Lugar Proposal Would Expand Federal Nuclear Loan Guarantees

Sen. Richard G. Lugar, R-Ind., has joined a growing number of senators pushing for climate-change and energy reform by introducing legislation designed to help utilities taper off their use of coal-fired power plants and spur the development of nuclear power.

The bill, which was introduced last week, would provide some benefits to power utilities but would not provide the funding for other infrastructure that is included in the climate-change package proposed by Sens. John Kerry, D-Mass., and Joseph Lieberman, I-Conn. Those two senators today are expected to announce the results of a federal economic analysis of their bill.

Lugar’s proposal would establish a voluntary program under which utilities would be allowed to forego some high-cost regulatory compliance measures for their oldest and highest polluting coal-fired power plants over the next few years in exchange for agreeing to close down the plants by 2018. Such plants account for about 16% of the country’s coal-generation capacity, according to an outline of the bill.

The legislation also would provide an additional $36 billion in federal loan guarantee authority for new nuclear power generation facilities. Kerry and Lieberman proposed to almost triple to $54 billion the amount of funding available for nuclear power facilities under the federal loan guarantee program, and to more than double to $100 billion the total amount available for energy loan guarantees.

So far, the federal loan guarantee program has already given the Municipal Electric Authority of Georgia $1.8 billion to help build new nuclear units. MEAG issued about $2.5 billion of muni bonds in March to help fund its share of the project.

Additionally, the Lugar bill would offer electrical utility customers low-interest loans for energy-efficiency improvements through an existing Rural Utilities Service partnership with nonprofit electric cooperatives and other public power entities.

It also would create a $500 million state revolving loan program under which the federal government would split the cost of loans to commercial and industrial manufacturers for energy reduction. Possible lenders would include state governments and community and economic development authorities. The federal government would provide up to $100 million of matching funds per year for each lender, from fiscal 2010 through 2014.

In contrast to the Kerry-Lieberman proposal, Lugar’s bill would not generate federal revenue from emissions fees that would be redirected to transportation infrastructure programs. The Kerry-Lieberman package would provide up to $6.5 billion for infrastructure.

Lugar introduced the bill Wednesday, one day before the Senate voted to block a measure that would have given it more time to approve a comprehensive climate and energy package, and may have given utilities more time to adjust to possible changes to their energy production systems.

Fifty-three senators on Thursday voted against Alaska Republican Sen. Lisa Murkowski’s measure that would have precluded the Environmental Protection Agency from acting on its finding in December that certain carbon-based emissions are a threat to public health, which had opened the door for it to regulate those emissions under the Clean Air Act.