Obama To Propose Tripling Of Nuclear Loan Guarantees To US$54 Billion

• Breaking News - JANUARY 29, 2010, 1:53 P.M. ET
  

The Obama administration is planning to propose tripling a program that provides loan guarantees to construct nuclear reactors, an administration official said Friday, aiming to reach out to Republican lawmakers in an effort to break a logjam over energy policy.

The Obama administration will seek loan guarantees totaling about $54 billion, the official said. That is up from the $18.5 billion authorized. The details are to be unveiled Monday when the White House makes a fiscal 2011 budget request.

The proposal comes after the U.S. Energy Department announced Friday that it has asked former U.S. Rep. Lee Hamilton, a Democrat, and former National Security Advisor Brent Scowcroft to lead a panel charged with developing a long-term solution for managing the nation's used nuclear fuel and nuclear waste. The panel, which will be charged with developing an interim report within 18 months and a final report within 24 months, will also include Exelon Corp. (EXC) Chief Executive John Rowe, former Republican senators Pete Domenici and Chuck Hagel, and representatives of major labor and environmental groups.

The Obama administration has been promising for almost a year to create such a panel after deciding that a central repository for storing waste at Yucca Mountain in Nevada was not an option. The Nevada site has been opposed for years by that state's political establishment, most notably Senate Majority Leader Harry Reid (D., Nev.), who is facing a difficult reelection campaign this year.

Republicans have complained that the Obama administration's rhetoric in support of nuclear power has not matched its actions. Those criticisms may be challenged in coming months if the administration awards its first-ever nuclear loan guarantee and then expands the program. In the current program, 17 companies applied for $122 billion of loan guarantees, or about six times the amount of money available.

But the administration's efforts also could alienate the environmental wing of its base. The liberal group MoveOn.org said a survey of its members during the State of the Union address this week showed the most negative response to Obama came when he voiced support for more nuclear power and offshore drilling. The administration says that nuclear power can help reduce greenhouse-gas emissions since it produces less carbon dioxide than alternatives.

"I personally think that nuclear power has a place" because "it is carbon-free," U.S. Energy Secretary Steven Chu told reporters on Friday. "We will be able to solve the complete environmental concerns."

The Energy Department appears to be getting close to offering its first nuclear loan guarantee. Earlier this week, Southern Co. (SO) Chief Executive David Ratcliffe said in an interview that the company expects to finalize an application for a loan guarantee "within the next couple months." Scana Corp. (SCG), which has also applied, is "a couple months behind Southern" and is "hopeful" of receiving a conditional award "sometime in the next months," Scana spokesman Bryan Hatchell said Friday.