Georgia’s nuclear reactor project gets initial OK for new federal loans

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BRADENTON, Fla. – The U.S. Department of Energy conditionally approved up to $3.7 billion in additional loan guarantees for owners of two new nuclear reactors in Georgia, including two public power agencies.

Georgia Power Co. will receive $1.67 billion, the electric cooperative Oglethorpe Power Corp. will get $1.6 billion, and the Municipal Electric Authority of Georgia will be eligible for $415 million, if contractual obligations are finalized, the DOE said Friday.

All three previously received a total $8.26 billion in federal loan guarantees to support construction of two reactors at Plant Vogtle that are based on a new design by Westinghouse, the Toshiba Corp.-subsidiary that filed for bankruptcy March 29.

In announcing the new guarantees, DOE Secretary Rick Perry said Friday that he supports continuing the development of the Georgia nuclear project.

“Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security,” Perry said.

The bankruptcy of Westinghouse, which is supplying the reactors, roiled both the Vogtle project and another nuclear plant under construction in neighboring South Carolina. The South Carolina sponsors pulled the plug on construction.

So far, MEAG has issued $2.9 billion of M, J and P municipal bonds to finance the project and Oglethorpe has $1.5 billion of first mortgage bonds outstanding.

Georgia Power, a subsidiary of investor-owned Southern Co., has a 45.7% stake in the project and is heading up the work. Oglethorpe owns 30% of the project, MEAG owns 22.7%, and Dalton Utilities in Georgia owns 1.6%, which it is self-funding.

The Southern Alliance for Clean Energy criticized additional federal financial support for the Vogtle project, calling it “more corporate welfare at taxpayer expense.”

SACE said the Georgia loan decision is especially surprising after the similar twin-nuclear reactor project at the V.C. Summer Plant in South Carolina was canceled.

“By authorizing this loan, Secretary Perry is extending the swamp from Washington, D.C., down to Georgia,” said SACE Executive Director Stephen Smith. “We are astonished that utility giant Southern Company and its partners are getting yet another amazing sweetheart deal while taxpayers bear all the risk.”

The two new nuclear reactors at Plant Vogtle were the first to be licensed and begin construction in the United States in more than three decades, according to the DOE.

MEAG notified bondholders that its board voted Aug. 30 to complete the two, 1,100-megawatt Westinghouse AP1000 reactors. The next day, Georgia Power reported to the Georgia Public Service Commission that work would continue on the project, now estimated to cost the co-owners $9.45 billion. In addition to the federal loans, MEAG has said that it expects about $985.3 million of completion costs will be financed in the public capital markets.

The co-owners decided to finish the project after a lengthy assessment period that began when Westinghouse filed for bankruptcy. Through restructuring, Westinghouse is shedding billions of debt related to its work as the prime contractor at Plant Vogtle and at the South Carolina V.C. Summer plant.

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Energy industry Revenue bonds Bankruptcy Public finance Municipal Electric Authority of Georgia Georgia