The Department of Energy 2012 Budget

The DOE budget proposal for 2012 seeks to triple the department’s loan guarantee authority for new nuclear power plants, from $18.5 billion to a total of $54 billion, the same as requested for 2011. The budget also creates a new line item for small reactor licensing.

Because Congress did not pass a budget to cover fiscal 2011, instead opting to fund the government at 2010 levels through continuing resolutions, several new programs included in the 2011 budget request failed to receive funding. Some of these programs have had their requests renewed in the 2012 request; others have been scrapped.

In this year’s State of the Union address, President Obama proposed a clean energy standard, with the goal of generating 80 percent of U.S. electricity from clean energy sources by 2035. Nuclear energy, natural gas and clean coal, which have been excluded from previous attempts to create such a standard, are explicitly included in Obama’s standard, joining renewable energy sources as recognized means to reduce carbon emissions. The administration’s clean energy goals are reflected in several places in the DOE budget.

Let’s take a look at a few elements:

LOAN GUARANTEES

Combined with the existing authority of $18.5 billion, the request of an additional $36 billion would provide a total of $54.5 billion specifically for nuclear energy projects. Energy Secretary Steven Chu said in a news release that the increased loan guarantee authority would cover six to eight nuclear power plant projects, resulting in nine to 13 reactors.

Early last year, DOE issued the first nuclear energy-specific loan guarantee to Southern Co. and its partners to help finance the construction of two new reactors at its Plant Vogtle site in Georgia.

The guarantees are not an actual appropriation and, therefore, do not represent an outlay of taxpayer dollars when the projects are successfully completed. Recipients must pay a fee for the guarantee. The guarantees aim to boost investor confidence and allow worthy projects to obtain financing on more reasonable terms that ultimately will lower the cost of electricity generated by the projects.

SMALL REACTORS

The 2012 budget request provides $93 million to support design certification and licensing assistance for a small reactor design not yet chosen.

Chu said that the 2012 budget request both “secures America’s future” and addresses Obama’s pledge to “make tough choices” in attempting to rein in federal spending. Promoting small reactors—which have a generating capacity less than 350 megawatts—reflects the growing interest in the technology as an exportable item and mirrors efforts in Congress to pass legislation supporting their development.

The budget also includes a request for $125 million for reactor concepts research and development. This funding will support small reactors, a next generation nuclear plant and the light water reactor sustainability program, which manages the long-term, safe and economical operation of current nuclear power plants.

YUCCA MOUNTAIN AND THE WASTE FUND

The DOE budget continues the administration’s efforts to terminate the Yucca Mountain nuclear waste repository program despite DOE’s continuing legal obligations in that regard.

The repository program would not receive any funds in the 2012 request. However, DOE still would require consumers of nuclear-generated electricity to pay a surcharge on their monthly electric bills into the federal Nuclear Waste Fund to support the program. This would yield an additional $778 million in revenues into a fund that already has a balance of $26 billion, according to the budget request.

DECONTAMINATION AND DECOMMISSIONING FUND

The administration is again proposing to reinstate the tax on the industry to fund the uranium enrichment decontamination and decommissioning fund. The fund was established to decommission DOE uranium enrichment facilities in Kentucky, Ohio and Tennessee.
The current request, if approved, would mark the third time that the industry has been taxed for the fund, even though it has met its statutory obligation and the federal government has not yet done so. The fund currently holds a balance of $4.6 billion.

Other notable budget items:

•  Nuclear energy enabling technology, another new line item, would focus on potentially transformative technologies in the areas of reactors, fuel cycle approaches and proliferation reduction. Originally introduced in the 2011 budget, the request has been lowered slightly to $98 million for 2012.
• Re‐Energyse, a program introduced in the 2011 budget request to encourage students to pursue careers in science, engineering and entrepreneurship related to clean energy, was intended to replace the similar Integrated University Program. The program has been scrapped and is not funded for fiscal 2012.
•  Spending for energy innovation hubs, which are intended to use multidisciplinary research teams to “shorten the path” from basic research to development and commercial deployment of energy-related technologies, is set at $146 million. The funds will support three existing hubs and establish three new ones in the areas of batteries, smart grid technologies and critical materials. Of the existing hubs, the one most specific to nuclear energy uses supercomputer modeling to demonstrate how nuclear processes operate at physical plants and will help in reactor design.

This is original reporting.