trending Market Intelligence /marketintelligence/en/news-insights/trending/H0IBj56wZjm7QFQ0UOVgsg2 content esgSubNav
In This List

Vogtle nuclear project receives additional $3.7B loan guarantee from DOE

Blog

Global Capital Markets & SPAC Activity – H1 2021

Blog

Over 150 state-level energy-related measures enacted during Q2'21

Blog

Insight Weekly: Earnings learnings; Duke Energy hits back; PE activity surges

Blog

Q&A: Data That Delivers - Automating the Credit Risk Workflow


Vogtle nuclear project receives additional $3.7B loan guarantee from DOE

U.S. Department of Energy Secretary Rick Perry confirmed March 22 the Trump administration will provide an additional $3.7 billion in loan guarantees to help Southern Co. and its partners finish two new reactors at the Alvin W. Vogtle Nuclear Plant.

The DOE issued loan guarantees of up to $1.67 billion to Southern subsidiary Georgia Power Co., which owns 45.7% of Vogtle; up to $1.6 billion for Oglethorpe Power Corp., which has a 30% stake, and up to to $415 million to three subsidiaries of the Municipal Electric Authority of Georgia, which owns 22.7% of Vogtle. The DOE will now guarantee a total of up to $12 billion in loans for the project.

"If you want reliable 24/7 energy, this is it," Perry said during a March 22 news conference at the Vogtle plant in Waynesboro, Ga. "If you want true security for this nation … there is no reason not to include nuclear energy to the fullest extent possible in our energy mix."

Perry announced the loan guarantees alongside Vogtle stakeholders and state politicians, including Southern Chairman, President and CEO Tom Fanning, Georgia Power Chairman, President and CEO Paul Bowers and Georgia Gov. Brian Kemp.

"Through this whole administration … these people have been resolutely supportive of this project," Fanning said. "We've had our challenges, but we've been able to fight through these challenges."

The additional funding, first reported on March 20, comes as Southern management looks to expedite construction for Vogtle units 3 and 4, construction of which is years behind schedule and billions over budget as the nuclear industry continues to face increasing competition from natural gas and renewable energy sources. Vogtle's total cost-to-completion estimates have increased to more than $30 billion.

Environmental and taxpayer watchdogs criticized the loan guarantees.

"Rewarding failure by doling out billions more dollars in corporate welfare at taxpayers' expense for the Vogtle nuclear project in Georgia is not only unfair but it is idiotic given all of the red warning flags," Sara Barczak, regional advocacy director with the Southern Alliance for Clean Energy, said in a statement. "We are appalled at the lack of transparency in this process despite all of our efforts to get more information as to the risks facing taxpayers and especially utility ratepayers who have already paid billions for nothing."

"It would be a gross understatement to say this decision is fiscally reckless," Ryan Alexander, president of nonpartisan federal budget watchdog organization Taxpayers for Common Sense, said in a news release. "Putting the full faith and credit of the U.S. Treasury behind a project after it's been plagued by sky-rocketing costs and multi-year delays is an unjustifiable handout to the well-heeled Southern Co. and its partners. Throwing good money after bad is never good policy."

The Vogtle project has faced multiple setbacks in recent years. In March 2017, the project's contractor Westinghouse Electric Co. LLC filed for bankruptcy, leading to Georgia Power and corporate affiliate Southern Nuclear Operating Co. Inc. assuming project management including reworking the reactor expansion schedule and cost-to-complete analysis. MEAG Power is currently in a legal battle with Florida municipal utility JEA over their power purchase agreement for output from the new nuclear units.

The Vogtle expansion is about three-fourths complete and could come online sooner than anticipated, Fanning said during the company's fourth-quarter 2018 earnings call. Units 3 and 4 are slated to come online in November 2021 and November 2022, respectively, but the reactors could be operational as soon as April 2021 and April 2022.

The Trump administration has expressed support for nuclear: the White House's latest economic report discussed implementing measures to improve grid performance by favoring nuclear and coal plants that "might provide greater resilience benefits." Similarly, the DOE created a draft memo in 2018 that would require grid operators to buy power or capacity from coal-fired and nuclear plants to assure resilience, but the agency did not issue a final version of the plan.

The City of Dalton Utilities is also a co-owner of the Vogtle plant with a 1.6% stake, according to S&P Global Market Intelligence.