U.S. Rep. Mike Simpson was asked a question near the end of his speech Wednesday at the Intermountain Energy Summit: with deadlines approaching to raise the federal debt ceiling and pass appropriations bills, is there any chance efforts are merged into one piece of legislation?
“I think you’ll see health care reform, tax reform, the debt limit and the appropriations bills all in one bill,” Simpson said to the crowd, before slowly declaring: “I’m just kidding.”
Though the U.S. House of Representatives passed four appropriations bills before recess, there are eight left, and Congress is supposed to pass all of them before the new fiscal year begins in October.
“I’d like to tell you they’d be done by Oct. 1 so we could know what the hell’s going on … I don’t know if that will be possible,” Simpson said.
Simpson was a featured speaker during the Post Register-sponsored energy conference in Idaho Falls. He spoke at length about the delicate work of setting a federal budget against competing interests in Washington, D.C. The U.S. Department of Energy is among many government sectors caught in the balancing act.
The House Energy and Water Appropriations Subcommittee that Simpson is the chairman of was challenged by the Trump administration to tighten DOE’s non-nuclear weapons budget by $3.1 billion, or 18 percent.
Subsequent House and Senate appropriations bills didn’t cut that deep, but they do propose halting this year’s DOE loan guarantee funding, which would save about $400 million.
DOE’s Loan Programs Office provides funding to fledgling energy technologies that would otherwise be risky in the private loan market. The loans are intended to allow American companies to bridge the final financial hurdle to commercial development.
Utah Associated Municipal Power Systems, a consortium of Western utilities, has completed the first step in applying for a loan worth about $480 million in present value, CEO Doug Hunter said. UAMPS officials plan to open a NuScale small modular nuclear reactor at DOE’s desert site west of Idaho Falls by 2026.
Companies can apply for loans years before they’re ready to start digging, but they can’t use funds until their projects are fully licensed and sited, which usually take several years. NuScale’s first-of-its-kind small modular reactor design is undergoing a four-year review with the Nuclear Regulatory Commission that is expected to conclude in 2021.
Simpson said the House and Senate want to stop diverting significant money to the loan office so loans can instead be appropriated when they’re closer to being needed.
“My problem is … We’re going to spend $400 million on something that isn’t needed today,” he said. “We don’t want the program to go away, but we don’t want to be paying for something that’s not necessary at the time when we have reduced budgets.”
Simpson said President Donald Trump wanted the office closed, though Simpson’s in favor of keeping it open and honoring existing conditional loan guarantees and accepting new applications.
“At some point down the road when money becomes available or when it becomes necessary to do those loan program guarantees to move those projects forward, then I would expect Congress to put money back into the program,” Simpson said.
Several entities, including UAMPS, are at the point in the application process before a conditional loan is granted or federal money is set aside, which creates uncertainty in their funding if appropriations are cut off.
Hunter said the DOE loan would allow the small modular reactor to produce electricity for $60.50 per megawatt hour instead of $65 per megawatt hour. That reduction allows UAMPS to be “dead competitive” with combined-cycle natural gas, Hunter said.
“And we really need to be competitive. You can’t just do this because it’s cool and neat,” he said.
The second step in applying for a loan guarantee costs $385,000. Though small compared to the overall project cost, Hunter said UAMPS doesn’t want to waste money on a program with an uncertain future.
“I don’t want to give the feds money then have them kill the program; I want some value for the money,” he said.
Simpson said appropriations aren’t needed because his committee was told it would be another four of five years before a loan guarantee application is filed.
Hunter said his group has done the paperwork, but hasn’t cut a check.
“We’ve been debating whether we should do that right now. We met with Congressman Simpson and said if you can keep the office alive, if there only has to be one applicant we’ll keep it alive,” Hunter said. “I was encouraged.”
Simpson said the House and Senate energy committees need to revisit the loan office during conference, but he wants it to exist when UAMPS officials get ready to submit the next part of their application.
The office has given several dozen loan guarantees since its inception in 2005 ranging from $25 million to $5.9 billion. In 2010 Areva won a $2 billion DOE loan guarantee for the construction of a uranium enrichment plant near Idaho Falls. That project is stalled but remains on the loan program’s books.
There’s a trade-off if Congress decides to save money in the present while deferring to the future. Without an annual rolling sum going to the office, legislators could be crunched to find funds in a future budget for a large loan guarantee.
“There’s always that challenge,” Simpson said.
Reporter Kevin Trevellyan can be reached at 208-542-6762.