Wednesday, January 28, 2009

Loan Guarantees and Bennett's Amendment

I earlier mentioned the stimulus package; now, I've got some better understanding.

First, some background. The Energy Policy Act of 2005 established a federal loan guarantee program to facilitate deployment of clean technologies, which include renewables, transmission, and advanced coal- and nuclear-based generation. Companies who take a loan pay a subsidy cost, which is essentially the expected long-term liability the government would face. Typically, this is on the order of 1o% of the face value. The loan program is "scored" at just 1% of the loan face value--which means only 1% of the face value is appropriated.

The current stimulus legislation aims to appropriate $8 billion (House) to $10 billion (Senate). However, in its current form, this legislation would appropriate the subsidy cost, again, roughly 10% of the face value. That means, e.g., the Senate's version would allow provide roughly $100 in available loans.

Senator Bennett [R-UT] has proposed an amendment that would put $1 billion of the Senate's package into the current loan guarantee program. This $1 billion, with the 1% score, would allow for an additional $100 billion under the current program.

Obviously, this could be of paramount importance for financing new nuclear generation. Contact your Senators and let them know your opinion!

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