By TENNILLE TRACY And NAUREEN S. MALIK | Wall Street Journal | Link to article
The ongoing nuclear crisis in Japan could make it harder and more expensive for U.S. power companies to finance the construction of new nuclear reactors, threatening to further complicate a process that is already challenging.
Nuclear experts are warning of higher financing costs for U.S. nuclear projects and reduced political support for federal loan guarantees that help secure access to cheaper debt.
In a note to investors last week, Standard & Poor’s said the events in Japan “renewed public focus on the inherent risks of nuclear power” and could lead to “deteriorating economics for new plant construction.”
Any increase in financing costs could stymie the growth of the U.S. nuclear industry, which also faces possible changes to federal standards and a growing wave of opposition from citizens.
In the wake of the Japanese crisis, President Barack Obama and top administration officials have maintained their support for nuclear power. The White House this week said it still supports a budget proposal for an additional $36 billion in loan guarantees for new nuclear-plant construction. But some in the U.S. nuclear industry say they question the strength of the administration’s support for these loan guarantees given the damage and radiation leaks at Japan’s Fukushima Daiichi power facility following the March 11 earthquake and tsnuami.
“There is some justifiable anxiety over whether or not the administration will make good” on plans to seek more loan guarantees, said Scott Segal, an attorney with Bracewell Giuliani who works on power industry matters.
The new loan guarantees also are facing scrutiny from Capitol Hill, such as nuclear-power critic Rep. Ed Markey (D., Mass.). “After the Japanese meltdown, Congressman Markey absolutely thinks it’s important to revisit whether taxpayer subsidies for new nuclear power plants is a good idea,” said Markey spokesman Eben Burnham-Snyder.