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Georgia Power, Oglethorpe to receive nuclear loan guarantees totaling $6.5 bil

Highlights

Georgia Power and Oglethorpe Power will receive a combined $6.5 billion in federal loan guarantees to complete their 2,200-MW Vogtle nuclear plant expansion in Georgia, US Energy Secretary Ernest Moniz said Wednesday.

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Georgia Power will receive an $3.4 billion guarantee for its share of the $15 billion project. Oglethorpe will receive $3.1 billion in guarantees.

Moniz said the loans reflect the administration's support for a variety of energy sources that will reduce carbon emissions and fight climate change. He said he will travel Thursday to Waynesboro, Georgia, where the new units are under construction, to finalize the loan guarantees.


The Vogtle expansion partners had said they would go ahead with the project with or without the loan guarantees, but could save money if DOE provided the support. The federal government will provide the loan through its Federal Financing Bank, officials have said.

A third Vogtle partner, Municipal Electric Association of Georgia, has said it must complete certain administrative and legal steps before it could finalize the loan guarantee. It has set a July deadline to finalize the $1.8 billion guarantee.

In 2010, DOE provided conditional loan guarantees totaling $8.3 billion to Georgia Power, Oglethorpe and MEAG Power for the two-unit Vogtle expansion. The partners are building two Westinghouse AP1000 units, which incorporate passive safety technologies and are the first new-generation reactor designs to be built in the US, Moniz said.

The loan guarantees -- a central part of a 2005 energy bill intended to spur new nuclear plant construction -- have been delayed repeatedly.

Southern Company, Georgia Power's parent, has said one of the problems in finalizing the deal were terms DOE was seeking that would have given the government certain rights over the project. Those terms are more typical of facilities built using project financing, in which loans are secured by the project assets alone, Southern Company officials said. The Vogtle loans are being secured by all the assets of Georgia Power, the company has said.

No other loan guarantees for power reactors have been announced and many of the projects that applied for the guarantees are now on hold.

The award of $8.3 billion in loan guarantees would leave $10 billion in loan guarantee authorization for nuclear project remaining, and DOE officials have said they are considering issuing a new solicitation next year for nuclear energy projects, including small modular reactors.

Georgia Power is the largest owner of the two existing and two new Vogtle units, with a 45.7% share.

The board of directors of Oglethorpe Power, an electric cooperative which owns 30% of the Vogtle expansion, approved a new set of terms in November for a loan guarantee, CFO Betsy Higgins said last year.

MEAG Power, an association of municipal electric companies with a 22.7% share of the Vogtle project, expects to close its loan guarantee later this year.

Environmental groups have criticized the loan guarantee program as secretive and risky. "Taxpayers would be 100% liable in the event of a default," Friends of the Earth said in a statement January 31 on the Vogtle loan guarantees.

The loan guarantees include a credit subsidy fee -- a charge to recipient companies to repay the government for the risk of extending the loan -- that is too low, the group said.

South Carolina Electric & Gas and Santee Cooper are also building two AP1000 reactors at their Summer station. They applied for a loan guarantee but DOE has not awarded them a conditional commitment.

--William Freebairn, william.freebairn@platts.com
--Edited by Valarie Jackson, valarie.jackson@platts.com