AEHI Stock Filing Shows Huge Risk in Nuke Venture
Snake River Alliance News Release
Oct. 20, 2008

Contact: Andrea Shipley, Executive Director
(208) 344-9161

Alternate Energy Holdings’ newest attempt to raise money from stock investors for its Elmore County nuclear reactor reveals the huge odds against the project being successful and shows county officials how risky it would be to let the project proceed, the Snake River Alliance said.

AEHI, which hopes to convince Elmore County officials to rezone a huge piece of prime agricultural land and convert it into a heavy industrial nuclear complex, filed its registration of securities to the U.S. Securities and Exchange Commission last week. The SEC filing comes as the financially struggling would-be nuclear power developer tries to find new cash to finance its project, which is opposed by overwhelming numbers of Elmore County residents who say it will forever change their rural lifestyle and pose environmental and safety threats in Elmore County.

“We couldn’t be more pleased that AEHI has finally filed with the SEC to register its stock, because the company will now be held accountable for how it presents itself to investors and the public,” Snake River Alliance Executive Director Andrea Shipley said. “Even a cursory reading of this SEC filing shows this is a long-shot project and that Elmore County would be taking a huge leap of faith by allowing AEHI to impose its industrial nuclear complex into the heart of its treasured agricultural lands on top of the Snake River.”

Most important, as AEHI’s news release announcing the SEC filing points out, AEHI must now “be fully reporting and current with all required SEC filings, including audited financial statements, making it easier for investors to find reliable, unbiased information about a company.”

“It’s about time,” Shipley said. “Idahoans have been bombarded with inaccurate and incomplete information from AEHI ever since it came to Idaho. The fact the SEC will hold the company accountable for its statements is both welcome and long overdue.”

AEHI’s filing contains countless cautions about why this nuclear reactor proposal is a horrible idea both as an energy resource for Idaho and also as a stock play.

“AEHI has limited funds and such funds will not be adequate to carry out the business plan without borrowing significant funds,” the company told the SEC in its filing. “AEHI has not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to AEHI. If not available, AEHI’s operations will be limited to those that can be financed with its modest capital, and it could fail.”

Beyond the company’s tenuous finances, Idahoans will be interested in learning that the SEC filing says AEHI “Expects it is unlikely the company will be the ultimate owner or operator of any reactor to be built at the site.” Rather, AEHI hopes the plant will be owned and operated by a yet-to-be-determined consortium or joint venture made up of nuclear reactor suppliers and maybe utilities. So far, no utility has endorsed AEHI’s project.

Also, AEHI raises the prospect of building a coal-fired generation plant in the event its nuclear reactor falls through: “Even if circumstances prevented development of the site for a nuclear plant, management believes it could still be used for a coal plant,” AEHI told the SEC. That will likely come as a shock to Idaho state officials, who are on record as not supporting any new coal-fired plant that emits carbon dioxide or other greenhouse gasses.

And contrary to claims by AEHI CEO Don Gillispie that the land at issue comes with ample water rights to cool his massive, 1,600MW nuclear reactor, the company tells the SEC that one of its “risk factors” is “inability to assure adequate water supplies for steam and cooling because AEHI’s water rights could be lost because of government action, extreme drought conditions, or competing economic demands for water.” As all Idahoans know, the Snake River is one of the West’s most over-allocated rivers, and battles over access to that water among users are routine. The 1965 water right that would come with the land AEHI hopes to use is considered a junior right and subject to interruptions if more senior water right holders execute calls on the water for their own use in times of shortages. Perhaps that’s why in its budget, AEHI tells the SEC that it will allocate $6 million for “additional water rights” – even though it has said repeatedly it already had more than enough water to cool its reactor. In fact, AEHI’s SEC filing claims the reactor site “has ample rights to a source of water,” which raises questions about why it needs to spend $6 million it doesn’t have to buy more.

“This is exactly why we have urged Elmore County to demand more information from AEHI about what it intends to do on the 1,400 acres of land on the Snake River,” the Alliance’s Shipley said. “We have reviewed the report by Mr. Philip Miller, the attorney who was assigned the task of reporting on AEHI’s rezoning application development agreement with Elmore County, and Mr. Miller’s advice to the Planning and Zoning Commission is that the development agreement should state explicitly what this land will be used for if it is rezoned. In fact, the legal opinion requested by the Elmore P&Z Commission raises serious questions about the development agreement proposed by AEHI.”

In its SEC filing, AEHI said its newly preferred site for its reactor in Elmore County “has passed preliminary evaluations by ENERCON, an engineering firm that grants pre-approval of nuclear plant sites…” In fact, only the Nuclear Regulatory Commission can permit a nuclear reactor; there are no “pre-approvals” by outside consultants.

AEHI also tells the SEC that it plans to incorporate a variety of biofuels technologies into its reactor (although it does not say which reactor vendor or design it will use). Yet in the same document, the company acknowledges: “AEHI does intend to diversity it{s] operations to other areas, including biofuels and potable water production, but it cannot provide any assurances that these activities will happen.”

As important as these issues are, Elmore County officials and residents are sure to notice the ominous statements AEHI provides the SEC in its filing dealing with the myriad things that can delay the project or stop it altogether.

The filing makes it clear AEHI is cash-poor and currently lacks the financing to execute its project. “The Company does not have any loan commitments,” AEHI told the SEC. Moreover, AEHI acknowledges that other nuclear reactor proposals that have far greater financial resources could better position them for the relatively scarce federal loan guarantees and other incentives, meaning AEHI’s project may well be shut out when it comes to lining up at the federal trough for federal giveaways. Or, as AEHI tells the SEC: “Under the Energy Policy Act of 2005, Congress has provided production tax credits, loan guarantees, and regulatory risk insurance for the first new nuclear plants. The Project has a chance to qualify for these, but if the Project is delayed, or the schedule for other planned nuclear plants accelerates, the opportunity to get the incentives may be lost.”

The Alliance’s Shipley said banking on loan guarantees and other taxpayer-subsidized freebies that almost certainly won’t be there when AEHI comes to the NRC with its application should signal that this reactor project has slim chance of success.

“AEHI is saying it needs taxpayers to make this project work, and there are so many other reactor projects in the NRC line that this one has almost no chance of qualifying,” Shipley said. “AEHI also said it doesn’t have enough money to pursue the project without borrowing huge amounts in an already-tight credit market. This is all information that should be of interest to Elmore County residents and their elected officials.”

The Elmore County Planning and Zoning Commission will hold its next hearing on Oct. 29 to hear from individuals who oppose the rezoning proposal for the reactor. It will conclude with a Nov. 5 hearing to allow AEHI to rebut the opposition. The commission is expected to make a recommendation after the Nov. 5 hearing, after which the County Commission will begin its hearing process and decide whether to rezone the land.

The Snake River Alliance has a long history of advocating for the cleanup of the radioactive legacy from the Cold War at the Idaho National Laboratory and protecting the Snake River Aquifer that lies underneath the contamination. It also advocates clean energy alternatives to nuclear and fossil fuel power generation.