Obama nuke plant loan reflects new energy strategy

(AP) — The Obama administration's planned loan guarantee to build the first nuclear power plant in the U.S in almost three decades is part of a broad shift in energy strategy to lessen dependence on foreign oil and reduce the use of other fossil fuels blamed for global warming.

President Barack Obama called for "a new generation of safe, clean nuclear power plants" in his Jan. 27 State of the Union speech and followed that by proposing to triple loan guarantees for new nuclear plants. He wants to use nuclear power and other alternative sources of energy in his effort to shift energy policy.

Obama in the coming week will announce the loan guarantee to build the nuclear power plant, an administration official said Friday. The two new Southern Co. reactors to be built in Burke, Ga., are part of a White House energy plan that administration officials hope will draw Republican support.

Loan guarantees for other sites are expected to be announced in the coming months, the official said, who would speak only on condition of anonymity ahead of Obama's announcement. The federal guarantees are seen as essential for construction of any new reactor because of the expense involved. Critics call the guarantees a form of subsidy and say taxpayers will assume a huge risk, given the industry's record of cost overruns and loan defaults.

"The last thing Americans want is another government bailout for a failing industry, but that's exactly what they're getting from the Obama administration," said Ben Schreiber, an analyst for the environmental group Friends of the Earth. "This is great news for Wall Street but a bad deal for Main Street."

Even with next week's announcement, construction of the first reactor is still years away. The Southern Co. has applied to the Nuclear Regulatory Commission for a construction and operating license for the plant, one of 13 such applications the agency is considering. NRC spokesman Eliot Brenner said the earliest any of those could be approved would be late 2011 or early 2012.

The Southern Co. has begun site preparation in Burke but cannot begin construction without NRC approval.

Obama's budget for the coming year would add $36 billion in new federal loan guarantees on top of $18.5 billion already budgeted — but not spent — for a total of $54.5 billion. That's enough to help build six or seven new nuclear plants, which can cost $8 billion to $10 billion each.

The proposed new reactors would generate power for some 1.4 million people and employ about 850 people, the administration official said, adding that the Georgia project would create about 3,000 construction jobs.

Spiraling costs, safety concerns and opposition from environmentalists have kept utilities from building any new nuclear power plants in the U.S. since the early 1980s. The 104 nuclear reactors now in operation in 31 states provide about 20 percent of the nation's electricity. But they are responsible for 70 percent of the power from pollution-free sources, including wind, solar and hydroelectric dams that Obama has championed as a way to save the environment and economy at the same time.

Environmentalists and fiscal hawks oppose new nuclear plants and note that they come at the same time Obama has proposed eliminating a long-planned nuclear waste dump at Yucca Mountain in Nevada. Obama has appointed a commission to find a safe solution for dealing with nuclear waste, but in the meantime the government has no long-term plan to store commercial radioactive waste.

Republicans like South Carolina Sen. Lindsey Graham welcome the shift, but some pro-nuclear Republicans remain nervous about the heart of the Obama-backed climate bill — a plan to limit heat-trapping pollution, which would raise energy costs.

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Associated Press writers Matthew Daly and Philip Elliott contributed to this report.