S. has no choice but to go down the nuclear road,' Johong said. 'Things are going to be much better than people's expectations at this time.'
Southern Co CEO David Ratcliffe said this week he expects design certification issues to be resolved next year so the Nuclear Regulatory Commission can issue a construction license for the Vogtle expansion in Georgia by year end. Southern plans to get the first new reactor in operation in 2016.
(Editing by David Gregorio)
((eileen.ogrady@thomsonreuters.com; +1 713 210 8522; Reuters Messaging: eileen.ogrady.reuters.com@reuters.net)) Keywords: UTILITIES NUCLEAR/SLOWDOWN (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.