The nuclear energy industry is not unique in its ability to apply for loan guarantees. The federal government has decades of experience administering loan guarantees and other financial support for critical infrastructure projects. These projects span a broad array of industries from energy to shipbuilding to transportation to affordable housing. In fact, the $20.5 billion allocated for new nuclear energy facilities is less than 2 percent of the government managed loan guarantee portfolio, which exceeds $1 trillion. (This includes $18.5 billion for new nuclear power plants and $2 billion for fuel cycle facilities, such as enrichment plants.)

Loan guarantees do not represent a subsidy, let alone free money to the nuclear industry as some claim. The loan guarantee program is self-financing, requiring the companies that seek the guarantees to pay all costs to the government for providing them. A well managed loan guarantee program will cost tax payers nothing and yet provide them with the benefits of affordable, emission-free electricity and reduce our reliance on imported sources of energy.

The loan guarantee program was created under Title XVII of the Energy Policy Act of 2005. It was created in direct response to the monumental energy challenges we face, in order to spur investment in “innovative technologies” that “avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases.” The U.S. EPR™ reactors under consideration here in the United States would do just that, and we are gaining experience from the EPR reactors already under construction internationally. 

The interest in the U.S. government program has been tremendous, with DOE announcing applications for guarantees for 21 new reactors totaling $122 billion, more than six times the allotted amount.

Nuclear facilities are capital intensive projects, often requiring investments equaling half the market cap of the companies that seek to build them. Although nuclear power plants require more of an investment upfront, they have proven wise long-term investments because of low operating and maintenance costs. They also provide predictable revenue streams, not to mention clean and reliable baseload generation for electricity customers. Loan guarantees are essential to offset the disparity in scale between project size and company size. Such assurances also mitigate risks of charting the waters of licensing and regulatory processes which have been effectively revised but still could give pause to the investment community.

President Obama has expressed a clear goal to lift our country out of the current economic crisis and strengthen our position as leaders in the 21st century by way of a clean, green and more energy independent economy. The loan guarantees for nuclear energy reinforce this vision by encouraging investment in domestically produced energy, capable of helping the country tackle our ambitious climate goals and employ thousands of well-trained, well-paid Americans.

The NRC has completed its preliminary examination, the acceptance review, of the Eagle Rock Enrichment Facility license application and will now begin the formal review process.

On March 12, 2009, the Nuclear Regulatory Commission (NRC) officially notified AREVA Enrichment Services LLC (AES) that the NRC had completed its acceptance review of the Eagle Rock Enrichment Facility License Application. AREVA is very pleased that the NRC found the License Application to be acceptable for formal review. It is early in the Licensing process and AREVA Enrichment Services is working diligently to prepare for the steps ahead.

The NRC will now docket the application and begin its technical review process. The next step will be the NRC’s issuance of an Order, which will offer an opportunity for a hearing, provide a schedule, and address several policy issues related to uranium enrichment facility licensing. The NRC Staff will develop two reports, the Safety Evaluation Report and Environmental Impact Statement, to document the conclusion of its review of the license application. The NRC Staff plans to complete these documents by August 2010.

Throughout the license application process, AREVA Enrichment Services will provide updates regarding the status of the EREF License Application.

3-D Plan of Eagle Rock Facility

The good news is AREVA’s Eagle Rock Enrichment Facility to be built in Idaho is three months ahead of schedule, and we aren’t slowing down. AREVA is gearing up to launch detailed design, procurement, and construction planning of the facility. Even better, it will create some 5,000 direct and indirect jobs in Idaho through the life of the project.

In addition, we should expect an impact of as much as $5 billion on the local economy, including the capital invested by AREVA during the construction and operation of this state-of-the-art gas centrifuge enrichment plant and the associated economic impacts, according to recent study by the Regional Development Alliance. While AREVA waits for the NRC to complete the review of our application, we will keep moving; opening an office in Idaho Falls and appointing three new executives to the team.

AREVA is trying very hard to bring vital operations for nuclear energy industry to the heart of the U.S., but we cannot do it alone. We hope that the Department of Energy recognizes how necessary the loan guarantee is for this project’s finance needs in the frozen credit market.