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Georgia Gets Nuke Loan Guarantee

BRADENTON, Fla. — After receiving a federal loan commitment Tuesday, the Municipal Electric Authority of Georgia yesterday announced it would soon sell $2.53 billion of municipal bonds for the project.

The U.S. Department of Energy said MEAG would receive approximately $1.8 billion in loan guarantees toward construction of its share of two new nuclear units being planned at Plant Vogtle in Georgia.

MEAG's $1.8 billion conditional loan guarantee is part of $8.33 billion the DOE offered under the Energy Policy Act of 2005 to assist project sponsors in the construction of two nuclear reactors at Plant Vogtle, where two nuclear units already are in operation.

As one part of the conditional loan guarantee deal, the U.S. Nuclear Regulatory Commission must determine if proposed new reactors fulfill the regulatory requirements for a construction and operating license.

The proposed new units represent the first U.S. nuclear power project in nearly three decades. It is being sponsored by investor-owned Georgia Power Co., the Georgia cooperative Oglethorpe Power Corp., MEAG, and Dalton, Ga.

MEAG ultimately will own 22.7% of the project, which will provide 500 megawatts of power.

The DOE loan guarantee is an integral part of MEAG's finance plan. It served as a springboard for the agency yesterday to release information about the total financing program for its share of the new nuclear reactors, said chief financial officer Jim Fuller.

"Our intention is to obtain a substantial portion of our capital needs through public bonds issuance and use the DOE program for completion financing as an option versus the public markets," Fuller said.

The loan guarantee gives MEAG an option for financing the remainder of project costs, plus a 20% margin for any potential cost overruns, through the Federal Financing Bank.

MEAG plans to issue $2.48 billion of taxable Build America Bonds and $54 million of tax-exempt bonds with maturities between 2017 and 2057 to fund the significant portion of its capital expenditures related to its share of the new nuclear units.

The bonds are expected to price in March, but an exact date has not been set, Fuller said.

The bonds will be sold as three separate credits, each secured by a different combination of contracts, with MEAG power participants or two other public power agencies that will purchase a portion of MEAG's share of the nuclear-generated power.

Fuller said MEAG would remain flexible, for now, as to whether all the bonds will be sold in one day, or over several days,

"We want to make sure we have an opportunity to get out and tell the full story to investors that have an interest," said Fuller. Preliminary official statements were released yesterday.

Goldman, Sachs & Co. will be the book runner for the sale. An additional eight members of the underwriting syndicate have not yet been named. Public Financial Management Inc. is the financial adviser. Orrick, Herrington & Sutcliffe LLP is bond counsel. King & Spalding is underwriters' counsel. Nixon Peabody LLP is special tax counsel.

The top three rating agencies yesterday released ratings for the MEAG bond sales to be sold as Project M, Project J, and Project P bonds. Most of the bonds were rated in the A category by Fitch Ratings, Moody's Investors Service, and Standard & Poor's. Moody's had only released two of three ratings at press time.

While there is great concern particularly among environmental groups about the use of nuclear-generated power, federal officials said the MEAG project achieves substantial environmental benefits by reducing greenhouse gases and other pollutants.

Many nuclear power projects are in various stages of planning and permitting across the country as cleaner alternatives to coal- and oil-fired systems.

Sen. Lindsey Graham, R-S.C. is circulating a discussion draft of a clean energy bill that would provide federal loan guarantees to help finance the construction of 60 new nuclear plants.

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