Why do Republicans and free market advocates scream breathlessly about government picking winners and losers when it comes to new technology they oppose (for reasons that remain unclear) but have no problem with, and in fact, encourage, government investment in mature technology they support?
Do they just support bad government policy and decision-making as a matter of principle? And if so, what is the basis for that principle?
The Energy Policy Act of 2005, passed by Republican majorities in both houses of Congress (with Democratic support) and signed into law by a Republican President authorized $17 billion to support the development and construction of new nuclear power plants.
Section 1705 of the 2009 American Recovery and Reinvestment Act authorized $16 billion to support development and construction of clean energy technology, including solar manufacturing and construction, wind energy, biomass and energy storage.
Mathematically, $17 billion is more than $16 billion (double checked in MS Excel). While everyone knows the story of the $535 million loan guarantee to Solyndra, fewer know the story of Southern Company's Vogtle nuclear power plant.
In 2010, the Department of Energy began negotiations with Southern Company and its partners on a $8.3 billion (not million, like Solyndra) loan guarantee to support the construction of two new nuclear reactors at the company's Vogtle Nuclear Generating Station near Augusta, GA.
Although Southern company "borrowed $4.3 billion from commercial sources at an average rate of 2.8 percent" in 2012, the company feels it needs government guarantees to secure favorable financing for its new nuclear reactors. In addition to its apparent excellent access to private credit markets, Southern Company will be able to recover the cost of its investment from customers. And when I say the company "will" be able to recover costs from customers, I mean to say Southern Company is already collecting from its customers, even though construction has yet to begin.
So unlike Solyndra, a start-up company with higher capital costs, which needed to manufacture then sell its cutting edge panels at an affordable price, a well-established firm - Southern Company - operating in a regulated monopoly environment with guaranteed customers - required eight times the government support to construct a mature technology.
This story alone would seem to provoke instant and sustained Republican screaming. This $8.3 billion doesn't include an additional $200 million provided by DOE to support the licensing review of the GE reactor.
In any event, the real Republican outrage (yet to be expressed) comes from the $900 million cost overrun on the project. While the responsible parties in this dispute remains undetermined, the Republican silence over an improperly designed, inadequately constructed nuclear plant is deafening:
The Vogtle expansion, for which final permits were issued in February, has already encountered issues that could affect costs and schedules, the filing said. One such issue was a recent finding by the Nuclear Regulatory Commission that rebar installed at the site is not consistent with design standards.
The economic cost of a nuclear accident (for example, due to construction inconsistent with design standards) is not insignificant. It is so not insignificant that the federal government pays for
indemnity insurance for all 104 private nuclear reactors in the United States.
A 2008 Congressional Budget Office study estimate the value of this insurance at $600,000 per reactor per year - more than $60 million annually. For reference, the Price-Anderson Act paid $70 million for the Three Mile Island accident in 1979 - more than $200 million for a comparable disaster in 2012 dollars.
So is it simply a matter of principle that Republicans prefer bad policy and poor decision-making? Hopefully the answer will be revealed if and when the new Vogtle reactors come online.