On July 14, the Senate Energy and Natural Resources Committee once again passed legislation that sets up a Clean Energy Deployment Administration (CEDA) to provide loan guarantees as well as indirect subsidies to “clean” energy projects. Unfortunately, the definition of “clean” includes loan guarantees and potentially other types of direct and indirect support for new reactors and coal plants.
In 2009, CEDA passed the Senate Energy Committee as part of the American Clean Energy Leadership Act of 2009 (ACELA), which never made it to the Senate floor for a vote. The 2009 version of CEDA created a program that would have allowed for unlimited loan guarantees to new nuclear reactors and coal plants, because the program was exempted from a one seemingly tiny provision of the Federal Credit Reform Act of 1990 (FCRA) [Sec. 504(b)]. For a detailed explanation of how that exemption led to unlimited authority, see PSR’s factsheet. The bill also appropriated $10 billion for CEDA’s initial capitalization (yes, it is highly unusual to see direct appropriations on an authorizing bill).
CEDA has been through changes since its first incarnation. As much as Congress continues to rally behind nuclear, large money pots are hard to come by in DC these days, as we witnessed in the House FY2012 appropriations. So, Chairman Bingaman swapped out the $10 billion capitalization for a “Sense of the Senate” that Congress will at some point find a $10 billion offset lying around somewhere or other. An amendment also passed in committee to remove the FCRA exemption, so no more unlimited authority. Notably, Ranking Member Murkowski (AK) was the only Republican to vote for the bill.
Unfortunately, this version of CEDA can still provide loan guarantees and potentially other types of direct and indirect support to nuclear and coal projects. In addition, “nuclear power parts, services and fuel suppliers, and small modular reactors” have been explicitly added to the mix of eligible projects. The new version of CEDA also gives the nuclear industry an opportunity to argue over DOE’s probability of default and its estimated recovery in the event of a default – estimates which led to a higher subsidy cost fee than Constellation was willing to pay for a loan guarantee to build the Calvert Cliffs reactor in Maryland.
Without the FCRA exemption and with no money, CEDA is now essentially an inflated version of DOE’s existing Title XVII Loan Guarantee Program, which has been criticized for poor governance, management, and transparency by both the Government Accountability Office and DOE’s Inspector General. Another loan guarantee program with even more authority and less accountability is not going to solve these problems.