A U.S. loan-guarantee program is testing how much risk the Obama administration is willing to take to revive the nuclear-power industry.
Constellation Energy Group Inc. said last week it was pulling out of talks on a $7.5 billion loan guarantee to build a reactor at its Calvert Cliffs facility in Maryland. The estimated $880 million the company would have to pay the Treasury Department was "shockingly high," US Chief Operating Officer Michael Wallace said in an Oct. 8 letter to the Energy Department.
The administration offered terms no better than Constellation could get from private investors, said Christine Tezak, a senior energy and environment analyst for Robert W. Baird & Co., a Milwaukee-based brokerage.
The Energy Department has authority to provide $18.5 billion in guarantees to nuclear-power producers, serving effectively as a co-signer to help utilities get financing. The only award so far was to Southern Co. of Atlanta and its partners, which are getting an estimated $8.3 billion in federal backing for a project in Georgia. Southern hasn't disclosed an estimate of the cost for its federal guarantee.
